A business which uses sales agents to sell its products is dependent not only on the commercial strength of its products but on the success of its sales agents. In an increasingly competitive environment, it is crucial for a business to ensure that it gets the most out of its sales agents, who are, after all, the business’s ‘face’ - whether to wholesalers or retailers in their respective territories.
Getting the most out of your agents is, however, easier said than done, particularly as many agents will see any form of management as an unwelcome erosion of their self-employed status. The temptation for the principal is often to leave the agents to it once they are appointed. However, failing to manage your agents can result in year after year of poor sales in a territory and (in the worst cases) damage to the your relationships with customers or the loss of one or more accounts.
In order to get the most out of your agents, some investment is required. However, if you get it right, the investment will pay dividends in terms of profits and relationships with customers.
The 3 golden rules for getting the most out of your agents are as follows:
- Know your rights! – it is important to realise that, whether or not you have a written agency agreement in place with an agent, the principal will be owed certain duties by the agent which arise automatically in law. For example, did you know that your agents owe you a statutory duty to comply with your reasonable instructions? Having an idea of the duties which the business is owed by its agents will give you confidence when dealing with your agents, and assist you in knowing where the line is between what you can and cannot ask for. Care still needs to be taken, however, because it is not only the agent which owes the principal duties, but also vice versa. It is important that, when enforcing the duties owed by the agent, you do not over-step the mark and end up being in breach of your duties to the agent.
- Expand your rights! – Whilst an agent will owe the business various duties which arise by operation of law, nothing beats having in place a comprehensive written agreement which imposes specific obligations on the agent. For example, whilst the Commercial Agents Regulations require the agent to comply with the principal’s reasonable instructions, in a written agreement the principal can include specific provisions, such as requiring the agent to visit the customer base in the territory a certain number of times per quarter or per year, and a provision requiring the agent to submit regular reports detailing calls and visits made to customers. In addition, having a written agreement will allow the business to impose minimum sales requirements on the agent and provide for what is to happen if these are not met.
- Enforce your rights! – Finally, there is no value in the rights which the principal has vis-à-vis its agents under the law or as set out in a written agreement if those rights are not enforced! It is very important that an agent’s performance is monitored by the principal, and that any failure by the agent to comply with its duties is picked up by the business and raised with the agent. If the business lets the agent get away with conduct falling below what is required for several years, it will be difficult to suddenly start enforcing its rights. The monitoring and management of agents must be an ongoing process, from the beginning of the agency until its termination.
Finally, a word of caution. In the event that you monitor and manage your agent but you do not feel that the agent’s performance is up to scratch and you wish to exit the relationship, seek advice before you terminate the agency agreement. The termination of an agency must be handled with care, in view of the substantial compensation payment from the principal to the agent which the termination could trigger.
Before you make the leap, it is best to have a clear picture of where the business stands.