Advantages of using a commercial agent in sales and distribution in Germany
Do you have a good product? Do you wish to increase your turnover or sales? Are you looking for new markets? The key to this is a well-positioned, effective sales force. Have you ever considered outsourcing all or part of your sales and marketing activities to external field sales partners?
Advantages of using a commercial agent in Germany – a professional sales specialist
The advantages of using a commercial agent in sales and distribution are obvious. A commercial agent (also known as sales agent, sales agency, commercial representation, commercial agency, manufacturers’ representative, or manufacturers’ agent) is a sales specialist and sales professional. A commercial agent is an independent entrepreneur who acts on behalf of another business (for example, in your name). A commercial agent brokers transactions for another company (that is, also for you) or concludes transactions on behalf of that company. Commercial intermediaries, who are usually sales agents and also call themselves general agents, industrial representatives, factory representatives, commercial agents or commercial agencies or, in some technical industries, sales engineers or sales engineering offices, are links between the levels in the market. This is particularly advantageous in the B2B sector in Germany, in which commercial agents and sales agents play a major role. They broker goods between companies at all levels of the economy – for example, between industry and trade, between industrial companies (e.g., in the supply sector), or between wholesale and retail, and in almost all sectors. The turnover of goods brokered by commercial agencies in Germany amounts to almost 200 billion euros per year.
About 30 percent of all trade intermediaries at the wholesale level (B2B) are also wholesalers, as they offer and sell parts of their merchandise in their own name rather than in the name of and for the account of others. This is also called proprietary business.
Only a good 30 percent of all commercial agents in Germany work alone. Nearly 70 percent of commercial agencies employ at least one (other) person. Slightly fewer than 15 percent of commercial agencies employ five or more employees (calculated in full-time equivalents). The advantage for you as a company is clear: With a commercial agent as an external sales partner, you take advantage of an entire team of sales personnel.
A further advantage is that commercial agents bring their existing customers along with them. These are of great importance to commercial agents: The customer base is the capital they bring to the business relationship with the companies they represent. Especially if you are new to a market, this is a decisive advantage for you!
Sales agencies and independent sales partners bring the advantages of saving time and access to the German market
The customer base of the commercial agent is the capital that the agent brings into the business relationship — and you can use it to your immediate advantage. That spares you the time-consuming effort of having to build up your own customer base in Germany using your own employees. In sectors in which a listing (or line card) with the customer is usually required, that the sales agent is known by the customer can be the deciding factor toward overcoming this hurdle and becoming listed.
Sales agencies and independent sales partners bring the advantage of services
A further advantage of using commercial agents and sales agencies for external sales and distribution is the variety of services that commercial agencies offer. Simply brokering products is not sufficient today to gain entry to markets, including the German market, and to secure and expand a position in the market. A variety of services, including the following, complement the core activities of commercial agents:
- Obtaining information
- Technical advice and development work
- Handling complaints
- Managing a dispatching warehouse
- Representing the company at trade fairs and exhibitions
- Conducting and controlling promotions
- Sales training
- Logistics services
- And much more
Your commercial agent in Germany can perform these services for you!
The cost advantage of a commercial agent compared to a traveling sales representative
There are no fixed costs! Sales agents are remunerated based on their success – usually on a commission basis. In most cases, this is a commission based on sales. This is a matter of negotiation and depends on various factors, such as, for example, customer density and customer structure in the territory of representation, the products represented, their prices, and their turnover rates. Many represented companies combine the commission with a bonus for achieving certain goals or with fixed compensation for certain services beyond actual sales and reporting activity. Each commercial agent bears the agent’s own costs (including travel expenses, costs for office, telecommunications, company care, and so on). The advantage for you of using a commercial agent or external field sales partner is that you incur costs only when and after sales have been generated. A salaried sales force, on the other hand, means costs such as salaries, social security contributions, administrative costs, vehicle costs, telephone costs, and travel expenses. By using commercial agents, you are much more flexible without such a cost burden, especially in economically difficult times.
The advantage of complementary merchandise being sold by a commercial agent
A sales agency in Germany normally runs its business with multi-line representatives; that is, a sales agent represents multiple manufacturers or principals in a given market. On average, a commercial agent represents 4.7 companies. Nearly every third represented company has its headquarters overseas. In individual cases, the actual values can vary greatly from these average values, depending on the size of the commercial agency and the industry sector in which it operates. At a multi-line representation, customers find a compiled assortment of a range of complementary products precisely because the sales agent represents several companies. This facilitates and promotes the sale (cross-selling) of all products distributed by a commercial agent. This is another advantage for you!
Customers can make their purchases more efficiently with fewer sales representatives than when salaried travelling salespeople do the selling. The represented companies benefit from the cost-effectiveness of selling through multi-line representatives, who can offer a buyer not only the product range of one company but those of several vendors.
Sales agencies and commercial agents bring the advantage of information
Having the right information can be a critical competitive advantage, especially in markets in which products are subject to rapid fashion or technological change. Commercial agencies that are regularly in close contact with various manufacturers and customers in Germany have a variety of information relevant to the market as multi-line representatives.
It is to your advantage that your sales agent informs you of what the German market demands and what your competitors offer. Your commercial agent represents your marketing strategy to customers and provides you with information on your competitors.
Summary of the pros and cons of commercial agents
Sales through commercial agents in Germany offer many advantages and are a clever and often the better alternative to an in-house sales force. This is particularly true for relatively small companies and for companies that are not yet present in the German market. These companies in particular benefit from the market knowledge, customer contacts, cost advantages, additional services, and multiple lines sold by commercial agents.
Would you like to put the advantages of commercial agencies and sales agencies to work for you?
Find your agent in Germany now. Place a classified advertisement at handelsvertreter.de to connect with manufacturers’ representatives in Germany.