Sales Management Information

By David Regler

Outsourcing part of all of the sales process is nothing new. Resellers, sales agents and distributors are established methods of sales force outsourcing.

However, with the rise of Business Process Outsourcing (BPO), a number of dedicated “Sales Force Outsourcing” vendors have become a strategic alternative to sales agents and indirect channels.

This article examines two models for outsourcing a sales force, Sales Agents and Distributors/Resellers and compares them with the BPO solution of Sales Force Outsourcing.

Sale Agents

Sales agents are self-employed individuals who sell products on behalf of your company on a “commission only” basis. Commonly selling into retail or manufacturing, sales agents typically have established contacts and carry multiple products; they’re the classic travelling “rep”.

Whilst a commission only sales force outsourcing option seems an ideal solution, it does have limitations.

Sales agents specialise in servicing a defined market, either geographical or industry sector. They are typically only interested in products that will be of interest to their existing contacts.

So, if your product does not fit into an existing market currently serviced by sales agents, then sales force outsourcing through agents is not the best strategy.

Also, to gain UK national coverage you may need to hire around 8 to 12 independent sales agents which would need dedicated management resources to get the best out of your outsourced sales force.

Distributors & Resellers

Another solution for sales force outsourcing is an indirect channel network. Distributors and resellers vary in one important aspect from independent sales agents: they own the customer (which is why they are called an indirect sales channel).

So, whilst a sales agent sells on behalf of your company, distributors and resellers buy your products and sell them on. You therefore lose control over the end customer and the ability to sell additional products and services directly.

As with sales agents, both distributors and resellers focus on their own sector niche. You should research your market to identify the best indirect partners for outsourcing your sales force.

Sales Force Outsourcing Vendors

Until recently, there were little sales force outsourcing alternatives to sales agents and resellers other than building a direct sales force in-house. This option requires substantial capital and expertise; the cost of hiring, training and managing a direct sales force can be eye watering.

So, if a direct sales force is so expensive, why would anyone have one? The reason is control.

As sales agents and resellers are selling your products on a commission or margin basis there is little control over what they do and how they do it. With in-house sales people, paid a base salary and bonus/commission, a company has direct control over its markets, customers, pricing, etc.

This can be a critical factor in very competitive or emerging markets.

However, with the growth of the BPO sector, sales force outsourcing is emerging as an alternative to building in-house sales teams.

Because you contract sales force outsourcing vendors to deliver part or all of the sales process you can control sales activity, markets targeted, pricing etc in the same way as an employed sales force.

Sales outsourcing vendors operate as a service provider making them an ideal partner for companies with limited in-house sales expertise. Remuneration can be a combination of fees and/or commissions. For established products with defined sales processes, the focus can be towards commission; with emerging markets and/or products with longer sales cycles more fee element is typical.

Also, sales outsourcing vendors operate as if they are part of your company, developing direct customer relationships, and only representing one client within each defined market or sector. This is better for companies with “big ticket” products and services requiring a “higher touch” consultancy sale.

In summary, compared with indirect channel partners and independent sales agents, sales force outsourcing vendors are now a strategic solution to building a direct sales operation without the capital costs and management overhead of recruiting and training in-house sales people.