DON’T LET SALES REPS HOLD YOUR BUSINESS BACK

An average sales rep is expensive for a wholesaler of goods to businesses like ours. This is not to say they are all expensive in a bad way. But they do cost money and this is reflect in the cost of goods to your business.

There is the salary, around $60,000 a year including on-costs, a car or vehicle allowance of $200 to $300 a week, additional travel costs of $150 to $200 a week and commission, if part of the package, or somewhere between $10,000 and $30,000 depending on the products sold.

For the purpose of this discussion, let’s price a rep at costing a business $100,000.00 a year.

If a wholesaler has a GP of, say, 50%, the rep needs to sell $200,000 worth of product a year to cover their labour cost. However, it is not that simple as many wholesaler businesses have a GP after fixed costs such as warehousing, marketing and admin of 50% of GP (often more) leaving a more accurate GP of 25%, meaning a rep needs sales of $400,000 a year to cover their costs.

Think about this. A full time rep will have around 200 customer facing days a year after allowing for annual leave, sick leave, public holidays, training days, travel time and other time overheads. The $400,000 a year they need to make represents $2,000 in orders a day. While that may not sound like much, it is considerable.

But covering their costs is not enough in today’s situation. A rep covering their costs is of dubious value to their employer.

Our point here is: reps are a cost to your business. If you buy from a supplier that does not have the rep overhead, there ought to be more money on the table for you and the supplier.

This is part of the problem with buying from reps. They are under pressure to increase the return they achieve for their employers. This means they have to sell more each day. It means they need to spend less time driving to retailers and more time close to calls they have to make.

• Reps will place more product into stores near you to improve the return they need to achieve.
• Reps have their preferences that can skew what they pitch to you.
• They are under pressure to sell more in a call. This can see them take their eye off the ball on what is best for you and focus on what is best for them.
• Rep visits are manual. They take time. You might have a new product presented to you that they first started presenting two months ago. A supplier being smart online could pitch product faster, so you are with or even ahead of the pack.

Whether we like it or not, we are no longer in a face-to-face world. Unless you adapt to the new paradigm you will have higher costs of business and a speed restriction – factors that will make you less competitive.

We are not saying stop dealing with reps. Rather, we are foreshadowing that more suppliers will reduce customer facing time. We encourage you to not be stressed about this – as long as these suppliers put in place good opportunities for more efficient engagement that benefits your business rather than hinders it.

Have a thoughtful and honest look at your rep relationships and consider what your business needs for it to grow in the product categories covered by existing rep relationship.

We get that for many of you reps are friends. The needs of your business must come first.