I am new to the market. How can I get qualified independent sales reps to take my line? How can I interest a sales rep to “pioneer” my line?
Your Hot Concept
You are excited about your new hot product or service. Everyone you talk to is excited. You know how to create or procure the item, whether domestically or via import. Up until now you have focused on these production or procurement aspects. But now you need to find somebody to sell it. So, you try to find Independent Sales Reps or a Rep Agency.
But wait! — the Independent Reps I have contacted will not take my line!
The primary question that an Independent Rep has is whether they can sell the product or service at the intended price. When a product or service is unproven, has no track record, requires market research, and perhaps is not even fully developed, either the Rep is hesitant to take the line at all, or would do so under the condition that they are compensated for their product introduction efforts. In effect, they would be “building your business”. In such cases, the Rep may require an up-front fee in some form. The best way to think of this cost is as a market development cost, and not as a commission.
Steps to take to gain the interest of an Independent Sales Rep
Here are steps to improve the ability of the Rep to sell your product and help you to capture a qualified sales rep’s attention!
1. Have the correct wholesale price. It is common for an inexperienced Principal to put the wrong price on a product. Surprisingly, the price is often too low. When pricing a product, in addition to direct production costs, there are costs of production overhead, marketing, selling, packaging and shipping, damaged and lost goods, obsolescence, and not to be forgotten, the “all-important” profit!
Often pricing is accomplished by using a rule of thumb such as taking the costs of raw material and labor and multiplying by a factor of 2x or 2.5x to create the wholesale price. When importing, this factor can even as high as 3x to cover the additional damaged and lost goods plus importing mistakes.
2. Have the correct retail price. Typically a product will retail at the “keystone,” or double of the wholesale price. Under this model, if you want to sell your product for $5.00, then it has to retail for $10.00. Be sure that you product is properly priced at the retail level.
3. Test market your product. To capture the interest of a Rep, it is much easier if you can show success in a test market. Without any proof that the product can be sold, the Rep or Rep Agency will rarely just take the product and start selling it.
Testing the Market
For example, here are two type of tests applicable to the retail market:
1) Get a half dozen retailers in your area to agree to take your product on consignment. That is, they only have to pay you when your product sells. They must agree to pay your established wholesale price, and sell for your expected retail price for the test to be valid.
2) Attend a local flea market, fair, bazaar, craft show, or harvest festival. Sell at your retail price.
You will obtain critical market feedback from each of these exercises. The questions you want to answer are:
1) Does your product interest people?
2) What suggestions do they make?
3) Does it sell? Why, or why not?
4) Do you have the correct price? Was there price resistance?
5) And most important for the consignment test: will the buyers re-order the product?
With the knowledge gained from these tests, you are much further towards the goal of using an Independent Sales Rep or Rep Agency. Your success in the marketplace will pave the way for acceptance by the Rep.
On the other hand, if the product does not sell or the retailer will not reorder, you have the market feedback needed reprice, redesign, or repackage your product. Or you may find that you have to discontinue the product entirely. You are ahead of the game as compared to where you would be if you tried a full roll out without a market test.
Find and Contact Qualified Independent Sales Reps Today!
When you create your Company Profile at RepHunter, you simply fill out a form to post your sales rep opportunity. Once your profile is in the system sales reps actively searching for new service or product lines find your profile and contact you. You also have the ability to quickly search our up-to-date rep database and narrow your search to reps whose profiles look promising.
You could be contacting sales representatives today! You only pay when you know we have the right Manufacturers Representatives and Independent Sales Reps to build your sales force.
Also easily applicable to your article, what you say about pricing “services” and not tangible “products”? Thank you
Sebastian
Generally the same points in other discussions apply to both products and services. However the rule of them for services can go a bit higher. So rather than 10-15%, it could be 15-25%. But the method for computing give at our article titled “What is a fair commission to be paid to independent sales reps” would be applicable.
By the way, welcome to RepHunter as a new subscriber!
When we first stated, pricing was the hardest part. i agree with the author. You must not forget to factor in at least a 10 percent unknown cost variable.
The other key to mention is time. Successful independent reps are swamped with people trying to get them to sell their product.
Every time a rep starts a line from scratch it takes a lot of time. That’s time that s/he takes away from existing business that is already paying him a commission.
Most people don’t realize that an independent representatives value comes from their relationships with their existing customer base. Your new product or idea may falter, and jeopardize those long term well established relationships.
As Jas mentions, start your business locally first. Find a local independent representative who is willing to help you grow it nearby. This way you can work through all the bugs and early problems before exposing it to the nation as a whole. Your success locally will easily transfer and impress reps in other areas.
The pricing structures discussed here are very over simplified. Many things need to be considered including the allowances the distributors are seeking, competitive market price and positioning. I highly recommend a new manufacturer work with an experienced rep to set this price prior to going to market, it is well worth the investment of consulting funds to get the pricing right at the start. If you plan to market on the internet this is especially important to get a rep that specializes in this channel. I do agree that most of the time the pricing is too low and once the pricing expectation is too high it is difficult to raise prices to a more profitable level for the manufacturer.
My recommendation for manufacturers is to develop your product and work with someone who understands the different channels of distribution and how they intertwine and effect each other so you can have a streamlined, effective and profitable product launch.
Thanks Jas,
i will check out salesrephunter and let you know if i succeed!
I don’t know what you mean. However, it appears that you are looking for sales reps.
If you are looking for reps, please check out our website at http://www.salesrephunter.com. We specialize in helping start ups find independent sales reps. You can create a profile for free, and post your opportunity. You can search for reps for free. If you find reps you are interested in, our fees are very reasonable.
Hello we want to but our makeup line for sales reps like avon an Mary Kay.
Irene Mata
(619)316-2606