Know-How Exchange : Strategy

I own an independent manufacturer's rep agency.

Territories are almost all defined geographically. It is a nightmare to have reps rushing to the table saying "me first". It dilutes their focus from what you want them to do-- sell to filling out some paperwork. if the aggressive rep who really is responsible for the sale loses because they didn't rush to the table claiming MINE-- you will lose that person. Don't go there.

Make an easy well defined system-- managing good reps is like herding cats.

Some franchises limit territories to marketing vs sales. This can work. You can sell anywhere, but you only market in a geographic location. Say, you have a client who loves you and gives you a referral out of territory. You can go out and sell it. There is really little problem with two franchisees competing in this manner. As a franchise, I am sure your reps are paying a royalty earmarked for advertising. Those dollars are limited to spent in the territory.

In a rep agency (as I mentioned I own), I am paid on any sale that happens in my territory. However, if the spec comes from another-- we split. This varies. The area doing the most work gets the majority of the commission (75%). I get 25% just for the geography (ship in credit), and if local support is needed. There are situations where 3 people are involved, and its split again.

Sometimes we argue, management has the right to change the split based on who is doing all the work and who influenced the sale

This is a generic answer-- if you give me more info, I can fine tune my response.

hope that helps, Carol
Sell Well and Prosper tm

Stacey, lots of good perspectives here. In the end, you want a solution that (a) encourages a sales rep to sell a multi-location account even if it extends beyond her/his territory and (b) prevents another sales rep from undermining the effort or making it messy.

The key account approach mentioned by ChrisB is great if you have the data, process and scale. It's hard to tell from your description but since it's three salespeople and early days, I'm guessing you may not be quite there yet. Even if not, it's a good idea to start to think this way.

In the interim, what about giving salespeople full commission for sales that they originate and which occur within their territories. And then give them split commission for sales they generate outside their territories or which occur in their territories which they did not originate. It might be 50-50 or some other split, depending on the relative effort and average sale size.

If I'm a salesperson in territory A and make a sale that also includes business in territory B, I have a strong incentive to make it work for the client across all territories since that partial commission could be significant (and if it's not, there's no real issue). If I'm the salesperson in territory B, I have commission falling into my lap because of a strong relationship that my colleague in territory A has established. The upfront work is done, so I need only to support it on the back end. And that may give me an excellent opportunity to sell follow-on business.

If you feel the incremental business is worth it, you can even sweeten the pot a little with "bonus commission" for cross-territory sales. So if normal commission was 10%, the commission for the cross-territory business in territory B might pay out at 14%, with each salesperson getting 7%. That might make it attractive enough to warrant some extra cooperation.

In most cases, salespeople will still tend to focus on the sales within their own territories that give them 100% of the commission. And starting out, that may be perfectly OK, especially if the secondary territory potential is not too large. But if its big and therefore a likely priority for both you and your salespeople, then a solution that encourages both (or all) salespeople to take a hard run at it in a way that does not make your company look silly (by having two reps compete with one another) can set the right tone.

Hi Stacey,

hope you're having a great life. You've been offered some great advice above.

When I was a consultant in the Security Industry We did the following:

BREAK UP REPS BY EXPERIENCE/KNOWLEDGE...

MAJOR REPS: was the most advanced, experienced consultant in the company. Not based on how many years they were with the company as much as it was based on their ability to show sales success at a high quota level over a period of time. They could sell anywhere without splitting commission. The object was their success at closing a sell warranted their approval to sell anywhere because this was in the best interest of the company.

SENIOR REPS: was the next most advanced consultant in the company. Quota was lower and the ability to hit this mid-size quota was proven over a few months before the rep was promoted there. This rep could sell outside of their territory if they had a client who had businesses in other territories outside of their district. They would have to use a Major rep if the size of the job warranted some one of more advanced knowledge.

ACCOUNT REPS: was an entry level sales consultant at the lowest tier and could not sell outside of their territory unless they had a Senior or Major account rep accompanying them. They had to use the Senior or Major rep whose territory they were trying to sell in. This fostered mentoring and secured the sell which was in the best interest of the company but also in the best interest of the reps joint efforts.

LET ME SUMMARIZE IT HERE...
In a nutshell create territories, split commissions when these reps sell outside of their territory if their knowledge or experience is limited and bond partnerships between your employees when they are selling outside of their communities to defuse problems and maintain camaraderie. And finally REMEMBER... our only real problem in life is our failure to be "MORE Creative" than we’ve ever been. If you “Invent” your opportunity YOU WILL most definitely create your future. I'm only an email away from you if you need my help. Is there anything else I can do for you?

Your Servant, Deremiah, *CPE (Customer Passion Evangelist)

*Camaraderie Promotes Exult