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20 March 2014
Are Commission-only sales reps the new Innovative approach to Sales Growth?

Are Commission-only sales reps the new Innovative approach to Sales Growth?


By SalesProEd @ 05:28 :: 2908 Views :: 0 Comments :: Article Rating :: Featured Articles
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Many organisations have wondered if you could utilise professional commission-only sales agents to grow or expand your business into new or existing territories. But like many companies, you may not be sure where to look for sales agents or even how to present your opportunity so that it attracts the right people.

The pay-on-performance sales industry has been around for well over a hundred years and is popular across many industries as a cost-effective alternative to hiring in-house sales staff. "Companies are willing to outsource their back office operations. So, why not the salesforce?" Says Steven Hamm from Bloomberg’s Businessweek.

An Independent Sales Rep, also more commonly known in the US/Canada as a Manufacturer's Rep, or in the UK as a self-employed sales agent or Commercial Agent, is essentially a self-employed individual who provides sales as a service on a commission-only basis. The sales rep will usually represent at least two related but non-conflicting product lines in a well-defined territory where agents tend to have pre-existing contacts.
 
There are many reasons why a company would want to partner with independent sales agents. These may include:
 
  • Lower overheads and financial risk associated with taking on employees
  • Entering broader or international markets
  • Expansion of local markets or territories
 
Ryan Mattock, co-founder of CommissionCrowd, explains: "companies tend to realise the advantages of partnering with self-employed sales agents but many struggle to find this type of sales professional as well as manage multiple remote working relationships with ease. At one stage we were company principals ourselves and found it extremely difficult, so CommissionCrowd was born out of our own need to simplify and update an age old industry by providing modern functionality to both sides of the market.”
 
Experienced commission-only sales agents tend to have many contacts within a particular target market and are looking for new additional non-competing products or services to add to their existing portfolio. Essentially this means a company can tap into a sales rep’s existing network and expand their reach very quickly. In-fact, Intel bought Digital Equipment Corp's semiconductor business and used outside sales professionals to sell three lines of products in markets where its normal salesforce had no experience and few contacts. The result was a fast take-off and a strongly growing business.
 
Bob Alesio, sales director of AMCI, a global U.S. based manufacturer of industrial control systems whose company outsources their entire sales function, says “Our decision to outsource our sales and use independent reps was based on our goal of establishing a sales force in an effective but efficient fashion. Contracting independent manufacturers’ reps allows us to manage our salesforce costs in relationship to growth vs significant upfront costs associated with employed sales representatives”.
 
Companies are also starting to realise that sales outsourcing falls in line with other more commonplace outsourcing activities such as accounting, legal, and HR. Mattock also suggests that many businesses make the mistake of “hiring” and “managing” commission-only sales agents in the way they would an in-house employee. “Wise companies approach commission-only sales partnerships in the same way they would any other relationship with an external contractor who is paid upon completion of services, an accountant or lawyer for example.”
 
Keith Crispin, who has been a self-employed sales agent for over 30 years, explains the main reason for deciding to become self-employed was “the desire to use my professional contacts to earn more, but also I like the freedom to be in charge of my own destiny".
 
Understanding how to work effectively with an independent sales rep is one of the key things sales agents look for when considering your company’s opportunity, explains Laura McGregor, co-founder of CommissionCrowd: "We've spent a lot of time talking with self-employed sales agents and one of the most consistent messages we hear is that they want to work with companies who understand how to do business with them.”
 
CommissionCrowd are currently taking applications for early access to their platform via lifetime VIP founding membership and running a series of free webinars to help companies better understand how to build profitable partnerships and shape opportunities around the key factors that commission-only sales agents are looking for.
 

The free webinars are scheduled during February and March 2014 and are aimed at company owners, HR managers and sales directors interested in learning more about the self-employed sales industry. Full details and registration can be found by visiting: commissioncrowd.com/companies/

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