I’m having an interesting discussion with a company that I thought would be useful to share with the small business community, as it has to do with sales channels. I personally am channel “agnostic” and simply want to ensure the best channel(s) are implemented based on business needs. However, many sales leaders have their distinct preferences.
There are 4 basic channels, with many variations: Direct, Distribution, Manufacturers’ Rep, and OEM.
Direct: Your own employees in the field selling your product(s), typically directly to the user.
Distribution: Selling your offering to distributors (or catalog houses) who then sells to the user.
Rep: Independent sales people that sell your product along with other non-competitive manufacturers’ products.
OEM: This is a very specific channel where your product gets integrated into another company’s larger product. Most businesses are either ‘OEM’ or not, however some can crossover.
So what’s the best model for your business? Without knowing the details, it’s impossible to say for sure – but there are some real advantages to the Manufacturers’ Rep model in small, growing businesses. Given your likely lack of resources, you are probably looking to minimize your fixed costs – which makes the rep model perfect. Reps are commission only – If they don’t sell, you don’t pay. This is the easiest model to scale. Bringing on new reps costs very little, so you can increase your coverage without breaking the bank.
There are of course challenges with the rep model, especially from the management standpoint. Like all salespeople, they are going to sell whatever is easiest to make them money. However, unlike an employee who may focus on one product over another, reps will focus on one manufacturer over another. This means that you are competing for their time with one or more other companies and have to ensure you are fully supportive of their sales efforts (and as easy as possible to do business with).
If this interests you, we’d be happy to cover each of the models in greater detail – just let us know.
