At a first meeting you should be looking for:
- a competitive product or service
- a reasonable commission
- an agreed, exclusive territory
- acceptable literature & marketing
- sales aids
- advertising and lead generation
- a degree of training
- a formal, written agreement
These are all basic needs and your own experience will tell you what is acceptable. The formal agreement is dealt with in greater detail in chapter 7.
Other points you must agree.
- how and when you will get paid
- what happens with bad debts
- what paperwork do they want
- will they pre-notify any ‘house accounts’
- your limits on price negotiation
- who deals with after-sales service
The most important point here is about getting paid. Never accept a situation where you get your commission only when the customer has paid. You will usually wait a long time.
It is quite usual for a principal to deduct commission from commission owing due to a bad debt. You must jointly agree on the period that will elapse before it is deemed a bad debt.
Paperwork is another potential difficulty. Time spent on paperwork is non-earning time for a sales agent. It is generally accepted that a principal is entitled to a monthly report of your activities on his behalf and any observations on such matters as market trends and competitors activities. He needs this information to help you in the market. Submitting daily or weekly reports should be diplomatically resisted at all costs.
Another area of potential problems are ‘house accounts’ where the principal has dealt with a customer for a long time and claims that he has gained the business and need not pay a commission on it. It is vital that he declares who these are at the outset. There is nothing worse for an agent than getting orders from a customer only to have the principal claim it as a ‘house account’ and not pay commission. Another point arises on servicing the ‘house accounts’. It is unfair to ask an agent to service these accounts without payment.
Agreeing the limits of the agents authority in dealing with prices or any other promises made on behalf of the principal is another point that must be agreed. The sales agent must know how far he can go in negotiations without reference to the principal.
After-sales servicing can be expensive in areas such as machinery sales and many other fields. If it is likely to crop up, agree who is to carry this out and at whose cost before signing the agreement.
Excerpted from the book: ‘How To Be A Freelance Sales Agent’. by Terry James. Additional content and editing by Paul Brown, MD of AgentBase.