This article was written in collaboration with many independent sales professionals who are currently using CommissionCrowd to find exciting new product and services to add to their current line cards. It is widely considered to be the 'Blueprint' of working with freelance sales agents.
So you’ve decided that it’s time to grow your business and expand your reach in the Market, but recruiting permanent employed sales staff can be costly and in many cases risky too. You have heard of independent sales reps, but have never considered outsourcing your sales requirements before and don’t know where to start. This article will help you to understand who these sales professionals are, how to work with independent sales reps and the benefits of working with independent sales reps over in-house employees once you connect with them through CommissionCrowd.
Who Are CommissionCrowd?
CommissionCrowd is the home of Independent-sales reps. A place where great companies and experienced reps come together, connect, collaborate and easily manage their remote working partnerships. We believe there is a better way to manage remote working relationships and our primary goal is to disrupt and improve the self-employed sales industry which has been neglected for far too long.
Why Should You Consider Working With Independent Sales Reps?
One of the major benefits of working with independent sales reps is the ability to tap into their existing network of contacts. This usually ensures a potentially very quick route to Market for a company’s products and services.
Imagine your company manufactures cleaning products for the automotive industry, and you connect with a commission-only sales agent that already supplies a non-competing product line into car dealerships and gas stations across the country, you can see how this would give your company instant access to a whole new customer base very quickly.
Independent sales reps seek out partnerships with quality companies whose products and services compliment their existing networks. This not only ensures a win for the company, but a win for the rep also.
There are many reasons that a company should consider outsourcing their sales function to independent sales reps. Here are just a few:
- Less financial risk than taking on in-house sales employees
- Quick route to Market by partnering with reps that have experience and contacts within your industry
- The ability to manage cash-flow more effectively as you are only paying on closed business
- Access to a much broader sales talent pool when geographical restrictions don’t apply
As Steven Hamm from Bloomberg’s Businessweek noted:
“Companies are willing to outsource their back office operations. So, why not the salesforce?”
In fact some companies outsource their entire sales function:
“Contracting independent manufacturer’s reps allows us to manage our salesforce costs in relationship to growth vs significant upfront costs associated with employed sales representatives” – Bob Alesio (AMCI, Sales Director)
We interviewed Bob Alecio from AMCI which you can read here: How To Work Effectively With Self-Employed Sales Agents
10 Things You Must Understand When Working With Independent Sales Reps
There are a number of important factors that a company should take into consideration and understand before connecting with independent sales reps. The following ten points should help you better understand this type of sales professional as well as give you the information you need to decide if this is the right route for your company to take.
1. What Are Independent Sales Reps?
Most independent sales reps are seasoned sales professionals that have a desire to work for themselves and run their own business. The biggest mistake a company can make is thinking that independent sales agents who work on a commission-only basis, are so desperate for work that they are willing to work for free. The reality is that many experienced sales people looking for commission-only sales jobs are also highly entrepreneurial and have a strong desire to go into business for themselves.
Self-employment is not a new concept. Anyone that decides to go into business for themselves – whether it’s the owner of the local grocery store, a lawyer, an accountant or the CEO of a Fortune 500 company – technically works on a commission-only basis. This is simply because there is no one to pay that person a salary for doing the job of running their own company and if there was, we would all be doing it. Instead, a company owner receives a share of the profits on the sale of the products or services that they or their company provide.
There is absolutely no difference in this rule when it comes to an independent sales rep that has decided to break away from the constraints of employment and start their own business offering sales as a service. In reality, most freelance sales agents go into business for themselves because they have many years experience in their field, have built up a large number of contacts and no longer want, or need to work in a job for someone else.
We recently interviewed Colin Cornwall, a seasoned self-employed sales rep with over twenty years experience. We asked him the reason he decided to go into business for himself and also found out that he is looking for a new, exciting commission-only sales job to add to his existing portfolio of companies he represents. You can read his interview here: Experienced Self-Employed Sales Rep Seeks Exciting New Direct Sales Opportunity
2. What Do Independent Sales Reps Look For In An Opportunity?
Firstly we need to address minimum deal values expected by freelance sales professionals. While most reps are attracted by high value deals in the 10's or 100's of thousands, typically agents will expect an absolute minimum deal value to be in the region of £5000 ($7000) for a single sale or have at least a monthly recurring value of £500pm ($700pm).
However, you might be surprised to find out that money and potential commission earnings are not the only factor that independent sales reps consider when looking for new companies to represent. Potential commission earnings, although very important, only play a part among a multitude of criteria that reps take into consideration before agreeing to form a working partnership with a company.
We recently asked a number of sales reps on our database what the most important factors they take into consideration before showing interest in an opportunity are. All of the following points are vital to get right, but the results clearly show that it’s not all about the money.
Here are those results in order of importance:
- Honesty & Integrity
- Management Attitude
- Potential Earnings
- Attitude Towards Self-Employed Sales Reps
- Company Marketing Efforts & Samples Provided
- Payment Terms
- Customer Service
We took the time to interview a company that have signed up to use CommissionCrowd, and one of their top performing independent sales reps to give you an idea of what it is that makes their partnership so successful. You can read that interview here: How to work effectively with self-employed sales agents
3. Independent Sales Reps Are Not Your Employees
Simply put, independent sales reps are not your employees. Very often this type of rep will work with a number of companies and sell non-conflicting product/service lines into their existing network of contacts. You can not demand they give you the same hours or dedication as an employee under a contract of employment would.
That’s not to say that your working relationship shouldn’t have proper structure or a contractual agreement to protect both parties in-place, but you must not forget that a salary is put in place by a company to essentially 'purchase’ that person’s full attention at all times, as well as enforce certain restrictions for example, not being able to work for other companies while they represent yours.
By rule of thumb, their time is theirs, their leads are their own and their customers belong to them. We are asked all too often whether a company should pay an agent for a repeat order if the client goes directly to the company and not through the agent. You should recognise that if they opened the business, they should also be paid on any repeat orders that come from an initial purchase. The quickest way to lose an agent and your reputation amongst other reps, is by getting greedy and cheating them out of their hard earned commissions.
We recently interviewed an anonymous commission-only sales rep who was let go by his company principal because he actually brought in too much business for the company. You can read that eye opening article here: The Independent Sales Rep Fired For Being Too Successful
4. Think About The Sales Cycle Of Your Products/Services
It’s obviously a very exciting time when your outsourced commission-only sales team starts to grow, but it’s vitally important to be upfront and honest about the sales cycle of your products or services when speaking with potential reps about your opportunity.
The temptation to tell your reps that the sales cycle is shorter than it actually is will be there, but you should never do this and here is why:
Not every self-employed sales agent is equal in the amount of experience they have had in sales, or the number of contacts they may or may not have. A sales person that is newer to self-employment may need to represent companies whose products have a shorter sales cycle in order to secure sustainable income in the early days. Telling that person that the sales cycle is days rather than months is misleading and not only jeopardises your relationship with that person and future agents, but your company may actually end up being mis-represented by agents who try to close business too quickly. Working with an agent who’s needs you can’t fulfill is not only unfair to them, but to your potential customers also.
Don’t worry though, not everyone looks for companies who’s products/services have a very short sales cycle. More experienced reps that already work with a number of companies in addition to yours, and already have a high level of commission payments coming in, may be looking for opportunities that need nurtured for longer yet yield higher commissions in the long run.
5. Is Your Company Suited To Working With Commission-Only Sales Reps?
As we mentioned earlier, independent sales reps are not cheap labour and their job is absolutely not to single-handedly take over the responsibility of growing your company. Instead they seek out commission-only sales jobs with established companies whose products and services are proven in the Marketplace and are run by professionals that invest time and money into the success of their company. That's not to say that agents won't also consider working with very promising startups though.
Do you invest time and money into Marketing, product research/development, customer service, lead generation and growth in other areas?
If not, then your company may not be suited to working with outsourced sales people who are looking for quality commission-only sales jobs. Freelance sales reps are in essence an extension of a business, not the sole driving force. You will find it very hard convincing this type of professional to work with you if you can’t absolutely prove that your business is sound.
You might also be interested in reading this article we wrote that will show you how craft the perfect job opportunity for self-employed sales agents
6. Do You Invest In The Future Of Your Company?
Sales reps will not only want to know that they are supported and backed up by the companies they represent, but that their customers are also. Do you have the up-to-date Marketing materials and product samples? How professional is your company’s website? Do you have sound customer service procedures in place? Do you have a portfolio of case studies from existing happy customers? How is your online social presence? These are just some of the things that will make or break your chances of attracting the best freelance sales agents to work with you.
7. Have You Thought About Training And Support Structures?
Once you connect with reps on CommissionCrowd, you will have absolutely all of the tools you need to manage your working relationship remotely. You’ll have the ability to upload and allocate training and Marketing materials, share important documents and communicate easily. But have you invested time and effort into producing these? You’ll need to think about structuring your training so that your agents can learn your company’s products and services quickly and move on to what they do best, selling. Even the most experienced sales professional will need to learn about your company and product lines, so you must account for this and take agent on-boarding seriously.
Tip: Producing training materials doesn’t have to be complicated. You can schedule and make calls with your agents directly through CommissionCrowd’s user interface. How about also creating a series of private 'You Tube’ video’s? Perhaps create a training manual in PDF form and store it in your CommissionCrowd account then send directly once you make a connection. Get creative!
8. Always Pay Commissions On Time
Always without fail, pay your sales reps their commissions on time and accurately. There is no excuse not to do so, and failing in this aspect can quickly lead to the loss of your reps and your company developing a bad reputation with agents. If the business is closed, pay your agents when you agreed you would. It’s that simple.
9. Refrain From Micro-Managing Your Sales Partners
No one likes being micro-managed, yet alone a self-employed sales professional. Yes, that person represents your company, but they are not your employee. Through experience, reps frown upon companies who try to micro-manage them. CommissionCrowd makes collaboration and communication easy and efficient for both the sales person and the company, with one of our goals being the elimination of any unintentional micro-management from the company principal’s end.
10. Don’t Be Greedy
A simple statement, but one that rings true. Bearing in mind that you should treat your sales reps as partners and not employees, you must be willing to pay as high a commission as possible on closed business.
It’s amazing the number of times we are asked if recurring commissions should be paid if the client bypasses the sales agent and goes directly to the company to place a repeat order. The answer to that question is yes! If the self-employed sales agent brings your company a new customer and that client is either on a weekly/monthly/yearly retainer or simply places another one off order down the line, you should always pay commissions on that repeat business.
Setting your level of commission is not rocket science. Pay as high a percentage as you can, on a residual basis and don’t be afraid to speak openly and honestly with your potential reps. Negotiate and agree a fair deal before you start working together.
To Sum Up
Working with commission-only sales reps is a fantastic way to not only grow your business, but gain access to areas of the Market that your company employees might have struggled with. It’s important to remember that although you are not paying a salary, these sales professionals command respect and will only work with companies that meet their specific criteria.
We hope these 10 points have helped you to better think about how to craft your opportunity on CommissionCrowd, which in turn will lead to a much higher rate of successful connections with reps in your industry.
You might also find the following article interesting: How to create a successful buying process for your sales reps