3 years ago
January 7, 2015

The Pros and Cons of Hiring a Sales Agent vs a Sales Rep

Hiring a sales agent instead of a sales rep has distinct advantages and disadvantages.

Rhys Metler

If you’re just starting up in sales or are looking to expand your existing sales force, you typically have two different ways to get more individual sales people out there representing your product to potential clients. The first way is through hiring a sales rep, an employee hired to sell your own products and services from within your company. The second alternative is through hiring a sales agent, an independent salesperson to whom you give authority to sell your products and services in a particular territory. Hiring a sales agent instead of an internal salesperson has distinct advantages and disadvantages and it is important you make the decision wisely, as different companies will be more suited to one form of sales person over the other.

Advantages of Hiring a Sales Agent Instead of Hiring a Sales Rep

  • Value for money for small businesses – Some small businesses will not have enough prospects to justify hiring a full-time sales representative on staff and hiring one could initially cost more than the profits they bring in. In this scenario, a sales agent representing your products and services part-time can have the same effect and bring in the same income without straining your payroll unnecessarily.
  • No hidden costs – Hiring an employee has costs beyond just their wage – the cost of giving them office space, equipment, travel costs as well as holidays, insurance and other benefits. A cost of hiring a sales agent is clear and obvious since there are no hidden costs – the agent sells for you but is in business for himself and the cost they incur while selling your products is their responsibility.
  • Pay for performance – Sales agents are typically paid for their performance through a commission-only wage structure, which means that you only pay out money if they actually make a sale. This means that hiring a sales agent can cost next to nothing to start with and the products they must sell first will cover all the money you’ll pay them.

Disadvantages of Hiring a Sales Agent Instead of Hiring a Sales Rep

  • Lower degree of control – Although they will be selling your products, a sales agent is independent, and you cannot control them in the same way you can one of your own employees. Their sales process will be their own, as will their style and their manner, and they are unlikely to sell according to the methods in which you train your in-house sales representatives, even if you offer them training. If you are selling relatively generic products this can be fine but if your sales process is particularly enhanced by the style and manner in which your sales people act you may lose something by using an independent sales agent, and in rare cases they could even compromise your reputation.
  • May sell other products – Hiring a sales agent may result in your products being sold by someone who also represents and sells goods and services produced by other companies in your area. If these other companies are running a promotion or increase their commission you might find that your own sales suffer due to a reduced focus from your agents, something that is completely out of your control.

Hiring a sales agent instead of hiring a sales rep can be a wise choice that saves you money and reduces the amount of management work you need to do. Before hiring a sales agent, you need to understand your own sales objectives and then work out if you can achieve these through a force of sales agents or if they can only be achieved by in-house employees. Typically, the main deciding factor is whether you are willing to give up some control of the sales process in return for lower costs – the more important control is to you the less advantageous it is to hire a sales agent.

Rhys Metler

Rhys is a tenacious, top performing Senior Sales Recruiter with 11+ years of focused experience in the Digital Media, Mobile, Software, Technology and B2B verticals. He has a successful track record of headhunting top performing sales candidates for some of the most exciting brands in North America. He is a Certified Recruitment Specialist (CRS) and has expert experience in prospecting new business, client retention/renewals and managing top performing sales and recruitment teams. Rhys enjoys spending quality time with his wife, son, and two daughters, BBQing on a hot summer day, tropical vacations and cottaging.