Building a Commercial Network

The team composed of architects, engineers and glass artisans, that started MEL has proven to be capable of designing and manufacturing MEL’s exclusive lighting installations. But what about spreading the word about MEL? Could we reach on our own as far as we wanted?

Apart from attending events, international fairs and trying to be present on the media we had to start thinking of building a commercial team but, what would be best? A commercial team inside MEL or an external network?

Here we expose the summary of the analysis we did to compare both options:

COMMERCIAL DEPARTMENT EXTERNAL NETWORK
COST The team’s base salary as a fix cost regardless of the sales. Cost only when a sale is done although much higher than in the case of the internal team.
SCOPE It implies a minimum volume per commercial agent because it would work on exclusive basis for MEL. Each agent can work a limited area and thus we would need to achieve a minimum volume per area. It gives the possibility of covering more geographical areas without establishing beforehand a minimum of sales.
CONTROL Easier control over the agent’s work. Respect of brand values ensuring a consistent positioning. Lack of control over the actions taken and consequently over their effectiveness. Difficulties to analyze comparatively the results in different markets.
FLEXIBILITY Higher compromise Higher flexibility

We decided to start with an external network for two main reasons:

  • Our products have a reduced target that is placed in different markets. An external network gives us the possibility of testing different markets without assuming high risks.
  • We must keep putting a big effort on research and development. This requires that an important part of our resources is kept for that purpose.

Once the decision was made it was the time to take action. We had to reach an agreement with our partner agents that would set the rules for the game. These are the points we would say you should not miss.

  • The agreement should be clear. The agent should be able to easily calculate its commission in order to avoid confusion.
  • As we said a in our previous post “Which is the price of my product?“, the price should not vary inside one same market. Even better if It doesn’t vary much among markets. This is a way to ensure the client doesn’t ‘betray’ an agent that worked for him buying on a cheaper channel.
  • If an agent asks for exclusivity, and we think it is reasonable, it should be always linked to an area and objectives. If we are entering a new market setting the objectives might be difficult we can just set the time after which we would evaluate if the exclusivity was worth.
  • We should establish a prcedure to control the work of the agent (always keeping in mind he/she is an external worker) that ensures we have enough information for future negotiations.

These are our conclusions after the first attempt to set an external commercial network. If your experience says we are missing something feel free to tell us. It will help us improve!