Independent Sales Reps — A Powerful Channel

I’ve been involved in a number of discussions about independent sales reps recently.  They are a terribly misunderstood and under-appreciated sales channel.  Independent sales reps can be a solution to coverage and market access challenges, but only if we leverage them in a way that makes sense.

I see too many organizations making too many mistakes in thinking about this channel.  They do just about everything wrong, then complain about the independent rep, without understanding the channel was predestined to failure.

The biggest error I see organizations make is transferring our cost and risk problem to the rep.  Many organizations, particularly smaller businesses can’t afford to hire sales people to cover all the territories needed.  They figure, “We can get an independent sales agent, paying that person only when a sale has been made.”  Others mistakenly think, “Sales can be free until it produces results.” They seek to find an independent sales person, seek exclusivity in their time, that is, the sales person sells for the company full time, but is independent.  This is doomed for failure.  Independent sales reps are not different than the rest of us, they need to feed their families, they need pay their mortgages and bills.  How will they survive if income is deferred months to years. 

 Think of a complex B2B sales process.  It may be six months or longer (even longer if you consider the time to prospect and find qualified opportunities.).  It may even be a few months more until they get paid.  How do they live during that time?  The company that tries to do this is setting themselves and the rep up for failure.  The rep that signs up for this is a fool (so you probably don’t want to hire this kind of person).

If you want a “full time, dedicated sales force,” you’ve got to pay for it in some way.  Deferring payment until something is sold is not a solution–it just results in deferring revenue, possibly forever.  There are lots of solutions to this, either some sort of draw or retainer providing some level of cash flow to the individual, or manufacturers representatives, having complementary lines and services, allocating their time across the lines.

A related problem is the small  business ownerr who simply doesn’t want to sell.  They try to outsource this “annoyance” to someone else.  I may be somewhat limited in my perspective, but I haven’t run across any business that survives without revenue.  To get revenue, we need to generate orders, to get orders we need sales.  Outsourcing sales because it is an annoyance, it’s something you don’t want to do, it’s distracting; means that you are outsourcing your company’s destiny and future success.  

Business owners need to invest in the development and execution of their revenue generation strategies.  This investment is both time, resources, and money.  While they can outsource some of the selling function, they have to be actively engaged in this outsourced channel.  They have to make sure the people are executing disciplined sales processes, that they are doing the right things in building and maintaining a funnel.  They have to make sure the sales person has the tools, processes, materials, support, and coaching needed to be successful.  They have to get engaged in selected selling opportunities.

Making independent sales representatives successful requires investments.  Too many organizatoins (large and small) make the mistake of  “signing them and forgetting them.”  Just like our “own sales people” we need to invest in our independent sales people.  We need to train them, provide tools, processes, support, materials.  We need to manage, lead, and coach them.  We need to manage their performance.  We know our own sales people won’t be effective if we don’t make these investments, the independent sales organization is no different.

Some of the very best sales people I have ever met are independent sales people.  They can be a terrific channel.  They can provide coverage, access to markets, expertise that could be difficult to acquire otherwise.  They can provide a more cost effective alternative coverage model than your own direct organization.  They can help in cash flow issues (but with some cautions).

Every sales organization should consider independents and manufacturer’s representatives as a great alternative.  But for those who are doing it purely from the point of view of not investing in sales or deferring all investments until the sales person gets an order, it’s probably a doomed strategy.