Why Sales Agents are an effective method to enter foreign markets
Following our previous post introducing sales agents as our first article in our blog, let us now look into how sales agents are able to help your company sell in your target market. Their main benefits are the following:
Sales agents significantly reduce and simplify your cost structure when entering or increasing your presence in foreign markets:
– No hiring costs: sales agents are not “hired” as such and no hidden labor costs are to be dealt with. It all goes in their commission! There is a very flexible limitation as to how many agents you can have in one single market allowing your company to have a sales agent network as dense as you require.
– Fixed sale costs: agent commissions should be considered fixed selling costs. It’s as simple as adding them to your prices. How to calculate this commission and how to add it to your prices will be explained shortly in another post.
– Low agent management costs: once the collaboration between the agent and your company is solid it usually doesn´t require more than a weekly phone call and a few emails. In any case, it depends on how much support and/or control both the agent and your company agree on, so each case should be studied individually.
And what about employing a salaried commercial in your target market? Your initial costs even before your employee has set foot in a customer’s door are considerable and not completely known upfront. And it would still be necessary to demonstrate that those sales are profitable.
If he/she is not effective or your sales process, your company will take time to know, but meanwhile you will have to continue paying his/her salary and all other costs involved. Are you willing to take on the risk?
Bear in mind that the list of advantages that your company will obtain by collaborating with self-employed, commission-only sales agents is large:
– Simple collaboration formula
– Low cost
– Low risk
– No wages
– No bonuses for annual objectives
– No car, telephone or office expenses
– No mobile phone charges
– No accommodation or holiday expenses
– No sick leave to worry about
– No National Insurance
– Reduced management
– Minimum training
– No hiring costs
– Agents provide their own client portfolio
– You will know and meet your buyers (the agent´s clients)
– The agent will usually have experience and knowledge of customers, competitors and sectors
– You will set your prices, communication and promotions with a clear view of your target market
EXTENSION OF YOUR CUSTOMER BASE
Sales agents choose to work in a sector which they know and they have previously worked in. They usually have been visiting those clients for some time and they place orders with them. Even if an agent doesn´t sell to a specific company, he will often know about the company and even who is the person in charge or a valid interlocutor as well as the products/services that could be offered to them.
This is a huge advantage for your company, especially a foreign company like yours. Sales agents will provide your company with a new database of potential clients immediately as they are already sharing it with their previous Principals.
In conclusion sales agents offer important assets to their Principals:
– Knowledge of the market (area where they carry out their activity)
– A database of existing clients
– Credibility with your customers, which will generate value for your company´s offer
Let us insist on this aspect. It is a fact that “people buy from people”, and it is very hard to mention an exception to this rule.
This means that most buyers, on equal terms, will always buy the sellers they know, like and respect. Sales agents are well aware and they know this much better than most salespeople.
That is the reason why they aim to be a respected and valued supplier to their clients and those other companies which are not clients yet but know about their professionalism.
By collaborating with sales agents your company will gain greater credibility, even more so if yours is an unknown, just-arrived foreign brand with no references to show for. And in the meantime, you will not have to pay salaries to employees while you find out who the buyers are.
SUPPORT FOR COMPANIES WITH LITTLE COMMERCIAL EXPERIENCE
Sometimes there are companies that could be described as commercially “crippled”. This means that they may be very good at producing a product or supplying a service, but they are not very proficient at selling it.
These companies do not have much commercial experience and even do not have a proper international department for this purpose: long tradition in their home market, an effective word of mouth or simply a demand that exceeds the offer make these situations not extraordinary. They simply hadn´t had the need. Some of these companies may have a very competitive product or service, but may not be able to identify, recruit and manage a commercial team.
Sales agents can in those cases provide an enormous added value:
– Sales skills and experience
– Advice on the best way to present your offer to the market
As you can see for yourself no other method is fastest and more cost-efficient than sales agents to introduce or launch a new product/service to your target market. Undoubtedly sales agents are a strategy to evaluate especially when you aim at saturated markets where personal relationships with potential customers are the key to success.