Posted on: Monday, December 13, 2004
Outside sales force can expand business, pose risks
By Erika D. Smith
Knight Ridder News Service
AKRON, Ohio — When economic times get tough, sales departments circle the wagons.
Why should a sales representative stick his neck out to find a new client? It is much safer to milk an existing relationship than to build a new one, especially at a time when most companies are looking to cut spending, not add more.
The problem is, safe is not always profitable. Courting new clients can be just as important as keeping the current clients, even in this economy.
"Every company needs to have balance in taking care of existing (sales) accounts and finding new ones," said Donna Early, owner of Providence Personnel Consultants in Cuyahoga Falls, Ohio.
"There are two types of sales reps," the recruiter explained. "One is a person who likes to go out and land new accounts. There's greater risk in what they do, and they're going to want more money. The other is a person who likes building ties with clients. They'll want less money. The (business) owner needs to know what type of sales rep they need."
That is where Concept Services Ltd. comes in. The company in Wadsworth, Ohio, has a stable of eight sales reps who specialize in drumming up new business.
The reps pick up the slack of a busy sales department. They do cold calls. They send e-mails. They do research. They make appointments. And they pass along any solid leads to the company that hired them.
It is outsourcing with a twist.
"The concept is all companies have some need for new business development," said Greg Harsh, vice president of sales for Concept Services.
"When I call a new client and say, 'I'm Greg calling from Concept Services Ltd. and I represent a way to get you new business,' it's almost like saying, 'I'm Greg calling from Concept Services and I represent oxygen,' he said. "Everybody needs it."
Harsh and his brother, Dan, are equal partners in the company, which was founded almost three years ago. Since then, the siblings have amassed about 30 customers, from a small Web design company to a large utility.
Concept Services' niche is doing the things in-house sales reps do not have the time — or the inclination — to do. And the company does it without letting sales prospects know it is an outside firm. The tactic, they say, breeds trust and consistency.
"Most (of our) clients don't want their customers to know they're using an outside sales rep," Greg Harsh explained.
The truth is, many companies are not.
Regardless of Concept Services' success, relying on a third-party sales force is by no means the norm for service companies. Early said she has never heard of a setup quite like it, and she has been recruiting sales reps for two decades.
That does not mean the concept cannot save companies money and increase sales, though. "I certainly think it's feasible," Early said. "It's just a step over from the manufacturers' reps we've always had."
As the name suggests, manufacturers' reps are outside sales people who specialize in cutting-edge industries where it can take months to close a sale. These reps generally travel and make lots of face-to-face contact with clients.
"They're more prevalent among manufacturers of products than suppliers of services," said Jay Ownby, manager of strategic alliances for the Manufacturers' Agents National Association in Laguna Hills, Calif.
The trade group says there are about 25,000 manufacturing-oriented sales firms nationwide, each representing an average of 10 companies and employing six people. Service-oriented companies, such as Concept Services, tend to be that size, too.
The trick, Ownby said, is to pick an outsourcing company that has enough manpower to dedicate time and effort, but not so much your company's sales seem paltry compared to its other customers.
That is especially true for small businesses — a tiny, but growing, segment turning to outside sales firms. "Small and medium-sized companies just can't afford to have a full-sized sales force in the field," he said.
However, there are risks involved with outsourcing sales.
The biggest challenge, of course, is finding a company and a rep that will understand your industry, your business and your capabilities.
Ownby recommends hiring a rep that already has sales contacts in your company's field. Look for sales agents who are established and who can produce a list of recommendations.
More than that, companies should talk to third-party sales reps about what deadlines they can and cannot meet. The lines of communication should be open and used frequently. Otherwise, your company could end up canceling product shipments promised by an overzealous rep or paying a rep who is doing nothing at all.
Another drawback is you may deprive your in-house sales employees of experience. That is something to consider if you are eyeing someone for a promotion, Ownby said.
In the meantime, Early said companies can do a lot in-house to strengthen their sales departments. First, employers should raise the bar on the reps they already employ, including doing a better job at tracking their work. Retention also is an issue at a time when many companies are whacking staff and commission rates.
In the end, though, it comes down to understanding what your company needs.
"I do know that hiring the right sales people is one of the most difficult challenges for any employer," Early said. "If there's a way companies can pass that off ... "
