Advantages & Disadvantages of Marketing & Sales Intermediaries

by Anam Ahmed ; Updated October 26, 2018
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Many small businesses, entrepreneurial ventures and large multinational organizations use marketing and sales intermediaries to help them fill in the gaps on their teams. Depending on your business, using a middleman may help your business to make more sales, develop close relationships with new customers and expand your reach. However, it’s important to be cautious about your engagement with an intermediary, so you don’t run into any disadvantages of this kind of organizational structure. In any case, it’s important to research the possible opportunities and pitfalls you’ll encounter while using a marketing and sales intermediary.

When to Use Marketing and Sales Intermediaries

Whether to use an intermediary or work directly with your in-house staff will depend on your business and the resources you have available. Some businesses don’t have a marketing or sales team, so outsourcing those roles can help them to complete tasks they would not have otherwise been able to do. Other organizations have marketing and sales departments, but use intermediaries during times of growth or when requiring a specific skill or expertise they don’t currently have available in-house. Using an intermediary can help organizations reach new geographic regions, access new spheres of knowledge and attract new customers from other markets.

However, certain activities should generally be kept in-house. For example, if your organization has some low-cost activities that anyone in the business can perform without much supervision, it may make sense to do those kinds of tasks yourself. Many businesses also choose to keep their core competencies, aspects of the business that are critical to their success, in-house. This enables them to have more control over the key elements of their business and invest in the areas that really matter.

Industry and Geographic Expertise

One of the biggest advantages of using intermediaries is that your organization instantly gets industry, market and geographic expertise. Marketing agencies, which are what many companies outsource their marketing strategies and campaigns to, are well-versed in their field and have likely worked with numerous clients who have achieved their business goals. As a result, the hiring company gets to tap into their knowledge and experience without any learning curve on their end.

Similarly, sales distributors usually have geographic and industry expertise. Reps work a specific geographic territory and know where the key customers are and how to approach them. They may already have solid relationships with those customers, making the sale much easier.

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Cost and Time Savings

Hiring a marketing or sales employee within an organization takes time. The business needs to review several candidate applications, interview prospective employees and onboard their pick, all of which can take several months. After going through the hiring process, the company may experience employee turnover which can lead to another round of hiring, wasting time and resources in the process.

Businesses can save a considerable amount of payroll expenses by outsourcing their marketing and sales activities, which is one of the biggest advantages of middlemen. As per the U.S. Bureau of Labor Statistics, an employee’s salary accounts for around 70 percent of the total wage package. The other 30 percent is allocated to taxes and benefits. As a result of using intermediaries, organizations can save that 30 percent.

Using an intermediary allows businesses to only pay for the services they need. For example, if a business needs two marketing campaigns one month and six the next, they only have to pay for those specific services. If they had a full-time marketing employee, the company would have to pay them the same amount regardless of their activities in each month.

Customer Convenience and Relationships

Another advantage of using marketing and sales intermediaries is that it is often easier and better for customers. Sales representatives that work for intermediaries may have already built up relationships with the key customers in their territories. If your business is new in the industry, it takes a lot of time to build that kind of trust the intermediaries already have.

It is also often easier and more convenient for customers if you work through a middleman. Channel distribution allows customers to purchase many different products from one sales representative or outlet, which saves them time, energy and money.

From a marketing perspective, using an intermediary may prove to be fruitful for a business because marketing agencies often have ongoing relationships with public relations and media agencies. This makes it easier to attain coverage for your business. Marketing agencies also have several contacts in the industry they can leverage to bring attention to your brand.

Reputation Risks of a Middleman

One of the biggest disadvantages of using a middleman is that you put the reputation of your company into someone else’s hands. While businesses work in good faith, you don’t always know how the outsourced company will behave and whether it will be in line with your company’s core values.

The intermediary may provide poor customer service in your name, which can result in customers no longer wanting to purchase from your business. They may not meet their agreed-upon timelines and delay orders and schedules. Similarly, they may go above budget and cause issues for your organization and the customers involved.

As a result, it’s important to carefully vet the intermediaries that businesses work with. This includes looking at their past performance, talking to other organizations that have used their services and even talking to customers who have relationships with them. Before hiring an intermediary, it’s important to outline the ideal criteria you want in a business partner.

Lack of Attention

It’s no secret that middlemen often work with several organizations at one time. Sales distributors and marketing agencies have several clients. While this can be an advantage in some ways, it can also cause a business to suffer if they receive a lack of attention.

A marketing agency that is working with several other clients may not respond to emails and phone calls about your brand instantly if they are busy working on another project. If they have looming deadlines for another business, they may drop what they are doing for your organization so they can work on their other tasks. This may cause missed deadlines and other scheduling issues. Sales distributors may place a priority on another client if they are receiving a larger commission from them, causing the representatives to divert their focus elsewhere.

Loss of Communication Control

Organizations spend lots of time and effort creating their brand message, identifying elements that make their products and services unique and developing talking points for their employees. However, when working with a marketing and sales intermediary, some of that information can get lost. In-house employees are often very close to the message, having had a part in creating it and learning it. On the other hand, outsourced workers may not know the core messages of the business as well. This may cause them to miscommunicate important elements of the message to consumers, which can then lead to lost sales opportunities and customer confusion.

Another way businesses can lose communication control when working with marketing and sales intermediaries is by not being available to contact them at all times. When employees work directly with a business in the office, they are always reachable for questions, action items or brainstorming sessions. However, when working with intermediaries, it may be hard to contact them throughout the day if they are working with their other clients or are on the road to another office.

About the Author

Anam Ahmed is a Toronto-based writer and editor with over a decade of experience helping small businesses and entrepreneurs reach new heights. She has experience ghostwriting and editing business books, especially those in the "For Dummies" series, in addition to writing and editing web content for the brand. Anam works as a marketing strategist and copywriter, collaborating with everyone from Fortune 500 companies to start-ups, lifestyle bloggers to professional athletes. As a small business owner herself, she is well-versed in what it takes to run and market a small business. Anam earned an M.A. from the University of Toronto and a B.A.H. from Queen's University. Learn more at www.anamahmed.ca.

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