By Carolyn Edlund

Are you considering using a salesperson to represent your designs and product line to the marketplace?  Hiring reps can be a great way to increase sales, as they usually have an established book of business, strong relationships with buyers, and the experience to show your line in the best possible light.

As a small company, you will work with “multi-line” reps, either as independents or working within a rep group. If a rep group accepts your line, you will get representation in a number of sales territories. The group manager will work with you on those parameters. Make sure the reps you want to work with have a group of complimentary product lines which will help them to “cross-sell” your work when they call on retailers.

Courtesy Sandra Davis

A written agreement is very important, and will define the territory, policies involving samples, exclusivity, commissions, returns, and other factors. Providing your reps with samples, sales materials and excellent customer service is essential. Samples are often free to reps, however that will depend on your line. You should reasonably expect to receive samples back from reps if your relationship ends, unless they are lower-end products such as paper and greeting card lines which may get wear and tear or not be worth shipping back.

Reps normally work on “straight commission”, which is often 20% of the wholesale price of the orders. This will vary with the industry you are in, but it is very important that you know what the standard commissions are from your competitors. If you offer lower commissions, you risk getting inferior representation, or none at all.

Commissions can be payable either at the time that the order is shipped to the customer (“pay on ship”), or at the time the invoice is paid by the customer (“pay on pay”), and an agreement as to these terms should be agreed to and in writing at the time of hiring the rep.  Commissions normally are paid monthly. A commission statement including customer name, date shipped, amount of invoice (less shipping), and amount due is essential. Good reps keep their own records and know what commissions are due. It’s your job to be accurate and organized as well.

One of the best ways to lose a rep is to be late on paying their commissions. Reps have many out-of-pocket expenses, such as travel and office costs which can add up to be quite expensive. Because they usually make a living strictly on commissions, they will work hard for those companies who are fair and prompt with them. If a company runs late or underpays a rep, they will assuredly see orders drop as the rep has little incentive to show product when the manufacturer doesn’t seem trustworthy.

If you hire a rep to work in a territory, be very clear about any “house” accounts that you may have. For example, if you have a long-standing wholesale relationship with a museum gift shop, you can keep that house account for yourself and the rep should respect that. A list of house accounts should be given up front when the rep is hired. Any account which is opened (or dead account which is reactivated) by a rep should belong to them, and all commissions, whether submitted by the rep or called in by the customer, would be payable to the rep.

Sales reps know their accounts, and have a good feel for which ones should be given terms and which should prepay for orders. You have the right to set your own payment terms, but reps should be consulted for their knowledge about their customer’s behavior.

They can also give you great input about what customers want and what buyers are asking for. You must have new product releases – at least twice a year. Brochures, catalogs and samples are absolutely necessary to get orders on your product line. Some companies have abandoned paper catalogs, but many buyers do not like to use cd catalogs. Color sell sheets are great for introducing a new collection to add to your line.

Keeping clear lines of communication with your sales force is the best way to avoid problems and misunderstandings.  There are both very good sales reps out there and very bad ones as well. It can take some time to find the right people to represent your work. Good outside sales representation can take your business to the next level and help expose your products to new markets you would never reach otherwise.

Happy selling!

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