What is a Sales and Marketing Agreement?

A sales and marketing agreement is a legally-binding agreement that could act as an intermediate between the sales and marketing departments by providing accountability standards and creating a clear lead scoring material. Sales and Marketing agreements have become essential to the business sector because more often than not, these two departments don’t seem to be always on the same page. The agreement lays out how the leads (marketing-qualified leads and sales-qualified leads) are created, managed, and delivered to the sales team.

How does a Sales and Marketing Agreement Unite the Departments?

Here are the different ways that an effectively written sales and marketing agreement can bring the sales department and the marketing department on full synchronization:

Ways on Developing a Sales and Marketing Strategy

Planning an effective Sales and Marketing Strategy today can lead to a significant increase in return of investment (ROI) in the future. It can put you under a lot of pressure, but it should be rewarding in the end when done properly. Here are some ways a sales and marketing strategy is properly developed:

Budgeting for Success: Do ensure that the budget that you have for the company’s goals is enough. This includes the resources which are people and money. The size of the budget will depend on the amount needed to invest and the timetable needed for the results to be materialized. Too high expectations for a budget that is too small will only disappoint the teams.Create a target customer profile: In this step, identify the kind of customer that you would be able to work with in the best possible way. Identify all the characteristics that make them profitable and enjoyable to work with. As your growth goals change over time, also keep up with your customer base and update them as necessary.Keep up with your customers. In this step, document the journey that they take on their way to become your customer, and ultimately, your buyers. A good way to do this would be to identify their main questions, motivations, objectives, and possible objections that they may think about. Then identify the kind of content that they want to consume to keep them happy and satisfied.Identify what makes you different. In this step, being unique or significantly different from your direct competition is emphasized. One way to find out what makes you different is by talking to your customers and asking them questions on why they choose to do business with you, and what factors may lead to them switching to your competitors in the future.Check your marketing collateral. Ensure that the marketing materials that you’ve created whether it is printed or digital are designed to attract your customers and showcase what makes you unique from the competition. Also, ensure that everyone in your team is on the same page and uses the right and updated version of your materials.Verify your sales process. In this step, it is important to check if your sales process actually aligns with the customer profiles you’ve created, and is set up close enough to the quality and quantity of the customers needed to achieve your company’s objectives. Also, make sure that every member of the sales team is on the same process for qualifying and nurturing potential customers. While in this step, you might as well make sure that the customer relationship management system is efficiently and effectively set up and the sales process effectively documented.Document the sales and marketing strategy. If there are any issues that surface or are identified, prioritize them and work out a strategy on how to deal with them effectively. Depending on the issue or issues that are identified, tactical plans may need to be developed for content/inbound marketing, social media, lead generation, lead nurturing, or account development.

Common Problems Between Sales and Marketing Departments

Although these two departments share a lot in common, the relationship between sales and marketing departments can be a bit unharmonious. This can affect how the company is run and may lead to a nosedive in a company’s efficiency in productivity. Here are some common problems that these departments face:

Communication Problems. This continues to be a big challenge for companies that run their sales and marketing departments as separate units. This not only significantly affects a company’s productivity but also affects both departments’ trust with each other.Funding competition. Marketing teams demand more budget for creating high-quality promotional materials and extended digital campaigns in social media. However, sales teams also demand a bigger part of the budget for covering additional new people, better training for the current team, or greater performance incentives. In reality, not everyone gets what they asked for, and we can easily see how jealousy easily arises from this kind of competition.Misaligned strategies. This can lead to numerous redundancies, gaps in the production line, lost opportunities, and multiple massive inefficiencies in the production process.Blaming of each other. Whenever something difficult happens in the production process, sales and marketing departments tend to blame each other due to a difference in their understanding and expectations with each other’s goals and contributions. Marketers tend to blame salespeople for inadequate execution on an otherwise successful lead generation campaign. Salespeople tend to call out the lack of appropriate and effective marketing content for the customers they are currently engaging with.Incompatible personalities. The sales department and marketing department attract different kinds of people. Hence, there are different kinds of personalities. People who work in the marketing department tend to be more of the methodical type and focused on the achievement of strategic outcomes. Meanwhile, people who work in the sales department tend to be brilliant relationship builders and they thrive on being right in front of the duties of customer engagement. When the environment gets tense, any differences in personalities can be detrimental and will lead to serious misunderstandings.Conflicting goals. Sales departments and marketing departments strive for a common goal, and that is corporate growth. However, the way in which they try to achieve this varies differently from each other. While marketing departments tend to build an increasing number of qualified leads, sales departments usually aim for closing deals and revenue generation. Simply asking for help from someone from the other side usually doesn’t work out, or if it does, it might not be as straightforward because the goals and timelines from each team are very different.

How to Make an Effective Sales and Marketing Agreement

When making a sales and marketing agreement, you should consider the purpose and goals of each team so that everything they need is addressed and they stay on the same page. Also, make sure that each goal aligns with each team’s mentality. Here is a guide on making a sales and marketing agreement:

1. Identifying the parties involved in the agreement

In this step, it is important to identify the full names of the parties involved and to indicate their respective roles in the agreement. The company that is to make the agreement is designated as the producer, and the client in the agreement will be designated as the customer. It is necessary to identify the roles to designate their responsibilities and duties on the agreement without mentioning the names repeatedly throughout the agreement. You can start the document by writing the date, address, and title of the agreement.

2. Write the important details of the agreement

In this part, now you can begin drafting the main body of the sales and marketing agreement. There are several clauses you must include but that depends on what the needs of the company and the customer are. Here, you enumerate all the important details you want to happen. The terms and conditions specified by both parties should be evident from this sales and marketing agreement. It is also recommended that you take into account the project that the company is currently working on to fine-tune the agreement. The important sections of the agreement to be made include the titles, expiry/effectiveness dates, names, scope of work, copyright protection, confidentiality clause, indemnity clause, and signature lines of the parties involved. It should also include a clause that states any modification of the agreement is subject to the prior approval of the court. Also, ensure that the clauses included are designed to protect both parties in case something happens.

In this step, it is important to go through the agreement and give it a proper verification process after producing your initial draft. Make sure that nothing of importance is left out, and nothing unnecessary to the agreement or project is included in the document. The process of editing consists of the examination of the entire material, structure, clarity, and style. Present the paper to a legal professional for evaluation after thorough rewriting and editing. It is always advisable to seek a legal professional’s advice to help you find ways to produce effective and legal documents.

4. Have the involved parties sign the sales and marketing agreement.

Once the sales and marketing agreement has been finalized, then the terms stated inside it can now be put into motion by having the parties involved sign the agreement. You can also give it one final look to make sure that the terms satisfy all parties. Once the terms have been agreed, then it is now time to put the pen into paper, and the agreement is then signed.

FAQs

What happens when a party violates the agreement?

Whenever a party violates the terms stated in the sales and marketing agreement, legal action will be taken, according to what was agreed upon in the document. The solutions in remedying the agreement can be one of the following:

  • Compensation damages – the goal is to make the non-breaching party whole as if the damage never happened in the first place
  • Punitive damages – happens when the breaching party acted egregiously upon breaching the agreement. The non-breaching party then receives a payment that is more than the damaging amount
  • Liquidated damages – the damage amount to be compensated must be a reasonable estimate of the actual damages that were inflicted
  • Nominal damages – this occurs when the non-breaching party never suffered a monetary loss and is therefore awarded a token award by the arbitrator or the court as a result.

What is an Exclusive Rights Marketing Agreement?

By definition, an exclusive rights marketing agreement is a type of marketing agreement between the distributor and the company that grants the distributor the rights to some amount of the profit of the sale of a product in return for selling it. This is usually used by small businesses that do not have enough resources or capacity to operate their own sales department or cannot sell the product by themselves. Instead, they employ a distributor and in turn, the distributor will be the one who will sell the products for the small business, and they get a small amount of commission in return.

What is the difference between an MQL and an SQL?

A Marketing Qualified Lead (also known as an MQL) can be considered a site visitor that a company’s marketing team has deemed to be a potential customer in the future. An MQL is a reasonably qualified lead who matches the buyer personas created by the marketing team, but one who is not quite ready yet to make a purchase.

A Sales Qualified Lead (also known as an SQL) can be considered as a lead that a company’s sales team has decided to be worth pursuing. SQLs are usually now at the decision-making stage of their journey where they usually prefer sales-focused content and support. An SQL is a lead with an intent to buy and is a contender to make a purchase in a company.

The key differentiator of these two leads would be their intent to buy. They vary between different types of industry and even within individual organizations or companies.

An effective and properly drafted sales and marketing agreement can unite the sales and marketing department. It enables them to be on the same page of the process in order to let their activities synchronize to reach the company’s established goal despite the various differences that these two departments present. It also enables them to collaborate better and binds them legally for protection should any inconveniences arise. In this article, examples of effective agreements are posted above for reference and personal use.