How to Choose Between Internal and Independent Sales Reps
Whether your wholesale business has been in operation for years or you're just beginning to get your products off the ground and onto shelves, you may be in the midst of making the choice between building an internal sales force or selling through independent sales reps. While internal sales reps are on a company’s payroll regardless of how many sales they make, independent sales reps, also called “manufacturer’s reps,” will sell your line (and likely many others) while working solely on commission. These sales reps may be independent agents, or part of a larger rep firm. In talking with wholesalers across a wide range of industries, it’s become clear that there are a number of key points to consider when choosing between these two sales structures. If you’re deciding whether to switch from independent to internal sales reps (or vice versa), or wondering which type of sales force will help you get a new product line onto retail shelves more quickly, here’s a quick guide to help you make the choice.
Independent Sales Reps vs. Internal Reps: The Pros and Cons
An Independent Sales Force
- The risks are minimal, as reps work on commission and don’t get paid if they don’t make sales.
- If you don’t have sufficient territory coverage, independent reps may have established contacts that can help you enter new geographic markets.
- Independent reps can help you get more feet on the ground quickly.
- Independent sales reps often sell many different lines and brands. Your products may not get as much attention, especially if your brand isn’t well-known.
- If your products require some technical knowledge, training can be costly and difficult to coordinate.
- A brand’s relationship with independent reps can be precarious, as they can decide to drop your line whenever they see fit. In the words of one wholesaler, “independent reps are here today, gone tomorrow.”
An Internal Sales Force
- Internal sales reps are your employees, and therefore exclusive representatives of your brand. You know they’ll be focused on your products, not distracted by others.
- With their in-depth knowledge of your target market, brand story, etc., internal reps can provide a richer, more strategic selling experience.
- An internal sales force can take longer to scale.
- Internal reps are on your payroll. You may end up investing time and resources into a sales rep that doesn’t end up meeting quota.
Thus, with those pros and cons in mind, let’s take a look at some of the key questions that will influence your decision.
What is your budget?
If you have an aggressive go-to-market strategy, but don’t yet have the time or money to hire, train, and begin scaling your own internal sales team, working with independent sales reps may be your best option.
Where are you already selling and/or looking to sell?
You may decide to hire an internal sales team for larger, more saturated territories (where talent is plentiful and sales volume is higher), while also hiring independent reps for smaller territories where it’s more difficult for you to break into the market.
How strong is your competitive position?
Is your brand new or established? Where do you stand among your competitors? This can affect your decision of whether to go with independent or internal sales reps in a few different ways. If you’re a relatively new brand, independent reps can be an effective way to leverage an independent rep’s existing relationships and spread into new territories more quickly. As mentioned in the previous point, this can also be a cost-effective strategy. On the other hand, new or lesser known brands can be often overlooked by independent reps who have other more popular lines that are guaranteed to sell. Your brand equity can be a huge factor in how much time and effort reps will put into learning more about your products and pitching them to retailers. Remember: these reps work solely on commission. They may be carrying competing products, and they will sell what makes them money. For this reason, newer brands sometimes choose to cultivate their own internal sales teams.
How much do you care about your brand experience?
To a retailer, a sales rep can be the face of a brand. Indeed, some wholesalers refer to their sales reps as “brand ambassadors.” If you’re concerned with making sure that these representatives provide the best possible customer experience and a focused brand experience, you may not get that from an independent rep.
Are your products highly technical?
If selling your products involves a significant level of product knowledge, you may want to consider an internal sales team. Because independent sales reps often represent many different brands, sometimes across a wide variety of categories, they may not have the bandwidth for any additional product training.
How will you manage your sales force?
What’s your management style? Do you prefer your sales reps to take notes on customer interactions, track order history, play a bigger role in merchandising, etc.? Do you want to have a close, hands on relationship with the people selling your products? Internal sales reps might be your best bet. If, on the other hand, you’re comfortable placing some distance between your company and the deal-making and selling happening on the front lines, you might work well with independent reps.
Is it your ultimate goal to have an internal sales force?
It’s sometimes the case that companies will decide to hire independent reps in the beginning, but plan on transitioning to an internal rep force after their brand is more established. It’s important to remember, however, that B2B sales is all about relationships. If your brand’s relationship with a retailer was first created through an independent rep, it can be difficult to replace those reps with an internal sales force that has little or no connection with those existing customers. You may even end up competing directly with those reps who used to sell your products. This can be a disorienting––not to mention confusing––experience for your retailers. Regardless of whether you decide to go with an exclusively internal sales team, an independent rep group, or a mixture of the two, we hope that this helped you figure out which model would work best for your business. Other key considerations or experiences to share? Let us know in the comments.