Independent sales reps are a very cost-effective way of generating sales and revenues without incurring all the employment costs and risks involved in hiring full time sales reps.
Contracting out to independent sales reps can also be a great way to expand an already existing sales force. You can opt to give this as an option to your current team, or you can decide just to add more reps.
Whatever your strategy may be for your sales force, the following are general steps to be used in hiring an independent sales rep contractor.
Before You Start Recruiting Independent Sales Reps
Before you even begin to try to find the independent sales reps, you need to have some basics down about your business model. A good independent sales rep won’t take your line on if you don’t have your ducks in a row.
They want quality products and services from quality companies. There are enough companies vying for their attention, they will go with the companies that have a good system in place.
The first things you need are the basics of a viable company, like a branding, a compelling website, marketing communications and messaging already crafted explaining the benefits and features of the products and services. You also need a good pricing model in place as well.
Once you have these basics down, you need the following already established to be able to ‘sell’ your company to the independent sales rep.
Commission Structure
You need to know how much your product or service is going to be priced at and how much of the gross sale you will offer to your independent sales rep for a commission. Obviously, you need to cover your costs and leave a profit margin. But in the end, you must have a compelling commission rate.
Some companies choose to also offer a base salary for their independent sales reps. Generally, they have a plan in place for independent sales reps to prove themselves before they receive the base salary.
In some cases, for sales reps that are highly experienced with a host of contacts, companies may choose to start them out with a base, but this is rare. If it’s not an overly compelling independent sales rep candidate, you should stick with commission only, at least until they prove themselves.
You also need to know generally how much sales an independent sales rep could potentially make based on that commission structure. Of course, anyone can say reps can make up to $5,000 per day, and of course, in some universe that could be true. But be realistic and honest.
Sales Model
If you don’t have a working sales model already in place, you will be hard pressed to find an independent sales rep that will want to work for you. There are plenty of other companies out there that have a sales model in place. You need to have one, and have one that works.
A sales model or sales process would include lead generation, cold calling scripts, sales pitches, answers to common objections, a plan for doing sales presentations and follow up.
Sales Management Plan
Once you have the sales model and commission structure in place, you need to know how you are planning on managing your independent sales rep team. Once they are recruited, what will your training process be, how will you give them ongoing support, and what marketing materials will you provide for them to help them in their sales efforts.
Recruiting Independent Sales Reps
This is probably the most difficult part in the process. Finding good independent sales reps with experience and a good sales track record can be difficult. For one, finding a solid independent sales rep that can get the job done is a diamond in the rough.
In addition, the ones who are successful and good at sales usually limit the number of lines, i.e. product and services, they take on. Successful independent sales reps tend to stick to the products and services that bring in the most money for them. That means they stick with products and services that are easy to sell and have a higher commission.
In order to recruit and entice these established independent sales reps, you need to have a sales pitch yourself to ‘sell’ yourself to these candidates. If you have a compelling product or service in a growth industry, this should be that difficult.
Once you are confident that you have something compelling for the independent sales reps to want to sell, you should start posting to job posting boards. The best one is Craigslist. Many independent sales reps scour Craigslist to find new and better products and services to add to their current lines.
The job post should include a compelling message on your company, industry and products or services. It needs to sell. You need to include something about compensation. Even if it’s not explicit, you should be able to say what the realistic earning potential could be.
Interview Process
Posting to job boards will get you responses, especially in a recession economy. The challenge is not getting responses, but filtering out the ones who aren’t going to be good candidates.
Resume
First of all, request a resume. You want to look for prior sales experience and a proven track record. That means you want to see longevity in one organization and awards and recognitions for sales accomplishments.
It generally doesn’t have to be in the specific industry that you are in. A good independent sales rep will generally be a good sales rep in any industry.
Don’t waste your time with resumes that don’t have sales or customer service experience. And look for sales success in industries that are difficult to sell.
Interview
Once you have a set of resumes that look promising, contact them to schedule an interview. During the interview, first tell them about you and your company before you start asking them questions.
A good independent sales rep will have a lot of questions for you, and they are looking to interview you as much as you are wanting to interview them. Show them why they would want to work for you and explain to them in detail how the sales model and sales process works.
Then ask them what kind of sales experience they have and look for well-spoken, intelligent individuals. See if they start selling you and them. It’s important that a potential independent sales rep starts at least selling himself from the get go.
Also look for your own comfort level. Listen to your intuition. Since you generally won’t ever meet them face to face to get to know them, trust is a huge issue. If you don’t feel comfortable for whatever reason, you should cross him off your list.
Exception about Sales Experience
I generally have one exception about an independent sales rep having previous sales experience. If they hound you, continue to email you, try to call you time and again, each time having a different reason why you should talk to him, then you might have a good potential sales rep.
The main reason you want to see prior experience is to know that the independent sales rep candidate is going to have the persistence and the drive that sales requires. If they are constantly trying to get in touch with you, I believe they’ve demonstrated that they have what it takes.
Contracting Independent Sales Reps
If you decide to hire an independent sales rep candidate on, you should have them fill out at least 3 forms. These are forms you can find on the Internet or you can write it yourself. I recommend downloading a few sample forms and cutting, pasting and editing according to your own needs.
1099 Form for Independent Contractors
1099 is just a form saying that you pay them a gross amount and that they are responsible for paying the income taxes on whatever you pay them. Again, this is another benefit to having independent sales reps working for you. You don’t have to incur the payroll costs and time.
Independent Sales Rep Contractor Agreement
This is a business contract that details out the agreement between the company and the independent sales rep. It should include comments about which party is liable for what as well as the requirements agreed upon by each party.
The independent sales rep contractor agreement should also have the commission structure, frequency of payment, and method of payment. It should also include procedures for terminating the contract.
Make sure to include that you aren’t responsible for any costs they incur for this contract job. Make it clear that you won’t pay for any phone bills, Internet bills, or other equipment. Also include a requirement to honestly represent themselves and the company.
You can find a lot of sample independent sales rep contractor agreements online, but make sure they have these elements in there.
Both parties need to sign this agreement and both parties should have a copy on file. You can email these forms and have them fax them back to you with their signatures on them. Then you can fax it back with you signature on them as well. Or you can email them a pre-signed form of the agreements.
Non-disclosure Agreement
Depending on what you are selling and what industry you are in, you may also want to have a Non-disclosure Agreement. This will protect you if you have trade secrets, whether it’s the product itself, the business model or the sales model. You don’t want an independent sales rep to go to a competitor and tell them how you operate. In addition, this protects you in case your competitor decides to send moles your way.
Training and Support
This will entirely depend on you and the independent sales rep. But note, the better the training and support, the more retention and sales you will have. If you have a good independent sales rep working for you, this will be an investment that will be well worth it.
You want to model the sales process with them. You should go over with them each step in the sales process. A good independent sales rep will have a good grasp of the sales process, but each company and each industry has it’s own varieties.
You also want to give them ongoing coaching and advice. There are many situations and objections that you have faced in the past as you were doing the sales. You don’t want your independent sales rep to have to learn the hard way like you did.
I’ve had a few independent sales rep clients who didn’t do this for me. I would get an objection or come up against a situation only to find out that the sales director that was managing me had already gone through it before with another prospect but neglected to tell me.
This, of course, frustrated me, but eventually led me to believe this sales manager wasn’t really didn’t want to help me for whatever reason and I eventually quit.
Sales Management System
You will also need to establish a sales management system to track your independent sales reps pipeline and sales territory. You will also need a sales system in place to keep the independent sales reps from overlapping.
If you can afford it, an online sales management pipeline program like Salesforce would be of benefit. This way, both you and the independent sales reps can have access to the pipeline and track it together.
Working with independent sales reps are a great way to sell your product with little costs and relatively little time investment. But they are very different than recruiting, hiring and managing a traditional sales rep that comes to your office everyday, who you get to see and talk to face to face.
There are unique challenges to working with independent sales reps as well as great rewards if you are able to find the right ones and if you are able to manage them well.
