We all know that times are changing. The number of sports industry doors is declining. The High Street is becoming ever more challenging and the way we undertake commerce is shifting online.
Brands are attempting to come to terms with these changes - reassessing their go-to-market strategies, reviewing costs associated with generating sales, driving new business and looking for new opportunities.
One of the areas under the microscope for many brands is their sales force strategy.
With fewer doors to call on the economics of keeping reps on the road are being challenged with many concluding that fewer sales reps covering bigger territories is the answer.
Roll back ten years and most suppliers would cover the UK with five sales reps. Asses the rep coverage today and you will probably find two or even one covering the whole of the UK. And what about sales agents?
More brands & bigger territories
Many agents are now faced with the choice of either expanding their areas or to take on new brands.
Both have challenges;
Expanding a sales territory leads to much higher costs, as travel (and perhaps accommodation) come into play.
Driving further between calls to write more business does not necessarily make sense if the sales commission does not cover these costs.
Many agents have covered a particular territory for a long time (some perhaps initially as reps before they went independent) and thus the ability to leverage relationships is lessened if they begin to call on retailers who they do not know.
It takes time to build trust and to manage a new territory with new customers may prove to be a challenge.
Of course, whilst the agent may want to push territory boundaries to increase their customer base and potential earnings the brand may have an alternative view.
This is particularly true if the process would require removing another agent to consolidate the patch as this is likely to involve a compensatory payout.
The result is that many agents are faced with the second choice of taking on more brands in an attempt to increase earnings from the same number of calls.
In theory this sounds like a sensible strategy, however there are many points to consider before embarking on this route.
First and foremost the more brands that an agent carries means more products to carry and thus longer sales calls. This may be counter to the demands of the retailer who, arguably, wants shorter sales calls and more time to drive the business.
Alternatively, it may mean more frequent visits to the customer base to get through the product presentations adding more travel costs and negating the strategy of increasing sales for the same number of calls.
Secondly more brands and products may lead to range cherry picking by the agent and hence a dilution of brand range and message -something that clearly does not sit well with brands.
Advantages and disadvantages
From a supplier point of view there are advantages and disadvantages of the whole sales agent model such as lower costs, no hidden costs, pay for performance and immediate access to the market, however there are certainly some disadvantages as well.
Although they will be selling your products, a sales agent is independent, and you cannot control them in the same way you can one of your own employees. Their sales process will be their own, as will their style and their manner, and they are unlikely to sell according to the methods in which you train your in-house sales representatives, even if you offer them training.
Since the agent is working independently they may not buy into your company / brand strategy in the long run as they continue to maximise short term opportunities to maintain their revenue.
As more and more brands push their product ranges into new areas agents are finding more and more that their product ranges may be in conflict. In the short term this can simply cause market confusion. In the long term it may result in the brand terminating the agency agreement and thus having to find an alternative solution.
Finally, some would argue that an agent cannot represent the supplier at key account level as many of the decisions taken have much broader business implications where a senior staff member needs to be involved.
Certainly there are decisions to be made on both sides of the fence and these are becoming increasingly more difficult.
From a supplier perspective taking on fewer reps, covering larger areas, brings control and focus, however it may not bring increased profits if the costs versus sales are too high to do this.
From an agents point of view taking on more brands may increase earnings but, on the other hand, may lead to less focus, more confusion in the retailers eyes and increased brand pressure to concentrate on their particular offer.
Perhaps the most sensible approach is to embrace the market changes and work with your existing team to find the most appropriate solution for each territory.
This may, ultimately, lead to a mixed rep/agent strategy, or a full sales or agent strategy but either way one should consider not only the current situation within the industry but, perhaps more importantly, how things will look in the next 3-5 years.