Strengths and Weaknesses of Hiring an Independent Consultant

EP Huddle #37

Many companies consider hiring an independent consultant (independent sales reps) to help grow sales in a certain sales territory or channel. This option can be effective, but it also requires certain fundamental understanding of strengths and weaknesses of this model.

Here are a few things to consider when considering working with an independent consultant.

Note: To avoid potential confusion, Engaged Prospect is not an independent consultant, though we've worked with many in previous business roles, and engagements. We are an inside sales and marketing outsourcing company. The below ideas do not represent the strengths and weaknesses working with a firm like ours.

Working with an independent consultant:

• Independent consultants typically have a good understanding of a specific industry and are well connected to key decision makers within an industry or territory. In order to get into a specific business niche, it's common that this person has experience selling 'like' products to the same group of decision makers. It's important to ask specifically who they work with who will benefit from buying your product. During an interview or vetting process, it's tough for a business leader to grasp what business an independent rep can bring. But, it's important to ask. Then, trust your gut.
• They typically represent multiple products at once. The benefit for them to start their own business and sell into a specific market is that they're able to represent multiple organizations (typically not competing). This way, they can sell multiple things to the same groups. The downside of this is their clients typically won't get 100% of their time. It's human nature to focus on the low hanging fruit, and spend more time representing the products or services that are currently sought after. It's probable that prospecting and lead generation will take a backseat to closing deals for another client. During an interview, ask what they'll do to generate leads, develop opportunities and prospect for new business. Are they going to be focused on generating business to help your company continue to grow in the mid and long term? Or are they only going to take your product to their core group of contacts and see what they can sell? You might be OK with either, but it's important to understand what their strategy will be.
• An independent sales rep will likely not provide a ton of data and sales reporting. Their job is to close certain deals and bring revenue. But, they aren't typically focused on delivering the sales data back to their clients. This can be a challenge if the agreement ends. You won't have visibility into the territory. You also might not have a good handle on who they're calling, what opportunities might be coming in the future, and what's being said in the front lines. This information is extremely important for small and midsize businesses. It's critical for you to have a conversation with a potential independent rep to understand what visibility you'll have.
• They charge high commission. Compensation plans differ between independent reps. Some charge a retainer for monthly work. Other's only charge commission. However, it's very common that their commission rates will be high. In this case though, it's also possible that they'll cover their own expenses. It's important to understand how your partnership will work in the event you want to help sell into their market. If you make a sales (without any of their support), do you still owe them commission? If your company grows and you hire additional staff, you'll need to know how those people will support this independent sales rep. If the independent rep has an exclusive territory and charges high commission, you may want to consider utilizing those resources in a different territory.

As a team:
What other key issues must be addressed before hiring an independent sales rep? If you're planning to work with an independent rep, how can you structure it so you have visibility and understanding of their work? How will you craft your agreements so you can maximize on their relationships (and pay for it), and also build a longer term strategy for success even if you're not partnered long term?