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Things To Consider Before Hiring a Sales Representative

There are a number of different strategies for getting your product out into the marketplace. One is using a distributor. The disadvantage of using a distributor is that in most cases you are relinquishing control of how your product is shipped, stored, and marketed to your end users. Invoicing and collections is also often handled by the distributor. As a result, your distributor, if you choose to use one, is literally the face of your company. Now for many manufacturers, this system of divided responsibilities is preferred. However, other manufacturers, want more control of marketing, sales and customer service. If that is you, you’ll eventually need to recruit sales agents or a sales agencies to pitch your product to retailers.

Things To Consider Before Hiring a Sales Agent

A field sales representative sells and services new and existing accounts in the field. Many sales reps carry several complimentary product lines in order to generate enough income to make their efforts worthwhile. Seasoned Agents usually have an extensive network of customers in a particular geographic territory. In most cases, for their representation, they will demand exclusive rights to sell your product in their sales territory. They will also require you to provide product samples, catalogs, price sheets and terms sheets. The primary focus of Field Sales Agents is to have face-to-face contact with store-owners in their place of business. Out in the field, they will demonstrate your product, make sales, conduct training and resolve problems. 

In many cases, a Field Sales Rep’s primary income comes from their sales commissions. As a result, they are usually only interested in selling products that have a proven track record and have the potential to generate generous sales commissions. Therefore, it is incumbent on you to do your market research before attempting to contact potential sales agents.

One important item you need to determine from your market research is your wholesale pricing. All too often, products are underpriced. Make sure your wholesale price is enough to cover manufacturing, marketing, sales costs, packaging, shipping, breakage, warrantees and lastly and most importantly a healthy profit. A good rule of thumb to determine your wholesale price is to take your manufacturing cost and double it. If you are exporting overseas, it’s a good idea to multiply your manufacturing cost by 2.5 – 3 X, to get a ballpark wholesale price. 

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In most cases retailers will take the wholesale price of an item and double it to determine their retail price. Many retailers want to get as much as a two and a half times margin on the products they sell. They need these margins in order to cover their costs and make a profit. Therefore, it is important to know if customers are willing to pay 4X or more than the manufacturing cost for your product.

One way to get customer feedback is to find a number of boutique retailers that will sell your product on a contingent basis. With this arrangement, they will pay you the wholesale price for the product once it is sold in their store. After a trial period you want to determine customer interest in your product. Are the retailers interested in re-ordering? You’ll also want to get feedback on pricing, product design and packaging. 

Once you’ve determined that there will be customer demand for your product and that you can command a retail price that will generate sufficient profit for everyone concerned, it is time to approach a sales representative or a sales agency. There are a number of items that you must work out before you start advertising for a sales agent. Number one on your list should be to write a concise job description. Make it very specific. For example, list the skills and expertise that are required to sell your product. Describe the type of customers they will be interacting with. Will they be doctors or retail store owners? Are they are expected to do telephone cold calls in order to generate their own sales leads? What will their sales territory be? Are they expected to call on a certain number of businesses per week? Will they be representing your product at trade shows?


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After writing out you job description, you’ll need to determine the details of your sales agreement. In it will describe the terms of the contract, the sales territory and their compensation structure. Most agents will ask for the exclusive right to sell your product or service in a particular territory. Before giving them exclusivity, it usually a good idea to have it contingent on reaching a sales performance target within a prescribed trial period. 

So how much do you pay your sales representative? Sales commissions usually average about five percent of the total sale. This can vary, however, depending on the industry. Commissions can be based on sales or gross profit. If you decide to pay commissions based on sales it is important that you don’t give your sales reps control over pricing. Giving your reps the ability to set pricing will incentive them to make price reductions in order to make a sale. If this happens, they’ll still get their commissions, but you might end up with little or no profit from the transaction. 

In developing your sales representative compensation plan it is important to structure it so that it motivates your sales agents to make more sales. I urge you to check out NewBusinessCreator.com in order to view a video or read a more in-depth discussion about this topic. 

If you are searching for a sales representative, NewBusinessMarket.com is an excellent way to find one. You can search by industry category, and the regions you wish to focus your marketing in. In this listing site you can give a preliminary pitch to potential sales reps and sales agencies. This pitch can contain pictures, videos and narratives to persuade agents to carry your product. 

Please keep in mind that using a sales representative is just one way to market your product. I urge you to check out NewBusinessMarket.com to explore your other options. This website will provide you with a wealth of information and tools.

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