These top six sales support items manufacturers representatives should expect from the manufacturers, distributors or sales managers whose products or services are on their line cards. Missing any one of these critical elements can seriously impact either sales or the rep’s sales relationship with the company …or both.
» Training – Principals must train the independent sales rep on products and/or services. Principals may pay or split expenses with the manufacturers rep for training tools, courses (if they are necessary), and travel (if the independent rep is expected to visit the principal’s office or manufacturing facilities).
“The BIGGEST factor in an independent sales rep’s failure is their lack of product knowledge. If a sales rep is not comfortable selling a product, they WON’T.”
» Initial Travel Period – For the first few months, it is suggested that the principal make a person available to travel with the sales rep to make initial sales presentations. This gives the rep time to understand and get a feel for the sort of questions that customers ask, problems, what sorts of things to look for, what the sales cycle looks like, and so on.
» Sales and Order Tracking – Sales reps do not work under the same roof as the principal, and they are paid commission only. Because revenue is not guaranteed, it is vital for the independent rep’s business to receive information such as:
- Copy of quotations and price lists
- Pending orders
- Order status
- Shipping notifications
- Copies of invoices
- Commission schedules
- Copies of literature sent with Products
- IMPORTANT: The most common way to lose a rep is poor communication.
» Timely Follow Up – When independent manufacturers representatives bring in quotation requests, the principal needs to turn them around as soon as possible! Likewise, if there are problems in the field, principals should offer support to the sales rep, as well as their customers.
» Customer List –The principal must supply the sales rep with an installation or a user list of their lines or services within the independent rep’s territory. This is a great way to help the rep build a customer base, as well as to understand the principal’s products. This can greatly assist the principal, as it can open up previously unseen sales opportunities.
» Supply Marketing Material – Principals need to supply independent reps with the promotional material needed to sell that particular product or service. Common marketing materials include brochures, samples, catalogs, but may require training videos or manuals for more complex sales.
I currently rep for a small family American owned and operated furniture company. I have been with them for 18 months and in that time have brought in substantial business.
My current commissions are based on gross
5% for contract and container
7% for retail direct & design sales
The owner very flighty and challenging to work with. due to this a lot of servicing through out closing the sale to goods coming into port with consistent late deliveries.
I am putting together a proposal to have my commissions increased and would like an idea on where I should start in my negotiations as I am new to this industry.
Generally there are broad rules of thumb for commissions, but each case is specific. Here is a method you can use to determine if your commissions are “fair”:
1. Determine your target annual income that is reasonable for you. Don’t forget to take your taxes into account.
2. Compute the percentage of that income that has to come from this line. For example, if you have four lines that you spend equal time on, that percentage would be 25%. Of course, you have to adjust for the number of lines and time dedicated to that line.
3. This would give you the annual amount that you need from this line.
4. Compute the commission rate that yields that amount.
Not only does this method give you your own awareness of what is fair, but provides a way to communicate that to the client, if you are willing to disclose all of the details, which may or may not be the case.
As a general impression, I think there would room for increase commission rates, depending upon your calculations.
My main principal has run into cash flow issues and has begun paying me late (1-2 months late). He is also constantly reducing my commission, sometimes to zero if his costs to manufacture an order are over what he anticipated (ie. he had to pay overtime or he screwed up and had additional costs). We have a written agreement, but he always seems to play a violin about how tight things are at present. Suggestions?
Assuming you are in business to make money and there are no other justifications for making this into charity work, then you have a business decision to make.
As a last attempt to explain that you need to be paid what you are owed, you could ask what the principal would do if his customers paid him the same way. That is, if he was losing money on each sale, would he keep such a customer?
Send a letter by certified mail that you request back commissions be paid within 45 days. Have the information to back it up.
If they refuse, obtain legal advice.
And I would begin looking at other lines if possible. As jas eluded there’s no chance your principal would let an end user customer go more than 45 days without payment.
I am currently retained as a commission based contractor / agent in the Hardware Industry servicing and selling to independent and corporate Hardware and building supplies outlets in a given geographical area. My income is solely derived from commission on sales. Recently, my Principal has stopped providing me with copy invoices and reports so I no longer have the ability to see how my commissions were arrived at apart from them telling me what my total sales were for the month. Is the Principal under any legal obligation to provide me with detailed information about how the total sales figures were arrived at ?
The obligations of the Principal are of a contractual nature. The legal obligation is thus determined by that contract, whether oral or written. I hope you have such a written contract but I am guessing that you do not.
We always recommend that a written Sales Representation Agreement be put into place that spells everything out. If you don’t have one, you should try to get one. Otherwise, both parties are not sure what is allowed and what is not.
For a sample of such a Sales Representation Agreement, please check out this page on the RepHunter website, and look at item number 8 Sales Represenation Agreement