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Learning to build an agency on hard-edged demands is the road to success. Each salesperson who works for a rep agency should be managed against a very specific set of standards.

Planning

The first requirement that should be made a part of the salesperson’s responsibility and work plan is detailed planning for the territory, each significant customer, and each significant line.

One of the problems salespeople encounter is managing their time. Time and territory management go hand in hand.

• Where does a salesperson need to be? Of course, it depends on the business situation, but it also depends on the logical way of covering a geographic territory.

It also depends on the nature of the accounts the salesperson works with.

• Who is a salesperson selling?
• Who is running each of the key customer businesses?
• How is that person best approached?
• What schedule should the agency salesperson adhere to when working with the customer and their key personnel?

Each of these items can be documented and organized as a part of the sales rep’s business plans for the territory. If Tuesday is a bad day at Jones and Company, that fact should be a part of the profile that the salesperson develops for that customer. It all should be in writing.

Once the profile is organized then the sales plan should be created for the customer. The sales plan should contain a very specific organized plan for each line the agency sells with each key customer.

A key customer should contribute at least 5 percent of the territory total volume. The territory hopefully represents a significant contribution to the total commission income of the company.

A lot depends on the total commission of the agency. In a larger agency one would hope that the salespeople each contribute a meaningful amount of the gross commission income.

If the agency earns $5 million in commission the hope would be that each salesperson contributes at least 10 percent of total commission or $500,000 a year — the salespeople can be paid based on a share of the commissions they produce.

In one situation the agency policy was to pay the rep 33 percent of the commissions earned, plus all expenses, plus 100 percent of benefit costs.

Therefore, the rep would be earning $166,500 plus all expenses and all benefits. Of course, there is a possibility that a rep who produced $500,000 in commissions the previous year could increase business substantially the following year. The agency should have a “bonus” or incentive plan for compensating the rep for exceptional performance and to push the rep to higher and higher commissions.

The compensation plan needs to be 100 percent public and the same for every rep. The incentives need to be public. Success should be well publicized when a rep exceeds his or her targets and provides substantial extra income for the agency. Remember the rep is never going to receive more than 33 percent of the commission income. Expenses need to be carefully managed and handled in a disciplined manner.

Having the systems in place is the first step. Then someone, probably the owner or one of the partners in the rep agency, must work with each salesperson to discuss the salesperson’s plans and the organization of the territory. The compensation plan should be so simple and clear that every member of the sales team knows where he or she stands at all times.

The bottom line is clear. Strict adherence to standards. Constant measurement against clear standards of performance. Clear compensation with enough incentive to keep a carrot in front of the salespeople. Everyone knows what is expected and what’s in it for them.

From that point on it should be onward and upward in dollars sold, dollars earned, and market share increased for principals. A great world.

MANA welcomes your comments on this article. Write to us at [email protected].