When someone wants to increase the sales of their products or services either in home or abroad, then appointing a sales agent is very important. A sales agent is a person who has the accurate quality and experience of find customers for you. For this service they get commission on sales that you make to those customers. Thus selling a product through an overseas agent is one of most cost effective way.
An agent is a person who is authorized or appointed by a manufacturer to sell or distribute his products within a given territory but who is in business for himself, takes title to the goods, and does not act as agent for a principal. Agents create a legal relationship with a third party. Commercial agents enjoy substantial legal protections which are unlike those given to employees. These are set out in the Commercial Agents (Council Directive) Regulations, which were introduced in 1993 to bring the law of agency in the UK into line with other EU member states.
Always remember that if the agent is working in another member state, you may need to consider that country's equivalent legislation.
Once you have decided to appoint a sales agent either in your own country or overseas, you must be sure to have the terms agreed in writing. A good contract will protect you against disputes or loose sales.
Advantages of appointing a sales agent
Eliminate sales force maintenance expenses: When you appoint an employee as a sales person then the travel expenses and phone expenses can be as high as his salary. Advantage of employing a sales agent is that you can sell your products or services without incurring the expense of maintain a sales force.
Durability of a sales agent:Sales agents are more stable than other entry-level salespeople.
Experience:Sales agents give better result because they are more experienced than your in-house sales force and have long and successful career backgrounds that include sales experience with large, national firms.
Saves management time: Sales agents already have solid relationships with potential buyers, hence it saves the time of the exporter to build own contacts. Sales agents are generally more experienced than in-house employees and need less management and direction.
Sales agents eliminates many costs:When you appoint new sale employees to enter in an overseas market you have to train them and you start paying them immediately, but they don’t start paying off for you immediately. Sales agent avoids the recruitment, training, time and payroll costs of using own employees.
Increase in sales: : Many manufacturers estimated that sales agents increased their sales approximately 70% than in-house sales force. So they prefer to appoint a sales agent than sales employees.
Disadvantages of appointing a sales agent
No control over sales agents
You can't control an independent sales agent. They will try their best only for those products which they feel the best chance of selling and making money.
You must keep in mind that your sales agent may be sells the products of your competitors and reduce the sale of your products if he offered extra commission by your competitors.
Difficulty in after sales services
When selling through a sales agent after-sales service can be difficult.
Appointing a sales agent instead of appointing a sales employee can be a good choice which saves your money, time and reduces the amount of management work you need to do. Before appointing a sales agent, you must keep in mind that your own sales objectives and then work out if you can achieve these through a force of sales agents or if they can only be achieved by in-house employees. Typically, the main deciding point is whether you are willing to give up some control of the sales process in return for lower costs or the more important control is for you the less advantageous it is to appoint a sales agent.
Factors to be consider while appointing an agent
Personal contact is essential
Trust and Personal Rapport is vital
Their confidence about your company, your product, and your chances for success
Financial stability of the agent’s company
Size of agent’s company, no. of employees as sales staff and their experience
Reputation of the agent’s company
Ensure representatives are not representing other product lines too similar to yours – avoid conflicts of interest and competing products.
Knowledge of the overseas and local market
Network of representatives and/or contacts
Experience in market sector
Ensure you fully investigate all options before appointing a sole agency because you want to get value for money. You consider a trial period and advise the agent they may receive exclusivity of your product if they meet identified performance targets.
In large markets such as the USA, use regional distributors (i.e. more than one) for the best market coverage.
Some source from where you get Information of Agents
Government Departments Trade Associations
Chambers of Commerce
Export Promotion Councils
Difference between agent and distributor
Agents are representative of the exporters on the other hand, distributor are the customer of the exporters.
Agents are not direct sales persons, whereas distributors are the direct salesman of the products.
The agents are only responsible for selling the products. They are not involved in the delivery. On the other hand, distributors buy the product directly from the company and distribute it in the market.
While an agent can be called the company’s representative, a distributor cannot be called so, as he buys the product and then resells it.
An agent is responsible for finding the target people and negotiating with them to buy the product. Distributors do not have any role in negotiating with the customers; they only perform the role of distributing the product in the market.
Exporters sell through an agent on the other hand, exporters sells to a distributor.
Agents are not responsible for after sale services but distributor are responsible and in some cases for guarantee and warrantee issues.
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