Now is the time of year when everyone starts to look for ways of increasing their sales, adding to their customer base, and widening their market. One way to do this is to look into hiring sales representatives. This article was originally posted in 2007, and we’ve decided that many of you could use the advice posted here.
A sales agent, also known as sales representative (sales rep, for short), can be a powerful business building partner if there is a good fit between the agent and the need of the designer/manufacturer. On the other hand, if there is a poor fit, the relationship can not only be frustrating and costly, but can also potentially stunt the growth of the company.
In an ideal relationship, the designer/manufacturer would have the following strengths: efficient manufacturing and shipping, products with high potential demand, and good value. Meanwhile, the sales agent would have the following strengths: extraordinary sales skills, established relationships with a large customer base, extensive travel/trade show schedule so that they’re in touch with changes in the market place and will grow the customer base, and strong complementary, non-competing lines. They should believe in the product and be excited to build the business. In such a scenario, the sales rep would instantly give access to a large customer base that would sometimes take years, and tens of thousands of travel and trade show dollars to establish, while allowing the manufacturer to concentrate on its core competencies in designing/manufacturing.
If, however, the conditions are less than ideal on either side of the partnership, the degree of success will depend on whether or not the strengths can compensate for the weaknesses. For example, consider a sales rep that doesn’t already have a large customer base because she is just starting out, but is hungry and will travel extensively to build that customer base, and has few product lines, none of which will compete with yours. You would be guaranteed a full and focused sales effort.
There are many factors which a designer/manufacturer must consider when assessing the feasibility of having a sales rep, and then, whom to work with. The following are some pros and cons of having a sales rep which may be worth noting.
*Selling is the livelihood of sales reps, and they will therefore naturally devote more time and energy than the designer can. This frees up time for the designer to focus on what they’re best at: designing.
*They can devote more money to tradeshows and trips because the overhead of those endeavours gets shared with other lines the sales rep is selling.
*They’re experienced and know how to present, read body language, close the deals, and add on sales. These are the tools of the trade, and designers may not be familiar with them.
*Good sales reps already have connections and established accounts with stores.
*Sales reps carry several lines at once. It is much easier get a appointment when buyers are seeing many lines, especially if they have some strong lines – so you can ride on the coat tail of these established lines that can almost guarantee an appointment. This means less trailblazing for you the designer.
*Reps are removed from the product, so they can sell and negotiate more effectively on your behalf. Customers will also feel that they can speak their mind more easily, adding to the comfort of the whole sales process.
*You can benefit from comparative value – if, for example, the sales rep’s other lines are of a higher price point than yours, then your line will seem even more affordable and appealing to potential buyers.
*It is easier for reps to say ‘no’ to customers than it is for designers. It is more difficult for the actual decision maker to act as though they don’t have a choice in matters of special arrangements, discounts, and so on.
*Having sales reps reduces the possibility of outstanding customer debts. Since sales reps don’t get paid unless you do, they have a strong incentive to settle outstanding accounts. To this effect they can withhold other lines until debts are paid. Of course, harassing customers about unpaid accounts is another thing that you as a designer would prefer not to spend time on. In this sense sales reps are useful as another set of people who can do soft collection calls on your behalf.
*Having a sales rep, you can generally expect to pay a 15% commission on sales on all accounts in the agreed territory, even if the orders are placed directly with the manufacturer.
*Sometimes there are showroom fees. These are monthly fees that must be paid even if no sales are made. This means you still have to pay your sales rep even if they’re slacking and the manufacturer does all the work.
*To some degree you leave the development of your business to the rep. They determine the accounts they want to sell to, and sometimes end up selling to smaller accounts and not the better ones, choosing instead to promote their more “favoured” lines to the better accounts. In the long run, relying on sales representatives may not be as good for the development of your brand.
*Sales are generally not as good as when the designer personally sells to the customer. Customers like to meet the designer and feel valued when getting special treatment.
*You’ll split sales with the other lines the rep carries. The buyer’s attention & budget is divided among the rep’s whole collection, so orders are usually smaller. For this reason it’s important to choose a sales rep that does not have conflicting lines, and as few lines in the same category and price range as possible.
*If the sales rep has a difference in taste and doesn’t like the look of your work they won’t sell it. This means that, in a sense, you have to sell sales reps on your jewellery before they sell it effectively to others.
*The designer won’t get immediate first-hand feedback on their product (designs, price, presentation, etc). All responses are filtered through the rep and usually not in depth or timely. Sometimes feedback may even be reported inaccurately to mask the rep’s laziness or product bias.
*Some customers don’t want to deal with reps, but you have to go through them anyway. Customer may even have bad experiences with certain reps, or your rep may want to alienate certain customers for personal reasons at your line’s expense. In such a scenario you’d have to do the work to by-pass conflict, and all the while you still have to pay the rep.
*A sour relationship with a sales rep can end in a bad break-up, and that can hurt your line. The rep is the face of the company and has the power to slander your line by blaming the break-up on poor sales, poor delivery, poor quality, and so on. Though unprofessional, this happens remarkably often.
*Rep turnover is bad for business – high turnover usually sends bad signals to customers who think that if sales and products are good there should be no such problems. High turnover makes customers wary unless they already have a good relationship with the designer and know that she/he is reasonable to work with. For this reason it’s good to always maintain some kind of ongoing contact with customers. Great customer service on the delivery and good trade policies will definitely help in this department.