Sales questions.

Ken C.

Ken C.

Jack of all trades, master of none.
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My brother has a business that he started selling a product he invented and he is looking for a sales rep to sell one item from his product line to a specific market that he knows I have an interest in. It will require visiting with the potential customer and at times calling them. I have never done any sort of sales work except for what I do with my own product (website and word of mouth). My commision would be 10% of every sale I make. It is possible that I could make quite a bit of cash if I play my cards right. I have first hand knowledge and experience using his product but have never tried to "sell it" to others. I would be selling mostly to stores that that carry fishing accessories and big box sports stores.

Anyone have any advice for the first time sales newb?
 
I'm not a salesman (Ren is), but I know that -- depending on the industry, of course -- 10% is a low commission. I suspect that consumer fishing gear generally has a greater than 10% commission.

Keep in mind, also, that in consumer market, if the product isn't patented and it does sell well, the big names will knock it off within a year or two. If it is patented, the big brands will still knock it off within a year or two and then your brother has to do the whole patent infringment thing which is very expensive.
 
The product is patented and he has lawyers on had to handle any such infringement.

So should I be asking him for more of a percentage in commision or should I not even bother? Working for family has its perks but also its disadvantages.
 
I don't care to work for relatives. It is one thing to have to take abuse from a boss who you don't know, it is another to take abuse from a relative. It is also difficult to get a relative to listen to listen to criticism with out taking it personally. Unless there is a great deal of money involved and you definitely understand who is boss, don't so it.
 
I make 10%, Expenses, plus a moderate salary. Our outside sales guy who is commision only, makes 50% + Expenses. Our product sells for 25K - 75K of which the company makes 40%. How much does the product sell for? Is it a search and rescue electronic gadget? We have a firefighter customer that invented such a device, they make 15 Million a year now with only 6 people on staff.
 
Sales is basically a math game the more people you visit the greater the opportunity for a initial sale..and a relationship game once they trust you they will buy more from you.. It is very hard work. Very few people will buy from you the first time you walk into thier door with a new product. It has been my experience in sales and also training sales people that it takes about three years to develop a customer base and relationships with these customers before the money starts to become good.

Several question you need to ask your BIL

1. 10% of what? gross sale or profit on sale ...there is a big difference between the two..If you sell a thousand widgets for a dollar and your commission is 10 points..well you made a fast hundred bucks...if its on profit and you sell a thousand widgets for a dollar and the profit margin is only 10 percent...well you only made $10 which probably does not cover gas to drive to the customer

2. who pays expenses...does this come out of your 10 % if so I think the small ammount of profit you make will be eaten up in travel costs..

3. Who aborbs the loss...if the customer does not pay his bill, product is damaged in shipping or lost in transit...these things happen to me every year? one customer not paying a bill or going out of business could really screw up your commission if it your responsibility to absorb.

4. I would personally be reluctant to rep only one product. Because once you have saturated the territory, the product is no loger popular, the company cannot meet expectations, or competetion makes a cheaper or better model regarless of patent this will happen. where do your sales grow from there? every product has a life cycle..in 20 years of sales I have seen the hottest thing become the biggest dog more times than I could count.

5. Cold calling is a bitch. It is not easy and takes a skill to be able to do. If you cannot handle rejection or loads of frustration at being told no for weeks and months at a time...sales is not for you..

6. Chain accounts rarely want to talk to a sales rep..they want to talk to someone who can " pull the trigger" in other words guys who can change production runs, make specific packaging decisions, and above all quote smaller and sharper pricing...

7 Chain accounts are also very high risk and low margin. Everything is barcoded and often reorder and P.O. Structure needs to match your companies coputer system or guaranteed foul ups occur...Try having a bunch of product in a Home Depot where the bar code on the tag does not scan at the cash register...Home Depot is so huge they cannot change the SKU and so usually product is rejected and you do not get paid...is your comany ISO certified and able to meet these very specific criteria?? Its harder to do than you think..

8. would you be considered a independant contractor or an employee. there are various and complicated tax hassles with being a independant contractor..Its not as simple as just selling a few widgiets for my BIL..it could be a tax nightmare...and you could get screwed big time...

9. Selling an identical product to box stores and independant retailers rarely work. Independant fishing stores are going to hate Gander Mountians etc of the world..if they see your product in the box store for sale your done with those guys... you cannot service them both...

10. also working for family...huge red flag there...there is bound to be issues...

11. having a interest in something and having used it...and selling it are two different things entirley..you are talking to a buyer usually who could give a rats ass about how the lure works..or how many fish it could catch..blah blah blah...they want to know..square foot of retail space. Return on investment, Profit margin on sale..shrinkage cost..can you speak that language??

these are just a few things to consider...
 
The other things I'm concerned about -- and Ren can comment on this greatly -- is that

A) Chain retail stores have no buying authority locally. You're going to have to approach this as a national account which is a whole different level.

B) Local retail stores may be hesitant to engage with an upstart in the market who is competing with their established lines, lines that have a proven track record of profitable sales for them.
 
Gollnick said:
The other things I'm concerned about -- and Ren can comment on this greatly -- is that

A) Chain retail stores have no buying authority locally. You're going to have to approach this as a national account which is a whole different level.

B) Local retail stores may be hesitant to engage with an upstart in the market who is competing with their established lines, lines that have a proven track record of profitable sales for them.
Click to expand...


Good points Chuck let me address..

A. Chain stores usually purchase at corporate headquarters. This means Wal-Mart will be at Bentonville AR. also rarely can you just book an appointment and go visit the buyer. Most of these companies have a weekend or three day long event for each product line, you must attend with your competetition. First day is usually a bunch of company information ( walmarts ended with us doing the walmart cheer..GIVE ME A W...I just could not do that) then you prepare your quote and make your 20 minute presentation. There is no guarantees of anything..So your sales schedule is dictated by the chain corporate structure. This is not always true but in many cases it is..Chain stores have found out that this is a very effecient way for the buyer to purchase his lines without visiting with 30 reps in a six month period.
It is also very intimidating..standing around in a suit with your competetion waiting for your 20 minutes with a buyer...

B. Local retailers will probably be willing to give a upstart a try but it will be sold alonside thier competing lines. If it does not sell as well initially you are probably out the door. Retailers are lazy so if you sell only a small ammount of lures for example they will just price it and put it on the shelf and expect it to sell. I found out quickly in the sales game unless you sold them a thousand of something...so when they recieved it they almost panic and say to themselves.." Holy Cow I gotta get these sold" and actually spend effort on merchandising, advertising and selling it themselves..rarely do trials in stores work. a catch 22 IMHO..
 
just make sure to get any deal between the two of you in writing. i wish i had in some deals that went bad.
 
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