Hiring and Evaluating Sales Representatives

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ANNA BULLARD, UNIVERSITY OF CHICAGO PRESS

STEVE MAIKOWSKI, RUTGERS UNIVERSITY PRESS

The AAUP Business Handbook >> Part Four: Interdepartmental Aspects of Financial Management

Contents

Hiring Sales Representatives

There are a number of different sales arrangements available to university presses. Indeed the variety of reps and arrangements can be bewildering to the inexperienced. In addition to the purely financial decisions involved in deciding how to sell books to the trade, there are-as in any hiring decision-quality issues to consider. Below are definitions of different sales arrangements; some advantages and disadvantages of each are noted. Immediately following are some suggestions of addition all things to consider when hiring a sales rep.


House Representation

House reps are employees of the press, and they only sell their employer's books. Since it costs about $50,000 a year to finance the full-time salary, benefits, and travel expenses of a house rep, a press should not consider hiring one unless it has a sales base of at least $500,000 in the territory. Most presses that employ house reps keep their sales rep expense between 5%-7% of net sales in each geographic area. Since hiring a full-time house rep is not an option for small and medium presses, an alternative arrangement worth considering is hiring someone to split his or her time between the road and the office. This is especially desirable if a press has a strong regional list, be cause the cost of selling these books will be quite low. The money that would have been spent on sales commissions is retained by the press, and since it will take the rep only a few weeks each season to call on local accounts, he or she is free to perform other duties in the office.

The biggest advantage of having house sales reps is the higher quality of sales representation. They will often know the backlist better, they will have the time to help with bookstore-related marketing activities, and they can take a more active role with customer service and credit problems. Someone, however, will need to take responsibility for hiring, training, and managing the house reps within the press.


Consortia

A consortium is created when one press hires a sales rep, and then offers his or her services to other presses for a fee.

A number of publishers have set up groups of university presses. Joining an arrangement like this has a number of clear advantages. Reps who sell other university presses' books are more likely to recognize authors and to have some understanding of university press "culture." A client press can enjoy the benefits of a house rep without the added expense. Because the parent press charges a flat fee to each press for representation, there is a minimum amount of recordkeeping. And unlike some commission groups, the consortium generally carries a limited number of lines, which usually ensures that each press will get adequate representation.

For the parent press, the fees charged to the other presses help subsidize the expense of a house rep. Since organizing and maintaining a large group of presses to use a sales rep can be time- consuming, a press should not embark on this plan unless it has a full-time sales manager.


Cooperative

A cooperative arrangement differs from a consortium agreement in that the responsibility for the rep(s) is shared by the presses. Two clear advantages of this partnership are that the presses involved save money and gain more autonomy than they would have in a consortium arrangement.

This is a good arrangement for a medium-sized press that wants a fair amount of control and influence over its sales representation. It's important to note that a cooperative spirit should exist among the presses involved, since they'll need to work together closely. For example, one of the presses will need to act as "paymaster" by putting the reps on their payroll, issuing travel advances and processing expense reports, and doing the bookkeeping for the group. All presses involved should collaborate in drawing up the job descriptions in advance, since they will have to hire and fire the reps as a group.


Commission

Commission reps are independent contractors who carry and sell a number of presses on a commission basis. Most reps charge 10% commission on retail sales, 1%-5% on wholesale sales. Rates differ based on the territory. Before hiring a rep on a commission basis, a press should ensure that it has the capacity to provide adequate sales reporting, since the rep will expect accurate and timely commission checks. If the business office isn't able to provide this information, inquire as to whether the commission rep will accept a flat fee for services. When negotiating a flat fee with a sales rep, it is important to know, at least in general terms, the total sales for the territory to be covered. A flat fee should never be more than equivalent to what a commission rep would earn.

Flat fees are appealing because they require little recordkeeping, and it is very easy to prepare budgets each year when there's a fixed amount for sales representation. But keep in mind that flat fees can also lead to complacent sales representation. Paying reps commission on what they sell clearly gives them an incentive to sell more books. Flat fees do not provide that incentive.

Before a press decides to enter into a group arrangement-either by hiring a commission rep or by joining other presses in a consortium or cooperative partnership-there are a number of qualitative issues it should consider:

1. Make sure that the lists sold by the rep are compatible with each other. Most university presses look for a rep who has experience selling university press titles. This is generally a good idea; many of our titles only sell to strong academic accounts, and it is essential that these accounts be serviced properly. If a university press specializes in a particular area, however, then it might want to consider hiring a sales rep who carries similar presses. Rizzoli or Chronicle, for example, are excellent company for a university press that has a strong art list. Choosing a rep who sells their books would ensure that titles are getting strong representation in museum stores.

2. Find out exactly how many lines the sales rep carries. Book buyers do not have unlimited attention spans. In addition to looking at the company a press will keep, it needs to ascertain how much time and attention it will get, based upon the strength and number of titles the rep sells per season. This is especially important if the press is small. It might seem like a good idea to tag along with bigger presses, but there is always the danger that a smaller press might be completely neglected. Many presses require that their reps, by contract, provide them with a list of client presses each year.

3. Look at the stability of the sales organization. How long has it been in business? Do the sales reps have good reputations in the territory? Since selling is based upon establishing and maintaining a relationship with a customer, it is always best if the reps serve the same accounts for as long as possible. Disruption and constant change lead to lost sales.


Performance Evaluation

Once you have engaged sales representation, whether using a commission sales force or a house sales rep, or entering one of the collective arrangements, you will want to measure and evaluate sales performance on a regular and continual basis.

There are a number of performance indices that should be followed and studied. Eight areas of evaluation are listed below; the first five focus on the question of how hard the rep is selling. Although much of what follows pertains more to managing an independent commission sales force, the principles may be extrapolated to evaluating other types of reps as well. It should be noted at the outset that sales increases are, by themselves, not an accurate gauge of performance, and a commission arrangement does not guarantee maximum sales and efficient self-management.

1. Visits. Consider first how many accounts your rep is visiting each season. Routinely review all orders received and books sold. This will tell you whether or not your rep is working every day. Track the number of sales calls made each season. If the number of visits is decreasing, it could be because of illness, lethargy, or even factors such as the overexpansion of a rep's line so that not as many accounts can be seen each season. In any case, the number and quality of visits is a key indicator. As a rep gets to know a territory better, he or she can get around faster and learn what buyers are interested in; therefore, visits go more quickly and smoothly, leaving time for new accounts to be opened.

The visitation pattern defines the rep's sales strategy. By seeing major accounts first, back orders on major books grow early in the season, and this gives a marketing director time to adjust print runs. The rep should call on small specialty accounts last in a season, and perennial stop-ship accounts last, if at all. At the end of each season, review what new accounts were opened, and be sure all major and midsize accounts were visited.

Sales managers should closely track the number and quality of new seasonal orders received. (Note that this is different from backlist orders generated by bookstore computers and forwarded to reps for processing.) Comparing orders with itinerary/call lists will tell you how many visits yielded orders. (Often catalogs are left, or tentative orders taken, and the rep is told, "We'll mail the order in to you." The latter often require phone follow-up, so the number of orders taken is very important.)

2. Orders. While the number of orders is important, their quality may be more significant. If the rep is doing a good job, he or she will present the entire list, including backlist. Close perusal of rep orders will tell the sales manager whether or not the rep is using the full sales kit (if, for example, anthologies are sold to contributors, local bookstores), if your rep is a real care-giver (i.e., special attention is given to orphans on your list), if your rep understands the fine line between representing the publisher and representing the bookseller (i.e., includes text orders on sales rep order forms), and if your rep is opportunistic (i.e., responds quickly to important book reviews and finds new markets for your titles).

3. Unit Sales. Keeping in mind the changing size and quality of your new offerings and backlist as well as the percentage of cloth and paper of your list, you should track whether or not your frontlist and backlist unit sales are increasing or decreasing.

4. Net Sales. Certainly turnover in a particular sales territory needs close watching, but this can be a deceptive measure of performance. Factors independent of the rep's selling work can influence sales, for example: the growth of superstores and other chains, a shift in buying for an important regional chain into or out of a territory, and the opening or closing of key independent accounts. Major reviews of a lead book, or of a major regional book, can inflate sales figures independent of a rep's work, and economic conditions or natural disasters can depress sales. If you have the capability, track the value of orders taken, rather than the value of shipments, since the latter can be adversely affected by late arrival of stock and by credit problems.

5. Organization, Communication, and Information. Some aspects of this measure are intangible; nevertheless, reps should demonstrate in a concrete manner that they can handle the administrative side as well as the selling side of representation. The most important evidence that a rep is organized is a written itinerary. Reps should supply a list of accounts to be visited in each city, with dates; such a list keeps booksellers informed, ensures that important accounts are visited, and lets you handle special sales accounts yourself.

It is unusual with commission sales reps, but house reps often submit a weekly call sheet, detailing who has been seen (who is only getting catalogs, and who is stiffing whom on appointments), what is selling, what's not, and why (to provide an opportunity to reposition/rethink books and/or adjust print runs), coop/signing ideas or interest, customer service problems, and any reason why a backlist order has not been taken.

Publishers often find that a monthly or seasonal summary memo is useful. Some information is most efficiently gathered by the press itself; how ever, since most university press sales managers are unable to get into the field very much, the reps' eyes and ears are extremely important to publishers' marketing decisions. The publisher may be able to follow trends shown in order data but still needs to know why certain accounts are doing better or worse compared to last season, and why it is seeing changes in frontlist/backlist buying patterns. In addition, the sales manager needs to hear firsthand what the impact of superstores or chain stores in the territory was and what accounts were opened or closed and which ones are in trouble.

Sales reps must have the equipment to do the job. Their specific needs will depend on what kind of sales force you have, and whether or not a rep handles some administrative work for a sales group or not. These days, reps should have faxes, and one would hope that they have computer programs with the capability to develop a database of accounts for mailings and to develop, review, and then prioritize an account list. Obviously, independent commission reps will need to invest more in equipment than a house sales force will, since much of the latter's administrative tasks are handled by the publisher.

Finally, whether you use house reps or commission reps, you have a right to expect prompt answers to your inquiries and speedy processing of orders and other paperwork. Again, how well reps handle this illustrates how well they respond to customers.

6. Sales Conference. This may be the only opportunity to size up your sales representatives face-to-face, so try to make the most of this time together. The first test, of course, is whether your reps show up. If not, that says something about the way they manage appointments with customers. Whether you have house reps or commission reps, you have a right to expect that they will be prepared, enthusiastic, and productive at sales conferences. The sales manager should assess the reps' performance at each sales conference, and first of all, ascertain if each rep has reviewed the catalog pages in advance. Consider the following: Does the rep help position books and clarify markets for titles? Can he or she provide a quick, thoughtful reality check on marketing concerns, such as print runs, jacket comps, ad placements, and places for parties? Does a rep subject a book or author to his or her political litmus test, or does your rep complain about every hardcover trade book and suggest that you do it in paperback instead? Does your rep go off on tangents that are of marginal relevance to the book at hand or are focused on narrow concerns of sales force, or does this person see the "big picture"?

7. Handling Regional Shows. These meetings are of varying importance to presses, depending on the overall list size and its salability within particular regions. Commission sales reps routinely attend and display books at these meetings. If you have commission reps, they should offer you the chance to participate.

Carefully coordinate what to display and offer. Observe how your rep prepares for exhibits with mailings to accounts featuring presses, titles, offers, and giveaways. In addition to orders, ask for a memo summarizing attendance, interest in titles, and new accounts seen (even if no orders are taken).

From time to time, the sales manager should try to attend these regional trade shows, even if the press does not take its own table. It is a good way to observe your reps in action as well as a cost-efficient way to get closer to the marketplace.

8. The Intangibles. There are some truly subjective measures of performance. Here are a few. Does your rep find time outside of sales conferences to visit and talk? Does your rep check in during the season? When you (the sales manager) call, what is the rep's attitude? Does he or she see inquiries and requests for information as necessary to a sales director's job, not as harassment? When you share data on their performance, do they see this evaluation as helpful, not threatening? Does your rep allow you to sit in on occasional sales calls to key accounts? Will the rep graciously help with problems, such as nudging accounts on stop-ship? What do booksellers think of your rep's selling ability?

Finally, it must be noted that if your reps are doing a good job, make sure you tell them so. Although we may forget it, we all know from our own evaluations how important this is.


The AAUP Business Handbook >> Part Four: Interdepartmental Aspects of Financial Management

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