How to Work With Independent Sales Reps

If your goal is to increase sales, cut costs or penetrate new markets, independent sales representatives can help. Here's how to find, retain, and get the most out of your reps.

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You want to bring your new product to market as quickly as possible, but you're on a tight budget. You don't want to spend the time or the money on putting together a sales team, so what are your options?

One consideration is working with independent sales representatives--sometimes called manufacturers' representatives or manufacturers' agents--who sell products or services to customers directly for the company or companies he or she works for. Unlike with hiring a salesperson, with a rep you are taking on no initial risk until the person begins producing revenue, because you're not responsible for health and retirement benefits. Sure, you may have to dole out a little more commission for each sale. But it's worth it if you want to test the market, or if your product will benefit from a demonstration, or your customers require constant explanation of new products. For this reason, independent sales reps work mostly for manufacturers, wholesalers, or technical companies.

Still, you can use reps in your business to cut costs and boost sales over the phone or penetrate new markets or territories. We've created a list of ways to find, retain, and get the most out of the reps in your budding sales effort.

Working With Independent Sales Reps: How to Find Them

Finding a rep to meet the exact needs of your company and to produce for you isn't a walk in the park. You have to learn to live with the fact that not all of your reps are going to produce in high numbers. This means you have to place a lot of reps in a lot of different locations in order to squeeze the most out of your sales initiative.

RepHunter.net, a Minnesota-based company that connects business and sales reps, helps to facilitate the process. The site aims to prevent the frustration of finding inadequate or mismatched reps so that you can get the most out of your team as quickly as possible. The fee to use their service is small, and likely won't amount to the price you will pay to place ads on job boards or in newspapers, hire an ad agency, or hire inside sales reps.

David Hoffmeister, professor at Chicago-based DePaul University's Center for Sales Leadership, suggests cheap alternatives like searching through trade publications in your industry or querying existing customers if your company has already taken off. "If they give you a recommendation, you can be pretty sure they are doing business with them already, and you can be pretty sure that they enjoy working with them and the way they do business," Hoffmeister says.

Communication and networking are also important. Visiting well-known trade shows to meet with different independent agents or agencies in your business can be a tremendous boon to your brand. Sally Thomas Cooper is founder and vice president of Lusive Decor, a Los Angeles-based custom lighting manufacturer for the hospitality industry. The company has an army of 17 independent sales reps that sell signature pieces for hospitality, gaming, commercial and residential projects. Cooper believes that her ability to network and hone in on industry trends has kept the company growing. "Custom lighting is a small, word-of-mouth, very much relationship based industry," Cooper says. Not only does she constantly spend time on the road making contacts, she also encourages her reps to enchance relationships with designers and key players in the field.

Always remember to network as much as possible with clients, customers, and just about anyone you meet at trade shows, who could provide you with hordes of potential contacts in the industry.

Dig Deeper: Where to Begin in Hiring Independent Sales Reps

Working With Independent Sales Reps: What to Negotiate

Once you've found some potential reps, your next step is to have them sign an Independent Sales Rep Agreement. Independent sales reps and contractors technically aren't employees of your organization (you can't even say you "hire" them). That being said, you have to first understand the terms of any contract before agreeing to sign.

Unsurprisingly, the rate of commission is the No. 1 term you want to negotiate. Depending on your industry, typical commission rates run anywhere from 5 to 25 percent of the sale, according to the Manufacturers' Agents National Association. It might be hard to negotiate a rate that's lower than the standard for your category, especially if you want to recruit top quality salespeople. So keep the percentage within reason by looking at product cost, time it takes to make the sale, and volume level. To get a feel for your industry standard, attend trade shows or visit sites like MANAonline.com or RepHunter.net to see what different reps suggest.

Exclusivity is also an important consideration when signing on independent sales reps. While you want to find reps with lots of expertise and experience in your business category, you don't want them to conflict with any of your competitors. "If you're selling turkeys, you don't want a seller who represents two turkey companies," Hoffmeister says. "But it's ok if they represent companies in the same general food category," he adds. Likewise, Hoffmesiter says that there needs to be set boundaries for where the rep can sell and to whom. You don't want the person to interfere with your operation or, even worse, other salespeople in the region.

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