Selling an Invention on Commission Part Two

Implementation

Overview

You Need to Own the Market. The manufacturer or distributor who hires who lures you in commission is really buying your ability to sell the product.  If you aren’t experience try to find someone with experience who will partner with you. You will improve your chances to land a deal with each additional person you know who is either in the distribution channel or a major customer.  Other tactics you can use to generate support are call reports, which you write after you interview key buyers, letters of endorsement from those same buyers, and provisional orders.

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Produce Results. The manufacturer or distributor will be watching your sales results to be sure you can back up your potential sales claims before investing significant amounts of money.  You should have one or two customers presold before approaching a manufacturer.

Think Big.  One of the reasons you go with a manufacturer or distributor is that you want to use their size to build credibility.  Take advantage of that. Have your business card share the company’s name, always mention the company’s name when you call, and be sure to have first class brochures, marketing materials and trade show booth.

Momentum Makers

The Monster Account.  Nothing succeeds like having a account to land a selling-on-commission deal.  In the post “Success story on Selling an Invention on Commission” which was included in the mailing,  https://onestopinventionshop.net/blog/2015/12/how-inventors-can-sell-promotional-products/  Cindy Jones had strong interest in Antenna Buddies from both Taco Bell and Radio Shack (prior to Radio Shack’s decline).  Both of those firms could order million of the product and the lure of big orders landed Jones three offers

Orders First, Production Second.  You want the credibility of the manufacturer and the manufacturer wants the extra business. But the manufacturer doesn’t want to spend a ton of money before knowing whether or not the product will sell.  One solution to this concern is to allow the manufacturer allow you to represent it while obtaining initial orders. This is a win-win situation for everyone.

Before You Start

Identify the Market.  Your job is to identify customer groups who will buy your product, the distribution channels you will use, and the key players in the distribution channel. You also need to understand the industry’s price structure, which includes discounts to distributors and retailers, packaging required, key buying periods and important trade shows.  The best way to find this out is by reading trade magazines, and attending trade shows.  You can find out the magazines and trade shows with Internet searches.  Try to read at east 10 – 12 back issues of trade magazine, and try to attend at least one trade show.  Check out these posts for more information on how to attend and network at a trade show.  https://patentsbydondebelak.com/selling-an-invention-on-commission/ https://onestopinventionshop.net/blog/2016/01/how-inventors-should-network/

Customer Defined Products.  The most successful products are typically ones based on actual customer desires.  When you talk to manufacturers and distributors start with a customer focus, detailing how you have surveyed potential customers and explaining how your product meets their expressed needs.

The First Steps

A Clear Advantage.  You can achieve a clear market advantage by having a superior or markedly different product.  The Antenna Buddies are clearly a different product.  But you also gain a clear advantage if you are approaching a market the manufacturer doesn’t sell to, or if your marketing campaign, name or package stands out in the marketplace.

Work the Manufacturer or Distributor.  You will typically get better results if you propose your arrangement in steps. You might start by approaching your targeted companies to see if they would make the product for you as a contract manufacturer.  At a later meeting you can mention that the product’s potential is large than you expected and that you can’t proceed on your own.

Write an Agreement.   You need a formal contract with the manufacturer or distributor that defines your relationship.  The manufacturer will probably propose a manufacturer’s representative agreement.  (Sample contracts are widely available on the Internet or in books on legal forms in bookstores or libraries.)  But you need to add some additional clauses. One is that you receive a sales commission override on every sale of your product. A second clause states what happens to the override if you or the company decides to terminate the agreement. In most manufacturer’s representative agreements commission stops three to six months after the salesperson leaves.  You want the contract to state that your override continues for an extended period of at least two years after the agreement ends.  You should also insist that the manufacturer sells you the product, all of the inventory you wish to purchase and the product tooling if it decides to discontinue the product. Finally if the manufacture decides to sell the product line to another company the contract should state you get a commission on that sale.

Connections.   Creating a network of influential contacts is a key step for every inventor. It is even more important for inventors selling on commission.  Keep a file of every contact you make so you can go back to them when you are ready to sell the product.  Check out these posts for more information on finding contacts.  https://onestopinventionshop.net/blog/2011/07/how-to-find-and-work-with-marketing-contacts/ and https://onestopinventionshop.net/blog/2016/03/finding-industry-insiders/.

Off and Running

Set up Distribution.    There are usually plenty of sales opportunities for a product besides the big accounts you use to land your agreement.  You can continue to increase sales by using independent manufacturer’s sales representatives around the country to sell to smaller accounts. See this blog for more information on finding sales reps. https://onestopinventionshop.net/blog/2016/01/how-to-find-sales-reps/

Develop a Marketing Calendar.   Sales and marketing professionals always feel there is way too much to do in far too little time when introducing a product.  You can overcome this problem to a degree by setting up a yearly calendar of all you major marketing and sales events.  Major trade shows, product press releases, calls on big companies, adding new distributors and representatives should all be listed on the calendar.  This not only helps you to succeed but it also demonstrates to your manufacturing partner that you are earning your money.

Have the Manufacturer Hire other Sales People.  This of course cuts into you commission.  But it is the right strategy if you have many other products you would like to introduce to this industry.  You can’t take on the entire sales burden and continue to introduce new products.  You should have more options after selling on commission as you will be established in the industry and that could allow you to launch your own company.

Building a Business

Become a Resource. Your long term success in commission sales depends on your expertise at introducing a product into the market or your creativity to continually come up with new product ideas. Both of these skills are ideal for going into business for yourself.  You may not be able to reclaim your original idea from the manufacturer but you can move onto to introduce a new product of your own, or even products from other inventors.

Create a Key Industry Presence. You can create an industry presence by being on industry committees, by volunteering for associations, and by serving on standards or trade show committees. You can also write articles for trade magazines, give speeches or presentations at meetings, and volunteer to help with any training meetings in the industry.

Take Control.   There is an inevitable clash when you sell your product on a commission basis. Inventors want to develop a network of contacts that will lead to long term success. The manufacturer on the other hand will feel vulnerable if it doesn’t have direct contact with the customers and the distribution channel.  The best path for inventors to follow is to introduce buyers and distribution channel contacts to the manufacturer when starting out and then work to cut back the manufacturer’s involvement as sales develop.

Looking for  sales reps?  Check out https://onestopinventionshop.net/books/sales-reps/

Do you need web content?  Don Debelak, who has written 15 books published by major publishers such as McGraw Hill and Entrepreneur Press is currently writing web content.  Check out more information at:

https://onestopinventionshop.net/web-content-writing-services

Don Debelak offers affordable patent work. Check out http://patentsbydondebelak.com/