CommissionCrowd's mission is to drive the independent sales industry forward, a large part of our efforts involve education of companies who are perhaps new to working with independent sales partners.
This week we bring you a shocking industry exposing interview detailing the plight of a highly successful independent sales rep who lost one of his long term principals because he was – wait for it – over-achieving and bringing in too much business! As a result he now deliberately keeps his sales earning potential under $100k per line to avoid losing his remaining principals.
Understandably he has requested to remain anonymous for this article allowing him to be as open and honest as possible without fear of retribution. We hope that this article highlights some of the problems that currently exist within the self employed sales industry, and the aim is to give companies that are thinking of working with independent sales reps an insight into some of the issues that affect the performance of your outsourced sales team.
Qn. With a long and successful career in the sales industry to date, can you tell us where it all began?
I had worked for a bearing company as VP of Sales and it was my first exposure to independent sales reps. I met a highly successful rep in New York who turned out to be a good teacher and spent many hours with me on the phone and as we traveled giving me a special insight into what motivates a successful rep.
After leaving that job I went to another Bearing company and took a role as sales manager of one of their divisions. They had worked with reps for many years and I had a good opportunity to apply what I had learned at my previous job. I also negotiated a commission override for my salary which gave me an opportunity to see first hand how commission sales works from the reps standpoint. After 8 years with that company my division was sold to another company and I was offered other positions but I now had the urge to have my own sales agency.
I remember telling my wife that I was going to start working from a home based office space. She asked what I was going to do and I told her that I would find a company to represent and then find clients to sell to. It seemed so easy.
Qn. What was the reason you decided to become a self-employed sales agent?
The main reason was the need to control my own life and the opportunity to make more money than I could earning a salary as an employee. I also liked New England and didn’t want to move to follow another job.
Qn. In your opinion what sets an independent sales representative apart from an employee?
Self employed sales reps are self starters. They do not require direction and are highly self-motivated. Usually the only time a rep will leave a manufacturer that they are having success with is due to being treated poorly or the product not living up to customer expectations.
Qn. Recently you said “I’ve come to the conclusion that the rep business is the only business where if you do a super job you can almost guarantee you’ll be fired” Can you elaborate on this a little?
I think it can be very hard for some companies to pay their sales reps high commissions for very long if they don’t fully understand what an independent sales rep truly is. The biggest mistake that companies make is that their financial people do not always see the value of the relationship that the rep has with their customers and don’t understand the justification for paying` a six figure commission over an employee who’s commissions can be capped or much lower.
Corporate managers usually give in to demands that the independent rep be cut out because their commission added to the bottom line makes the company look more profitable. However, in my experience this is short-sighted thinking and usually results in the principal losing the business the rep has brought in over time. Not only do customers become distrustful of companies that treat their reps poorly, but they develop a terrible reputation among other independent reps who rightly stay clear.
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Qn. In your opinion, what should a principal understand about working with independent sales reps before going into business together?
Firstly they should understand that the commission check doesn’t go directly into the reps pocket. We have expenses just like they do and cash flow is the the key to a successful business. We are professional business owners who provide a sales service to those that do not wish the up-front expense and risk of employing a sales team.
Secondly they should not look at the sales agent’s commission percentage as an add on to the selling price. If the company are willing to quote a customer in a territory without a rep a percentage less the commission, then customers in the reps territory are not being treated fairly. When you have your own sales force you have a cost of sales spread over the entire product line and customer base.
Lastly they need to understand that we do not work for them in the same capacity as an employee does. Excessive reporting, paperwork and call reports are a waste of our selling effort. Basic communication on a regular basis should be adequate for the rep and the principal to communicate what is going on in the territory. That’s not to say that we can’t have some written communication because forecasting and customer profiles are necessary to ensure business runs smoothly. Lastly, companies need to understand that if given the opportunity to bring up another non-conflicting line, the rep is going to do it. That is the beauty of multi-line selling and it cuts both ways.
Qn. How long did you work with the manufacturer before they quit you?
We worked together for Eight years.
Qn. Did you feel you had a strong partnership initially?
Yes we had a very strong partnership over those years.
Qn. What were the reasons given for ending the relationship?
The manufacturer wanted to cut my commissions by 40% and force me to sign a contract that would be more in their favor.
Qn. How has it affected the way that you work with other manufacturers now?
I have to say that I’m more wary of getting sucked into thinking that they can’t simply drop me anytime they wish because I’m doing a good job. I will also will never concentrate that much time on a single line ever again. It’s a shame.
Qn. Did you have a contract in place?
Yes, it gave me legal rights that allowed me to reach a settlement with the company
Qn. What advice would you have for a manufacturer who is looking to work with independent manufacturers reps in the future?
Understand that you will relinquish some control of the selling process but it will pay off in increased sales if you view your independent reps as partners in your business and not simply as disposable labor. Reps are usually in it for the long run once they find a great company to represent.
Qn. Thank you very much for your open and honest answers. Is there anything else on the subject you would like to add?
Yes, I love what I do and for the past 22 years I have had the best job on earth! I have worked with some really fine companies and even helped get some little ones get off the ground. In spite of some of what has happened in the past, I bear no ill will and continue to thoroughly enjoy working as an independent sales rep.
So there we have it from the horse’s mouth. It is important that a company knows how to work with independent sales reps before deciding to do so. Treating independent reps as disposable does not only negatively impact the industry as a whole, but ruins the credibility of your company in the eyes of future independent sales reps and potentially your customers also.