Sales and Marketing Agreement: Everything You Need to Know
A sales and marketing agreement is a binding agreement that brokers the collaboration between both the sales and marketing departments.3 min read
2. Ways a Sales and Marketing Agreement Can Align Sales and Marketing
3. What is an Exclusive Rights Marketing Agreement?
4. Manufacturers and Wholesaler Roles in an Exclusive Marketing Agreement
Updated November 17, 2020:
A sales and marketing agreement, also referred to as an SLA, is a binding agreement that brokers the collaboration between both the sales and marketing departments by:
- Defining the qualification process
- Creating lead scoring material
- Providing accountability standards
What Do Sales and Marketing Agreements Do?
A sales and marketing agreement is an important tool to get both the sales team and marketing staff on the same page to achieve the goals of the company and push the company towards profitability. The end goal of most sales and marketing agreements is to generate an acceptable level of marketing-qualified leads or MQLs for the sales team to them convert to sales-qualified leads, or SQL ultimately generating sales. The agreement will lay out how leads will be generated, managed, and then delivered to sales. There are requirements set on both sides and follow-up required to get the leads, qualify them, and properly distribute them.
These agreements have become a necessity in business, as sales and marketing departments don't often seem to be on the same team. In a report in 2017, called the State of Inbound, less than half of marketers felt that both the marketing and sales departments were aligned with one another. Unfortunately, making sure that both these teams work together is paramount to gaining and executing successful leads.
When drafting your sales and marketing agreement, consider the purpose and goals of each team so that all needs can be addressed. This would start with having a concrete strategy and reporting goals set out by the marketing department. Make sure that these numbers can align with your sales team's mentality.
Sales professionals are driven by concrete numbers, as they work based on quotas where these numerical goals will correlate with income as well as job security. If you help match the sales and marketing numerical goals, it will provide equal accountability for both departments. By laying out, addressing, and properly communicating the goals of each party, it confirms the importance of those goals being met.
Ways a Sales and Marketing Agreement Can Align Sales and Marketing
A properly drafted sales and marketing agreement can bring both a sales department and marketing department onto the same team. It can:
- Define the follow-up time for leads that have been received by the marketing department
- Define the lead nurturing process so they can provide the highest quality leads as early as possible
- Create a criteria-based lead distribution process that will help to optimize sales
- Provide clear marketing goals designed to create marketing-qualified leads
What is an Exclusive Rights Marketing Agreement?
An exclusive marketing agreement, or EMRA, is a contract created between a company and a distributor that will grant a distributor the rights to some of the profit of the sale of the product in return for selling it. Small businesses that manufacture products may not have the resources, manpower, structure, or finances to create a sales department or sell their product themselves.
In this case, they would use a distributor to sell their product for them in exchange for a commission amount. To ensure that this arrangement is beneficial for both parties and both parties understand their rights and obligations, drafting an exclusive rights marketing agreement is vital. The contract will grant only the distribution company the rights to sell the product which can help keep the competition at bay.
Manufacturers and Wholesaler Roles in an Exclusive Marketing Agreement
Companies may also use an exclusive marketing agreement if they sell their products online, but they would like to pursue sales to a wider audience. To accomplish this can be a time-consuming and costly process, so the business may seek out the rights of a distributor. When creating these contracts, the first goal is to identify and establish the roles of each party involved in the contract.
When referring to each party in a contract, the business that makes the products will be referred to as the manufacturer, and the party that is agreeing to sell the product is the wholesaler. When defining each party and their obligations you will also need to define the portion of the profits that each party will be entitled to.
If you need help with a sales and marketing 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.