Companies often choose to utilize intermediaries -- outside sales reps or distributors -- rather than employing in-house staff to perform the marketing and sales function. Either approach can work well, depending on the financial resources the company has, its goals for expansion and its ability to find intermediaries that are capable and dedicated.
Advantage -- Geographic Coverage
For a company that seeks to expand its marketing program across the United States, it can be extremely costly to set up regional sales offices. Besides the cost of office space, sales staff must be hired, trained and compensated. Another consideration is the time it takes to set up sales offices. Sales reps are already in place and can begin to work on the company’s behalf immediately. The rep or distributor is responsible for hiring and compensating its employees.
Advantage -- Market Knowledge
Companies look to hire sales reps with extensive knowledge of the local market and customer needs. This knowledge is a valuable resource for the company to use in designing its overall marketing program including advertising and public relations. The rep knows what sales strategies work best. It takes time -- and may involve making strategic mistakes -- for the company’s own sales staff to acquire this knowledge. Companies entering international markets for the first time can particularly benefit from utilizing distributors that understand the people, business customs and culture of that country.
Advantage -- Customer Relationships
A start-up company often faces the hurdle of not being known by its target customers, who may be reluctant to do business with a new company in the industry that does not have a performance track record. Sales reps and distributors cultivate these relationships and can influence customers to give the new company a try, or at the very least increase the chances that the company’s products will be given serious consideration.
Advantage -- Cross Selling
Sales reps often present more than one client’s products to a prospective customer at one time. They may be calling on the customer primarily to present one company’s products and find that the customer is interested in a second company’s product instead. Even if the customer elects not to make a purchase at this time, the company’s brand name and product offering have been introduced for a possible future sale.
Disadvantage -- Image and Message
The complete term for sales rep is sales representative -- he is the face of the company to the customers he calls upon. A company must rely on the rep presenting a professional image. The company also has to rely on the rep fully preparing for the meeting, being well versed in the features and advantages of the company’s products. The company hopes that the rep delivers a powerful, persuasive sales message. But sales reps are not always as enthusiastic about a company’s products as the company’s own marketing personnel would be.
Disadvantage -- Lack of Focus
Because sales reps and distributors typically market a number of different companies’ products at once, it can be difficult for an individual client to determine how much effort the rep is putting forth on its behalf. In-house sales staff are totally focused on the company’s marketing efforts -- because if sales are disappointing, they may not keep their jobs. Outside reps have income streams from more than one source, more than one client. A company’s VP of Marketing cannot directly supervise the rep or distributor as she would her own sales staff.