Why do sales agent programs fail?
The success of your sales agent channel will be determined by many different components. This includes the recruiting process, training programs, program management and your support structure, to name a few.
Why Sales Agent Programs Fail
Based on our research and years of involvement on both sides of the agent channel business, we have found that sales agent channels usually fail because of one or more of the following reasons.
- Lack of planning and support from the company
- Lack of commitment from the agents
- Poor communication between the company and the agents
- Conflict between your direct sales people and the independent agents
Failure Reason 1 – Lack of Planning and Support from The Company
It’s a typical problem: companies looking for sales agents do not plan much beyond the recruiting process. If potential agents do not see a clear plan of action from you then they are going to be lukewarm or not interested at all in the opportunity.
On the other hand, if you have a clearly defined structure then they will be able to see the benefits of representing your product and will be more likely to engage in the process.
Framework For Finding Independent Sales Agents (With Template)
Agents Look For Structure
In my interview with Craig Lindsay, President of Pacesetter Sales Associates, he stressed the need for this plan very clearly. He has 16 questions he uses to determine whether his agency is going to proceed with new product or manufacturer. He then rates the answers on a scale of 1 to 10. If the company does not get a good grade they will decline the opportunity.
I have seen it frequently over the years. A failure to plan for and support a new sales channel often is the cause of the new program falling apart right from the start. The company often believes they are ready to work with an independent sales agent partner only to discover they do not have the sales processes and tools they will need to run the program.
If you don’t have marketing material, training material, price books, catalogues and a comprehensive step-by-step selling process ready to go, the agent will quickly abandon your product line. They will simply move on to other suppliers or go back to tried and true products.
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Failure Reason 2 – Lack of Commitment from The Agents
Sometimes a lack of focus or commitment on the part of the sales agent is the reason for the programs failure. Many agents believe more is better and take on too many products and try to cover too much territory. This leads to cherry picking the accounts and only selling products that pay the best commission. This in turn results in the agent failing to service other accounts properly. It comes back to the 80-20 rule. 80% of your sales revenue will come from just 20% of your products and customers. You need to work with agents who can focus.
Also, watch out for part-time sales agents. They may try and convince you they have the time, expertise and contacts in your industry. In reality though, they are not working their business consistently. They may have other businesses operating or be retired and looking to keep selling as a way of paying for vacations, toys or to supplement their income. Remember, you are looking to build your business and improve your market and territory penetration. Therefore, you can’t afford to team up with people who are not ready to attack the challenge full time.
Failure Reason 3 – Lack of Communication Between The Company and The Agents
Another common problem occurs when manufacturers appoint a sales agent and provide them with limited resources and expect them to sell and communicate back to the manufacturer on a periodic basis. This is a mistake. Never assume the agent will communicate with you unless they have a problem or have made a sale. As the company sales manager you are responsible for the performance of a sales agent network. Part of that responsibility is to set up frequent communications with them. Your communication plan should include regular emails, phone calls, webinars and product training.
You may have the greatest ideas and plans in the world but if you don’t communicate them to your channel partners they may feel abandoned. Remember the old saying: “If you don’t take care of your customers your competitors will.”
Perceived Indifferent Creates Your Own Competition
The number one reason cited for leaving a current business partner and moving to a new supplier is ‘perceived indifference.’ If you are not actively engaging your sales agents then you are leaving them open to defect to your competition or abandon your products completely.
When this happens you have lost more than your sales partner. You have actually created a new competitor. And your new competitore has precise knowledge of your pricing structure, your marketing plans, your product features and benefits, and possibly damaging competitive information. Yes, you can attempt to prevent this from happening with a non-disclosure and non-compete agreements. In reality though, they are not always effective tools for protecting your information and trade secrets.
Failure Reason 4 – Conflict Between Direct Salespeople and Independent Agents
Another reason why sales agent programs fail is because of conflict that develops between your existing sales channels and your new one. This most often occurs when your sales agents and your direct sales force become rivals in the same sales territory, accounts or vertical markets. When this happens the agent will most likely abandon the relationship.
This is a business partnership with both parties looking for a win-win relationship. Don’t try to squeeze every possible dollar out of a territory by having your own channels competing amongst each other. You may end up losing the agents commitment. Competition is healthy but too much internal competition will work against you.
How to Ensure Your Sales Agent Program Doesn’t Fail
If you would like more detailed information about establishing and managing your own channel of sales agents then order a copy of: How To Find, Recruit & Manage Independent Sales Agents
The ebook is a comprehensive guide on how to select, manage and motivate sales agents. It provides proven exercises, forms, and templates to equip interested sales managers with the necessary tools to run their own successful sales agent program.
To Your Success!
Download Robert’s sales agent management recruiting webinar video, How to Find & Recruit Commission Only Sales Agents in 30 Days. It’s available for instant download and viewing. Watch it as often as you like, whenever you find it convenient. You can even pause it anywhere to learn at your pace!
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