What Motivates Sales Reps: Salaried vs. Independent
It’s our very first Guest Post Day here on the Breaking Up With Paper blog. We’re so excited to have guest contributors sharing their experience and expertise. Our first contributor is Alice Errett, founder of RepRight, a company that matches vendors with independent sales reps.
Currently trying to decide between building an in-house sales team and hiring an independent rep firm?
There are obvious differences in the structure of a salaried sales team versus an independent sales force that’s strictly pay-for-performance. To put it simply, independent sales representatives usually rep multiple brands and work on their own rather than as part of a larger team.
As you may imagine, the pay-for-performance model fosters distinct attitudes and behaviors. Generally, the actions of an independent rep are often characterized by the desire to close a deal above all else. While of course this approach has its benefits, there are always pros and cons to any arrangement. Here are three key areas in which the motivations and practices of salaried and independent reps vary widely.
What Motivates Sales Reps?
Salaried sales reps obviously receive a salary–guaranteed compensation, often with a kicker if goals are achieved. Salaried reps have less income thrashing, which translates into a more direct ability to focus on the needs of the prospect or customer. Their motivations are also often based on how their performance compares to that of other team members.
Independent reps are paid generally when two conditions both exist: 1) when they make a sale, and 2) when the customer pays. Sometimes those actions are conjoined and sometimes they aren’t. The independent reps’ compensation depends upon every step along the cycle, from marketing to selling to collections, and their commission is what drives them.
Independent reps’ commissions may be a bit higher, but companies that employ them are taking on relatively less risk, since these reps don’t receive compensation until they start producing revenue.
2. Relationship with Management
Salaried sales reps are usually focused on meeting the demands of their management, who sets concrete goals that the reps must work to achieve. The management, in turn, needs to make sure that reps are using their paid time efficiently, which results in more meetings, phone calls, reporting and other administrative functions…all in an effort to ensure that the sales team is performing in a desired manner.
Independent sales reps are laser-focused on sales and ensuring customer payments. They are usually not particularly interested in sales meetings and not particularly good at ancillary reporting. Independent sales reps are also fiercely protective of their core selling times and days. (Want to drive an independent sales rep crazy? Call a 2-hour sales meeting on Tuesday at 10:00 AM.)
Management often complains that independent sales reps aren’t responsive, don’t return calls in a timely fashion, and are prone to missing management/staff calls and meetings.
While this is indeed true, it’s largely because independent sales reps are focused only on selling. If two phones are ringing, one with a manager’s pre-scheduled call to discuss a sales plan and the other with a hot prospect, most (good) independent sales reps will answer the prospect call first, then call later and apologize to the sales manager for missing the meeting.
3. Relationship with Co-Workers
Salaried sales reps often help each other reach goals as a core requirement. Most salaried sales reps enjoy the idea of working together to achieve great outcomes–an attitude that promotes teamwork but can also inadvertently allow stronger sales reps to carry the load for the others.
Independent sales reps are a fiercely independent bunch and tend not to be great team players. Their motivations stem from their own individual goals rather than a group goal. That’s not to say that independent sales reps won’t help out their co-workers, but they do it on their own terms.
Understanding what motivates sales reps–whether they’re salaried or independent–can help you make a more informed decision about what kind of sales team works best for your current situation, business goals, and corporate culture. If you’re a sales rep, independent rep, or sales manager with further insights to share, let us know in the comments below!
About the Author: Alice Errett owns RepRight, a company that matches independent sales representatives with growing companies. RepRight’s clients list independent sales opportunities on RepRight’s job board to ask them to recruit through their Matchmaker program. RepRight.com