BUSINESS

Working with sales reps or agents

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Before you continue reading this article, let me warn you that Joe and I have a biased opinion on working with sales reps and agents. This is because we have worked with super amazing people and really unethical crappy people. So the experiences that we share here with you come from both sides.

Firstly, there are 2 types of reps. One is an independent rep, that goes door-to-door to get your sales. They usually cover a smaller area/region because, after all, it’s only ONE person. They usually do NOT do trade shows or have a showroom for that matter. They may once in a while throw a trunk show or exhibit at a trade show, if they have enough lines to contribute and cover their trade show expenses. Independent reps if you find good ones, are a really hardworking bunch. They travel consistently, actively calling buyers, chasing down clients for money for you, and all they get is a puny little commission, which we will talk about some more in a bit.

The other is a rep group. A rep group usually has around 15-40 reps working for them to cover larger territories, hence bringing in more clients when they have shows at their showroom. Their showrooms are usually at the Gift Mart in corresponding cities, i.e. The Market Center in SF, The LA Gift Mart in LA, The Chicago Mart, etc. Your line is showcased all year round. They will usually have shows at their showroom during the gift shows and sometimes they also participate in the gift show itself by having a booth to maximize their presence. Sometimes the independent reps belong to these larger rep groups.

Most of these reps are commission only basis. Which is great for startups with no resource to hire a sales team. If you have done a trade show before, you will probably have been approached by reps. Questions you should ask before deciding; how many lines do they carry? What kind of accounts do they have? Who are they carrying? What kind of shows do they do? If they have a showroom, how big is the showroom? How often do they have shows there? Do they attend and exhibit at gift shows as well? How many reps do they have? And ask for references! Call up some of their lines and see if they like them. The first rule of thumb is to join a rep that carries lines that are at par with your price points and your clientele. You want to be in good company.

And of course, the bottom line is what is their commission rate and how much will they be charging you for their showroom fees. And if they do participate in trade shows, how much is your participation fee? The gift industry rep commissions range from 15% - 20%, with fashion industry 10%. Showroom fees range from $50 per month up to $200 per month. That is in addition to the sales commission. Most reps do not get paid their commissions until you get paid by the buyer. Hence, some will go all out to be your debt collector when needed.

Now, here is the dilemma. You then ask yourself, can I afford to lose up to 20% off my wholesale pricing, and pay for showroom fees? (Read our article on how to price items.) SALES are #1 to any product/manufacturing business. Having sales reps is just one of your MANY sales strategies. Be it you doing trade shows on your own, hiring your own sales team, or having your family/ friends help you, or doing e-commerce. It may sound costly but you also have to weigh in that sometimes reps can get you into accounts that you may have missed at trade shows. Reps may follow up with stores more consistently than you can. They can get you the exposure you can’t achieve through trade shows or press.

And of course the downside of having reps would be you also having to pay them commissions on sales you bring in yourself. Most rep agreements are territorial based. Which means, if you do a trade show in NY, your Midwest reps will get commissions on sales from stores in the Midwest, that you have landed yourself at the show, even though you have just spent $10k doing a show. On top of that, you may question, why am I paying for showroom fees just to be cramped in with all the other lines. How come my reps aren’t bringing in as much sales as I thought they would? How come this buyer whom would normally spend $2k with me at a show, now ordering through my rep only order $90.00? Why am I cutting my reps all these commissions for work I have done entirely myself?

On the rep side, you have to also understand the agent’s point of view. First, if they carry ONLY your line, they would make pennies. A 15% of a $500 order only gives them $75, but it takes them days or even weeks to set up the appointment, phone calls after phone calls, and then finally when the buyer agrees, your rep lugs all your samples to the store, deal with the buyer, who may or may NOT be a nice buyer, spend up to 4 hours literally trying to convince or “begging” them to buy your line, to have faith in your products. What about cab OR gas money to get to the store, parking. And all that for $75?
This is why reps must carry so many lines!

And when you pay for fees to participate at a show, your rep is doing the setup, the networking, the mail outs, the shipping costs to the show, the booth fees, electricity, everything for a small fee.

Over the years, we have seen frustrations from all parties involved. We have always appreciated our reps. When things have not worked out, we’ve parted ways acknowledging that we can no longer benefit each other. Both parties agreed that the bottom line is for all of us to make money. We have also come to understand that WE are our best sales reps. You cannot depend solely on your reps to bring in sales for you. In reverse, if you do depend on them too much, you may find it hard to break free when you finally need to. You have to have many other sales strategies lined up as each yields different results. Your strategies have to be in line with your brand and goals. Do you want to be in thousands of stores? Or do you want to be in a selected few that represents your brand the way you envision? Is your target mass-market or high end?

I once read that it’s not about the quantity of stores that you get into. It’s about the quality of orders and the type of stores. It’s about your short and long term goals. If your end goal is to be in Le Bon Marché in Paris, or Liberty in UK or Bergdorf in NY, you don’t need your reps to get you there. You need YOU.

© 2008 BACE - Business & Creative Exchange.