01010010 01100101 01110000By Charles Cohon
This is how a computer stores the word “rep.” Binary language. Nothing but ones and zeros. To human eyes, incomprehensible.
Something else about ones and zeros has been almost equally incomprehensible. Can reps earn commissions selling ones and zeros?
Let me explain.
Yesterday I had a conversation with a manufacturer of communication software used in manufacturing plants so employees on the plant floor can communicate more effectively.
The software manufacturer wants to sell his software using manufacturers’ reps. After all, he reasoned, reps who are calling on specifying influences for other equipment on the plant floor would be a natural to sell his software. Except….
Except that most reps I speak with are used to selling a physical product. The product ships from their principal to a customer, the customer receives an invoice, and the rep gets paid a percentage of the invoiced price.
But selling software is different. When a rep selling manufacturing software makes a sale, ones and zeros pass from the software company to the customer. No physical products move. If the software is sold as a subscription, there may not even be an invoice. Let me give you an example.
A rep convinces a customer to equip 100 manufacturing employees with productivity software. The customer pays $20 per employee per month, $2,000 total a month, and the rep gets paid commission each month the customer continues to use the software.
If the rep has negotiated a good contract, the rep will continue to be paid sales commission for as long as the customer uses the software. It’s the ones and zeros equivalent of a life-of-part/life-of-program agreement for physical products.
It’s the first month of a new decade. Has the time come for reps to embrace selling intangible products, or does the rep business model require physical products? Please write to me with your comments; my email is firstname.lastname@example.org.