Can you “hire” a book of business?
I hear all the time from clients that they want to hire someone with a book of business. Can sales people just move their business to you when they are hired? How realistic is that? Can it be done? The short answer is “NO”.
What is a book of business?
In the printing and packaging marketplace, as well as in most manufacturing businesses, it is an industry term that refers to a sales person’s list of account or clients. The book’s value is determined by the revenues generated by that customer base.
Can you “buy” a book of business?
Yes, you can acquire your distribution, or any sales agency, or an independent rep organization that makes sense for your business. The acquisition process is another method for accelerating the growth of your business and has its own risks and rewards. Even then, there are no guarantees you will retain 100% of the revenue obtained.
If a sales rep has a book of business that they have cultivated and control, regardless of the point of manufacture, then they sometimes set up their own independent rep organization. They source the business with a capable partner and earn a 10- 20% commission on sales depending on the logistics in place. So, if a sales person has a book of business, why would they want to work for someone else?
What are you really hiring when a sales rep has a book of business?
Sales reps have a variety of attributes, skills and experience that set them apart from each other. Most importantly:
- They have product knowledge and understand market buying influences.
- They develop selling skills and either excel at business development or account management.
- They have carefully nurtured customer relationships and built a strong trust bond.
The first two skill sets are learned. Employers can teach and mentor these skills but the relationships built with customers tend to belong to the best sales reps and are not easily replaced or transferred. Relationships are earned.
Are there any guarantees?
No, when you hire a sales rep, you get access to their relationships with customers. Your ability to service these customers is conditional on your reputation in the marketplace, and whether you have the required manufacturing capabilities, systems, customer service, quality and competitive pricing in place. Usually the customer has to experience some “pain” with their current supplier and see some gain (price) from you before they will be motivated to consider moving the business. This also assumes long term contracts are not in place. In every case, the customer will ultimately assess the cost and risk of switching suppliers, regardless of the sales rep relationship. The reality is when hiring a sales rep; it will likely take 1 to 2 years to replace their book of business.
When you hire a sales rep, you can assess the depth of their selling skills, their product knowledge, their market understanding and the strength of their relationships, and then decide what their potential is for helping to grow your business. Beware of non-compete agreements which can prevent calling on existing customers for a one to two year period.
A realistic employer understands that they are hiring selling skills and customer relationships/market knowhow that will give them the opportunity to compete for all of a customer’s business. You can’t hire the “book” but you can hire the person with the potential to deliver the “book” over time.
Bob Harrington Associates has been in the executive search business since 1994 and can help you find the best people for your organization.
Bob Harrington CPC
Bob Harrington Associates