How do sales agent jobs work, can businesses benefit from having self-employed commercial agents selling their products and services, and is it the right career path for top sales people?
Here we explain how it all works for both sales people and the businesses whose products and services they sell. Once you understand the process from both sides you will be in a position to see if this is the best career move for you as a sales professional, or if selling through sales agents is the best, cost-effective sales strategy for your business.
On this page we cover:
- Common terminology.
- Commission payments.
- What should be agreed by the commercial agent and the business.
- The next step to finding or offering an opportunity.
And how our services can find the best sales agents for businesses and great opportunities for sales agents.
Sales Agent Jobs – Common Terminology
Here’s some basic terminology to support your understanding of the topics on the website:
What is a Sales Agent?
A sales agent is a sales person that works on a self-employed basis. They are usually rewarded by commission payments for their sales. Sales agents are independent and work with businesses, rather than for them, they are not an employee. Unlike wholesalers or distributors, sales agents do not normally buy or store product stock. They agree the sale with the customer and pass the details to the business principal who fulfils the order.
Sales agents will often sell products and services from more than one supplier. An agent can, in some instances, be an existing business. For example, a clothing manufacturer may become an agent for another clothing supplier as they have a sales team already prominent in the market sector and a readymade network of customers.
Sales agents pay all their own day to day expenses, e.g. transport, telephone, laptop. The commission they earn has to be enough to cover their expenses plus holiday pay, pension payments, and business costs such as insurance cover and accountants’ fees. And an income on top of the expenses.
A sales agency can be a small group of sales agents working together as an agency, or it can be a large agency with its own sales agents or paid sales employees. Similar to independent agents, sales agencies are rewarded for their results. The contract between an agency and a business principal reflects the agreement made on the terms and conditions of sales and payment and can accommodate all types of sales to all customer groups, B2B or B2C.
The Business Principal
The business principal is the company or individual whose products and services are sold by the sales agent or agency. The principal could be the manufacturer, supplier, or provider of a service. They are the company or individual that has the relationship, and a contract, with the sales agent.
A business principal is not ‘The Boss,’ they do not employ the sales agent. There can be some management of sales agents involved, especially administrative, but this depends upon the terms of the contract and the relationship between the agent and the principal. The business principal can be located anywhere in the world and does not need to be in the same country as the agent.
Sales Agent Commission
Sales agent commission is the payment made by a business principal to the agent as a reward for the sales made. It can be a set amount per unit sold, a percentage of sales revenue generated, a percentage of profit per sale, or can be based on any other measurable metric.
Commercial Agent Directive
The EU Commercial Agent Directive 1993 was created to protect the sales agent and give them more rights. Agency agreements should take these points into consideration. For a summary of the agreement (not the official document, please see here). You can also read our interview with the EU.
Agency Agreement – The Contract
An Agency Agreement is the contract between the sales agent and the business principal. We’ll discuss lower down the page what the agreement should cover, but we strongly advise having a contract drawn up by a legal professional with expertise in sales agency law. If there are problems in the future, a proper contract can prevent additional costs for agents and principals and help to resolve most disagreements.
In most cases the definition of a sale is obvious, it’s when a customer orders a product or service. In some sales agent-business principal relationships it is not always that simple. The sale, what the agent is rewarded for achieving, must be clearly defined. What is a sale can best be answered by considering, what does a sales agent need to do to get paid?
Sales agents may be paid for closing a sale or reaching a stage of the sales process. Sometimes agents also act as introducers, where instead of closing sales they introduce potential customers to the business principal. Agents may be paid for the introduction or if the introduction becomes a closed sale.
The Sales Agent Contact List
You will often see in the advertised sales opportunities reference to a sales agent having a customer and contact list in an industry sector, a network of contacts, or connections in decision making positions.
The sales agent’s contacts are one of the most valuable benefits a sales agent has that a business principal can benefit from. It is their list of people they have sold to, have a connection with, or are familiar with. Also called prospects, this list means that the agent has a readymade prospect list to present the business principal’s products and services to.
From the agent’s perspective, it is an asset to convince principals to work with them as an agent. The list will also help to quickly close sales of new products and services and earn commission for the agent. It is one of the key reasons businesses decide to use sales agents rather than employ sales staff that will have to start from scratch by cold calling and door knocking.
Sales Agent Commission Payments
How much commission should a sales agent be paid?
As with employed positions, commission payments can be dependent on the margins that the company make, the financial value of the product or service being sold, and the timescales of the sales cycle or order fulfilment.
Low value, quick turnover, products will have a lower commission payment than high value items with a long negotiation period. This is because the sales agent is expected to sell more of the low value items, in a shorter time span, and often with less work required, such as when a customer places a repeat order.
As a guide, if an agent is selling high value items and has to wait for the sale to go through a long process, then 20% – 30% of the sales revenue is a reasonable commission rate. Bear in mind that the agent has to wait longer for their commission.
If they are selling products or services that have a quick turnover, high volume, or repeat orders, then a reasonable commission could be 5%-20%, and the agent will receive the commission sooner or more frequently.
A business principal advertising a sales agent opportunity might want to prepare supporting evidence of sales numbers achieved by other sales people over a period of time. This will give an indication of the commission that can be earned by an agent considering the opportunity.
Sales Agent Agreements – What should be included
Each sales agent agreement may be different depending upon what they sell, sales areas, expected sales results, and many more variables related with customers and markets.
It would be impossible to write an all inclusive list of everything that should be included in an agreement but we’ve put together a list of topics that are often relevant for both agents and principals to consider. By seeing whether these topics impact your commercial agents operation and marketplace, and including them in the agreement, you can prevent problems in the future.
We discussed above about how much sales agents can expect to be paid in commission, but when it comes to a contract between the principal and the agent there are more details to include.
Both parties need to be sure on when commission will be paid, is there a set day of the month proof of sale needs to be submitted by, how long after a sale is made will the payment be made. How will it be paid, the usual way is by bank transfer but neither side should take that for granted. If it’s by cheque there is additional waiting time for it to clear.
What Counts as a Closed Sale
The principals must be clear on the definition of a closed sale. Is it a signed contract, a letter of intent to sign a contract or purchase products, or a cleared payment from the customer?
Does the buyer need to pass a credit check or have their account opened before a sale is counted as closed and allocated to the commercial agent? These may seem like minor points but if a sales agent loses commission over a technicality the relationship with the principal can break down.
Designated Sales Areas
Some sales agent opportunities give the agent a designated sales area. Where this is the case there needs to be agreement on:
- Does the sales agent get rewarded for every sale on that area, and does that include repeat sales from existing customers.
- What happens if a new or existing customer contacts the principal directly, will the lead be passed to the agent and will the sale be allocated to their figures?
- What happens if a customer on the agent’s area orders from another office outside of the agent’s sales area. For example, a head office with an address outside of the agent’s area orders for a branch office that agreed a sale with the agent. An agreement now can head off potential conflict between agents on neighbouring areas.
If there is an allocated sales area there should be agreed terms covering any changes to that area.
When companies expand they often want to add more commercial sales agents to their team to increase sales, which is a reasonable action. This can mean that existing sales areas are reduced as new areas are formed and this could reduce opportunities for sales or result in existing sellers losing a profitable part of an area.
By covering all the details listed above, and others that are specific to the opportunities you offer as a principal or apply for as an agent, you prevent future problems and maintain a trusting relationship.
The Next Step
At Salesagents.uk we specialise in bringing together sales agents looking for new opportunities and businesses looking for good sales people to sell their products and services in the UK.
Principals Looking for Sales Agents in the UK
For principals looking for sales people, the next step is simple. Follow the link below and complete a brief form giving us details about your sales agent opportunity. The more information you can give us about the opportunity, and the more appealing you can make it sound, the more successful your advert and promotion campaign will be.
Once we have received payment, and the advert information, your advert and promotion campaign will commence the next working day.
We offer services to suit all budgets and get your opportunity seen by the 1,000s of agents that we are in regular contact with. On our order page you’ll find more details about this service and how it works.
Sales Agents Looking for Opportunities
We publish new opportunities on the sales agent opportunities page. Just click on the ones that interest you and you will see a full-page advert with information about the business, the products or services, and contact details so you can discuss the opportunity with the business principal.
You can also keep up to date with new opportunities by receiving our newsletter and registering in our database.