An Education on Sales Outsourcing Options
Multiple Options for a Contract Sales Force
Our Sales Outsourcing model is a fee-based retainer model. This overview is intended to highlight the different options available to organizations seeking information on revenue growth strategies that will not utilize a salaried, full-time sales work force.
Acquiring a contract sales force is nothing new. Re-sellers, independent sales reps and distributors are established methods of sales force outsourcing and contracting.
However, with the rise of outsourcing in general (HR, Accounting, IT), sales force outsourcing companies have become a strategic alternative to independent sales reps and indirect sales channels.
This overview will examine, and compare, two models for a contract sales force (independent sales reps and distributors/re-sellers).
What others do...
Independent Sales Reps
Independent Sales reps are self-employed individuals. As part of your contract sales force, they sell your products on a commission-only basis. Commonly selling into retail or manufacturing, these sales reps typically have established contacts and carry multiple products. They're the classic "traveling rep."
While a commission-only contract sales force option seems like an ideal solution, it does have limitations.
Independent sales reps specialize in servicing a defined market. They either serve a geographical or an industry sector. They are typically only interested in products that will be of interest to their existing contacts. This allows them to make an easy sale.
So, if your product does not fit into an existing market currently serviced by independent sales reps, then sales force outsourcing through agents is not the best strategy. Additionally, if they have other products with better commission structures, they will push those products rather than yours.
Also, to gain national coverage you may need to hire around 8 to 12 independent sales reps. These reps need dedicated management resources if you want to get the best out of your contract sales force.
Distributors & Resellers
Another solution for a contract sales force is building an indirect channel network. Distributors and resellers vary in one important aspect from independent sales agents: they own the customer (which is why they are called an indirect sales channel).
So, whilst an independent sales rep sells on behalf of your company, distributors and resellers buy your products and sell them on their terms. You therefore lose control over the end customer and the ability to sell additional products and services directly. You are dependent on their energy and focus to sell your products or services.
As with independent sales reps, both distributors and resellers focus on their own sector niche. You should research your market to identify the best indirect partners for outsourcing your sales force.
What Lease A Sales Rep does...
Sales Force Outsourcing
Until recently, there were few sales force outsourcing alternatives to independent sales reps and resellers other than building a direct sales force in-house. This option requires substantial capital and expertise; the cost of hiring, training and managing a direct sales force can be challenging.
So, if a direct sales force is so expensive, why would anyone have one? The reason is control.
As independent sales reps and resellers are selling your products on a commission or margin basis, there is little control over what they do and how they do it. With in-house sales people, paid a base salary and bonus/commission, a company has direct control over its markets, customers, pricing, etc.
This can be a critical factor in very competitive or emerging markets.
However, with the growth of outsourcing in general, sales force outsourcing is emerging as an alternative to building in-house sales teams.
Because you contract sales force outsourcing vendors deliver part or all of the sales process, you can control sales activity, target markets, pricing, etc, in the same way as an employed sales force.
Lease A Sales Rep operates as a service provider in this space, making us an ideal partner for companies with limited in-house sales expertise. Compensation always includes a base monthly fee with a potential commission schedule. For "established products" with "defined sales processes", the focus can be more towards commission; with base fees, but with emerging markets and/or products with longer sales cycles, a higher fee element is typical. But not all industries and verticals are the same with regards to compensation programs.Also, sales outsourcing vendors operate as if they are part of your company, developing direct customer relationships, and only representing one client within each defined market or sector for a specified term. This is better for companies with "big ticket" products and services requiring a "higher touch" consultative sale.
In summary, compared with indirect channel partners and independent sales agents, sales force outsourcing vendors are now a strategic solution to building a direct sales operation without the capital costs and management overhead of recruiting and training in-house sales people.