You've found an agency, you like them and they like you. The next
step is to put your business arrangement into writing. A valid agreement
between a manufacturer and an agency must cover the following five
points:
1. Duration: defining the length of the contract.
2. Territory: exclusivity, any unusual conditions, and
the responsibilities of each party.
3. Commissions: defining the proper commission for the
activity and product and when the commission will be paid.
4. Duties: defining the activities and duties of the agreeing
parties.
5. Termination provisions: terminal commissions, length
of time between notice and termination by either party, and any extraordinary
circumstances.
The five points above provide a solid guideline for the relationship
between the manufacturer and the agency. Other things to consider
are:
· Any other points which you and/or your agency feel it necessary to have
covered.
· Since this document is an agreement, discuss it with your agency, and
mutually agree upon the terms.
· Be certain to list any exclusive covenants that the agreement must cover.
· Indicate the dates on which commissions will be paid and any other special
arrangements. Mutual understanding and acceptance of the agreement is vital for
success, since you are entering a joint venture with another company for mutual
profit. More detailed contract guidelines and samples are available from MANA.
What to Expect from Your Agency
Your agent is a professional - a marketing expert who will provide
you with low cost sales, immediate geographical coverage and local
product acceptance. But what else can you expect from your agency?
Assistance in devising a marketing program for a specific
territory. Each territory is different. Your agent will
help you tailor your marketing program to generate the most sales
with the customers he knows so well.
He or she will assist you in preparing usable marketing forecasts. Your
production department, your financial planning department, and other
areas require realistic forecasts. He or she will work with you to
set realistic standards of performance.
Your agent will work to your policies in his territory. He
or she will participate in trade shows, give product demonstrations,
and will keep you informed of his activity in the field. Don't overload
your agent with paperwork - the job is to sell, not process paper.
He or she will expect to help you with territorial market
research. The agent is invaluable in intelligence gathering.
He or she often has access to competitive product specifications
and prices. He or she will advise you on product modifications,
or advertising changes that will help him sell your product.
In a pinch he will help you collect. Your agent's
not a collection agency, but he can often help with those customers
whose invoices are aging. Even though credit approval and collection
is usually the responsibility of the principal - it becomes a sales
function if the customer won't see him or her because the account
is slow. An agent can generally collect an account with a smile and
no hard feelings if informed early enough -and save a valuable customer.
What Your Agency
Expects From You
A list of priorities. Be specific - what do you want him
to do first. A written list of priorities will help your agent get
up to speed much faster.
A team relationship. Since your agent is a professional
who is working with you in a mutually profitable joint venture, he
or she will expect all of your employees to be informed of the pertinent
details of the principal-agent relationship, and to abide by the
agreement. An internal lack of knowl
edge of the relationship can lead to poor performance. Late quotes, dismal
shipping schedules, and poor communciation can thwart even the strongest
sales effort.
Mutually set realistic goals. Often "quotas" are
used in the misguided concept that they will act as an incentive
toward greater sales. Arbitrarily set performance standards are often
a deterrent rather than encouragement to a professional manufacturers'
agent.
Indoctrination and the truth. Agents expect you to
be candid about your company, its history and product. They expect
to be completely briefed on the activities of your company in the
territory prior to your agreement with them. This information is
vital to their getting over any rough spots or previous mishandling
of the territory.
