Achieving a Better Bottom Line by Outsourcing Manufacturing Sales
One of the most important functions leaders across corporate America perform is increasing profits and building shareholder equity. And two of the most effective methods for reaching these goals is to increase sales and decrease company costs.
For manufacturers, outsourcing is a normal method for reducing costs and increasing sales, while allowing the ability to maintain focus on their core competencies. While it may be most common for companies to outsource security, technology, marketing or legal departments, outsourcing the sales function is equally effective to achieving those reduced costs and increased sales goals. Because manufacturer representatives handle so much more than direct sales calls, this process can be more complex than outsourcing some other services. But once understood and running smoothly, a representative will allow manufacturers to focus on their core business: manufacturing and perfecting their product.
Both large manufacturing firms and start-ups receive numerous benefits from outsourcing their field sales to independent manufacturer representative firms. It provides an opportunity to lower overhead and standardize sales costs by eliminating the many costs that a direct sales force generates. The “true cost” of a sales employee can be 2.5 times their salary when costs like admin support, auto commission, office space, benefits, holidays, technology and travel are taken into account.
A manufacturer can also gain greater sales results with fewer dollars by outsourcing. A manufacturer rep firm will build, train and maintain a sales force, while a factory provides reps with technical training, samples, literature and other support so they completely understand the product they are representing. Using a network of representatives with synergistic product lines allows manufacturers to explore new markets and opportunities, while remaining close to their current customers.
It can seem like an added expense to outsource the sales function. But by doing so, manufacturers see far more benefits such as lower overhead costs, a simple, standardized cost via commission rate, and eliminated fixed payroll and benefits costs. They also profit from a representative’s years of established relationships, all without the time and effort those relationships would have cost a direct sales force to achieve. Finally, manufacturers will often find they can vastly increase sales coverage by partnering with a firm.
Manufacturer representatives are sophisticated business professionals. Many independent sales agents have 15 or more years of successful corporate experience under their belts. Many have held positions in large corporations prior to becoming agents, or have close ties and intimate connections with retail team execs. They are technologically adept and are working everywhere. They will be working directly with Target buyers one day, planning with a manufacturer the next, and preparing reports that will benefit all parties on the third, all at their own expense.