Whether you’re launching a new product, exploring new markets, or trying to grow existing business, having a strong sales team on board is key to helping you achieve your business goals.
But what if you don’t have that team? Or what if you don’t have people in a particular territory? That’s when it’s time to consider alternatives, like partnering with an independent sales representative firm.
Before you take the leap, however, let’s address the elephant in the room: cost.
What Is the Average Commission of an Independent Rep Firm?
Unlike hiring a full-time salesperson, an independent rep doesn’t cost you anything until they start producing results and revenue.
When working with an independent sales rep, expect to pay 5% to 12% commission depending on the types of products and services, the experience of a particular sales rep, and other factors.
The more successful an independent sales rep is, the higher their commission will be. And in many scenarios, the front-end costs to acquire a new customer are reasonably high, and commissions reflect this to make sure the sales reps receive a fair return.
If your business is new—or targeting a new market—you will need additional resources to get going. Your Industrial Manufacturers’ Representative (IMR) might charge an added flat fee or retainer for services that help get your business off the ground.
These fees and commissions might feel like a bit of a tough pill to swallow. However, it’s important to keep these two things in mind:
- The independent sales rep does not get paid unless they actually make the sale.
- The more successful the independent sales rep is, the more sales you’re getting.
Considering the connections and value an independent sales rep can bring, a few pennies off the dollar is a smart investment. (And it’s still much less costly than hiring, training and managing an in-house sales team.)
How Do Independent Sales Rep Firms Determine their Pricing?
Agreeing on commission structure is a crucial consideration for rep firms. Functional commission structures have the right balance of commission, retainers and bonus programs. In many situations, the pricing structure will be customized to the situation.
Commission payment method is yet another factor that contributes to the final pricing of independent rep firms’ services. It’s common to negotiate long-term contracts that will renew each year unless there’s an issue. Reps should be paid on sales, not receipts of dollars from distributors.
Will an Independent Sales Rep Firm Want My House Accounts?
Many manufacturers have important house accounts or legacy accounts handled by executives or the main office … and are reluctant to hand over these accounts to an independent sales rep firm. With few exceptions, however, it’s actually smarter to allow the independent sales rep firm to handle them. There are multiple reasons for this:
- In many cases, the independent sales rep already has a strong relationship with that account. They know exactly who they need to talk to and the best way to work with them (including for those tricky discussions around pricing updates).
- They also know what projects or new initiatives are coming up and can anticipate the customer’s needs.
- Because an independent sales rep typically has a wide portfolio of SKUs, they have a much wider lane of opportunity for cross-selling and upselling. The rep might visit the customer to talk about products completely unrelated to yours, but during the discussion, they uncover a need that your products can fill – giving you a sale that might have never arisen otherwise.
Compare that to a new direct sales rep trying to make inroads at a large national account with only one product or catalog, and you can start to understand why logically, an independent sales rep is much more effective.
Nonetheless, you may still have concerns about outsourcing the care and feeding of your golden goose. In this scenario, a good independent sales rep firm will work with you to negotiate a custom contract that combines an attractive commission rate with clearly defined terms and responsibilities. This creates a win-win scenario: you can leverage the reps’ expertise and relationships while still steering the ship at a high level.
The Cost of Hiring a Direct Sales Rep Versus an Independent Sales Rep
Hiring a direct sales team is a considerable expense as you have to pay benefits, standard salary plus commissions, training, and potentially advertising and recruitment fees to entice the right people. An in-house team comes with a significant amount of overhead – and no guarantee of results.
In addition to total compensation, you must also consider the cost (and time) required to train and coach your people into an effective sales team. And if your best rep leaves, it may take a very long time to get another one up to snuff.
On the other hand, when you outsource sales, overhead is no longer a concern. Independent reps are professionals and sales experts who contract with you, and you only pay what is decided upon upfront. In fact, you only pay them for desired results, such as when they bring in new clients or win deals — any bonuses or increased commissions are your prerogative and depend on their performance.
To get an accurate picture of what you pay for an in-house team, gather your costs for hiring, onboarding, ongoing training, office space, payroll taxes and total compensation/benefits packages. That will allow you to compare apples to apples when assessing the value of working with an independent sales rep firm.
When you outsource sales, overhead is no longer a concern. Independent reps are professionals and sales experts who contract with you, and you only pay what is decided upon upfront.
What Differentiates a High-Quality Rep Firm from a Low-Quality Rep Firm?
The last thing any manufacturer wants is to jump on board with a rep firm that doesn’t deliver – or worse, one that is unprofessional and damages your reputation in the marketplace. That’s why it’s so crucial to focus on quality.
A high-quality independent sales rep firm should have a demonstrable ability to build, manage, and strengthen lasting relationships with customers. Finding the right one can turbocharge your growth, help you find new markets and create healthy, strong, mutually profitable partnerships with industry stakeholders and your customer base.
Additionally, even if the manufacturers’ rep firm has a stellar reputation, you’ll want to make sure they’re not carrying similar lines from your competitors. (A reputable rep firm will be completely transparent about who and what they sell.)
Here’s what else to look for when hiring a high-quality independent sales rep firm:
Industrial Supply Association SalesWerks 2.0 Certification
The Industrial Supply Association (ISA) SalesWerks certification is an excellent way to understand the credibility of a quality representative firm.
A powerful business planning tool, ISA SalesWerks 2.0 Certification helps you stay ahead of the competition, navigate change and translate your efforts into organizational success.
With an ISA Certified firm like Durrie Sales, you can enjoy the benefits of this certification that helps create improved strategic value. This, in turn, enables you to streamline your sales prospecting processes, onboard new customers, grow sales, and cultivate solid relationships with distributors and end-users.
When considering sales rep firms, factor in the time they’ve spent working in the industry. Business longevity is a crucial and distinctive factor for exemplary service as it helps you to partner with firms that have been around a long time and have established relationships with your target customers.
Leaders in sales rep firms who have achieved exceptional organizational longevity have a solid reputation for providing valuable sales functions to their clients.
Top Tier Reps
Your chosen rep firm should have the ability to envision the big picture and predict an accurate sales trajectory. Their reps have the sales processes down pat and understand how to take advantage of every opportunity when interacting with customers.
Durrie Sales, for instance, excels at assembling data and using cutting-edge solutions to help grow your sales pipeline and generate revenue. Durrie Sales leads the rep world in using technology to make sure manufacturers get the results they need.
Territory and Services
Time is money. And if your customer has to shut down production because they’re waiting five days for your product to get from your plant in San Diego to their plant in Chicago, they’re not going to be happy. And you probably won’t keep that account for long.
When choosing an independent sales rep, pay careful attention to what territories they’re able to cover and whether they’re able to stock your product and can ship out of their local warehouse. Of course, also inquire as to which customers they serve in your desired territory – a firm that already has a great relationship with your target customers is a firm that can help you grow quickly.
A sales rep firm like Durrie Sales can target prospective clients at multiple locations, giving you an edge over the competition.
Ability to Think Outside the Box
A high-quality IMR will help you with strategic planning to keep up with your new products to find new markets and customers.
A competent sales rep firm helps you create groundbreaking marketing campaigns, grow your business by upselling and cross-selling your products, and bringing in new customers. This creates various avenues for your business to get in front of your leads/customers and gain their trust.
Read more about the top qualities to look for when searching for an independent rep agency in our blog, “7 Things to Look for in a Manufacturers’ Representative Agency.”
Working with an Independent Sales Rep Firm: The Sky’s the Limit
Working with an independent sales rep firm saves time, expenses and hassle, as their primary focus is to make it easier for you to achieve your sales goals. When you want to engage with all your customers, and still save money, there is no denying that an independent sales rep firm can help you.
For instance, partnering with a trusted and credible rep firm like Durrie Sales offers you unique solutions and fresh perspectives to reach your target customers. We go above and beyond to build strong relationships for your company, going the extra mile to make sure your business is prospering.
If you want to improve your sales, grow your pipeline, minimize costs and generate revenue, Durrie Sales can help you achieve your sales-related goals and takes your business to the next level.