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THE ECONOMICS OF OUTSOURCING YOUR EXPORT DEPARTMENT
Ask any export rep, and you'll learn that one of the hazards of the business lies in
being perceived as too successful. Recent estimates in the high tech industries put typical yearly costs for a direct salesperson's salary, incentives, office, travel, and other support services in the range of $260,000. (in commodity businesses, they may run a little less.) The sales in a given territory grow to the $4 million point, and the sales manager pulls out the calculator. With what the outsourced sales firm is being paid (and commission rates vary widely by industry and circumstances), it seems possible to hire and support someone dedicated to the company full-time.
The calculation ignores the costs borne by
the export representative, as well as the administrative and facilities costs that will have to be added at the manufacturer's end, both in the territory and the home office. Also often overlooked is the likelihood that the outsourced team, with its multiple sales personnel and regional systems, will grow the territory faster than can a single direct individual.
The export rep not only finances the sale (usually not receiving
commission until after the goods have been shipped), but the commission dollar also covers the cost of recruiting, training, employee benefits, travel, client entertainment, automation, order entry, and more. (These typically add half again to the direct salary costs.) The export representative takes on a much broader role than sales alone, whether it's editing, administering, and expediting orders, staffing a trade show booth, or handling a customer return.
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