Non-Exclusivity: Everything You Need to Know
Non-exclusivity means partners may have to compete with one another in a specific market.3 min read
Non-exclusivity means partners may have to compete with one another in a specific market. A non-exclusive partnership lacks the ease of having an exclusive territory, but the competition can also push both partners to achieve better performance. Exclusive agreements, on the other hand, offer territory protection for vendors and partners to keep the territory solely for one or the other partner for a specific time period.
When signing non-exclusivity agreements, vendors need to be comfortable with the presence of competing partners in the same market. The vendors may even find themselves selling directly to the same market. This sometimes means cooperative selling in coordination with the partner to avoid confusing customers.
Prospect exclusivity or a deal registration process can be added to the non-exclusivity agreement to increase transparency and keep partners happy. A partner can be offered prospect exclusivity with a list of specific companies to target as a way to establish a customer base when starting out. Then, after the partner is established, or if another partner requests prospect exclusivity, the deal can be revoked with the first partner.
Advantages of Non-Exclusive Agreements
The advantages of non-exclusivity are:
- Better coverage within the market area
- More opportunities to make sales
- Vendors can adjust quickly if customers change providers
- Better market intelligence because there are more people talking to customers
When you agree to exclusivity, you and the party you make the agreement with, are agreeing to work cooperatively to sell your service or your product in a certain market. This lets you have the chance to develop your market without competition taking away your customers after you work to get established in the market. One reason to grant exclusivity is to get more commitment and enthusiasm from ambitious partners who want to claim a greater market segment, build a unique sales pipeline, and see faster growth.
As a vendor, to get an exclusive partnership off to a good start, you need to approach your potential partners success with the same level of control and passion you apply to your own territory. This helps both you and your partner feel invested in the business relationship, and it adds a positive effect to the experience of working together on your marketing and sales processes. It also lets you cut costs and invest more attention on effective performance. Support really is vital to ensuring a successful exclusive partnership.
Transparency and Expectations
From the beginning of an exclusivity agreement, it's important to be transparent and direct about your expectations. Both parties in the agreement need some specific things to become successful and sell more, including access to:
- Direct-to-salesperson support
- Full sales pipeline visibility
- Marketing campaigns
Each party needs to agree on the metrics they will use to track and maintain a high level of performance and so the organization operates seamlessly. Choosing a system that helps with tracking data in an exclusive agreement helps vendors and partners develops stronger business relationships.
Shared goals, milestones, and aligned incentives help vendors and partners work cooperatively. Other things that can help partners work together more efficiently are measurement systems. Vendors can put forth the threat of revoking exclusivity if performance goals aren't met. This works as a deterrent to low performance because exclusivity is worth holding onto for partners.
There are different ways to break up limited exclusivity. Exclusivity can be offered in a particular:
- Industry sector
- Customer type
- Application area
- Company division
It can be offered within any boundary or set of parameters that leaves the partner room to expand their marketing skills and achieve results. Partners may have to pay a fee upfront or guarantee a certain number of orders to gain exclusivity if the product or service in question is a successful marketplace commodity.
Sales goals based on activity targets help keep vendors and partners on track and committed to the sales process. An advantage of targets based on activity, for vendors, is that close tracking provides a way to see quickly if a partnership isn't working, and the vendor then has the chance to end the exclusivity agreement due to poor performance.
If you need help with a non-exclusivity agreement, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.