A corporate client recently asked us if there was a way to engage with existing customers instead of using distributors who seem to only be interested in taking easy orders. He’s frustrated with paying commissions when he doesn’t believe these outside people are actually trying to generate sales. That’s a good question.
I had this same issue back when I had my last real job. When I first joined the company, we had our own sales team. On the surface it seems great to have people who just sold our product line. But it was also frustrating because we had to spend a lot of time managing them.
Just before I was promoted to head of sales and marketing, our president got rid of all the salespeople and tasked me to hire outside manufacturers reps. These worked out pretty well, but definitely brought an entirely different set of issues we didn’t see coming.
Watch this week’s Uncopyable Business video as I talk about the five primary ways we can engage with our customers. Which is best for you?
I am looking to use a 5th option=franchise lots of small outlets and make every attempt to enable them to do as much of the manufacturing/design as possible=Collaborative Advantage: Winning through Extended Enterprise …
The way I am thinking about this is if I myself would not prefer to work in a factory but rather to run my own business and have control of design/mfg. , then how could I ever justify “shoehorning” people into this mode unless absolutely required for quality control/mfg. complexity/etc., reasons? I have a series of relatively small products already planned in this way and I am sure I can find/develop more!
Basically, I want to inspire “lynchpins”=
https://www.amazon.com/Linchpin-Are-Indispensable-Seth-Godin/dp/1591844096
You are correct. The nature of the product is hugely important when making a sales method decision.. Unloading excess consumer products, go with a distributor with high spiffs. Emotional purchase products are different. so are highly specialized products. I have used all 4 of your methods with success. However not all 4 methods worked equally well for all product offerings. So things you just have to learn through experience!
Something I didn’t point out, too, is that many companies use a combination of these options. Thanks, Steven.
In the industrial tooling industry, manufacturer’s reps work alongside distributors. So you really can’t have one without the other. The other thing to consider is, does your customer/market require or expect local inventory. If the answer is yes than distribution is probably the way to go. Great topic of discussion.
I have used a combination of direct employed Regional Sales Managers and Manufacturer Reps. Generally, we used the Regional Sales Managers in territories we had more mature distribution channels; where we had existing business relationship with most accounts/distributors, or a large concentration of national account outlets where, as a company, we had greater control at the corporate level of the account. We partnered with Reps in lesser developed territories where we had limited exposure and brand recognition; large geographic areas (i.e., Montana, Dakotas, Wyoming, etc.), the distribution channel was more independents v. national accounts, etc. We benefited from leveraging the Reps existing relationships with accounts in their area, giving us immediate credibility. The financial advantage of the Reps was that we did not have the up-front costs of hiring employees, with salaries and benefits. Our costs tied directly to the level of sales generated. It was an extremely prosperous and successful arrangement for the Reps and our company….and our customers.