Saturday, October 26, 2013

Sales exclusivity – Does it limit potential or add value?






Having been in a variety of senior sales and sales management positions over the past 25 years, I’ve worked in and managed both direct and channel sales groups.   In both cases, one major decision always seems to pop up……this issue of “exclusivity”

What exactly does the term “Exclusivity” refer to in sales?  The term really can have a double meaning in sales agreements.  


In one case “exclusivity” can be granted to a sales person or company to be the only person authorized to sell a certain set of products, or be the only authorized sales agency in a specific geographical region.  This could be a state, county, country etc.

The second definition can be written where a sales person or company can only sell one manufacturer’s product line, thus becoming an “exclusive” agent for a particular vendor.  In return for accepting this type of arrangement, the sales agent can typically negotiate favorable terms and pricing for the product.

But is “Exclusivity” hindering the sales organization’s success?  That is a debate that has been going on for years and will continue for the foreseeable future.  I have witnessed organizations who sell only one product or brand become highly successful and profitable.  Unfortunately, I have also often seen these relationships sour as technology passes by the product, or competition developing a better, more price competitive product.  

Just recently, the drug manufacturing company Merck lost it’s “exclusivity” to sell the drug Singulair when it’s patent expired.  According to NASDAQ.com, Merck & Co. “reported a 49% decline in second-quarter profit, as the drug maker continues to feel sales pressure from patent expirations”.  This is a big impact from the addition of sales competition to the playing field.  Obviously a positive In making the case that “exclusivity” helps drive increased profits.

On the other side of the fence, being an “exclusive” agent limits your options to a present to a potential customer.  While price limitations is an obvious result of this situation, consider other issues:  your prospect may have had a bad previous experience with your manufacturer, your product may not have the right features, your install or delivery requirements may not fit, or the prospect may just like to make a choice rather than be “sold” on a solution.  In any of these situations, “exclusivity” can hurt your sales efforts and can often lead to a lost sale.  If “exclusivity was good for business, Walmart would carry one type of vacuum, one brand of potato chips, one brand of laundry detergent, and so forth.  We all know they don’t, and they are America’s largest retailer.

So at the end of the day, is “exclusivity” worth it?  Still up in the air but it’s fun to discuss.  Personally, I think limiting yourself to one type of anything is a bad idea.  After all, how many of us  own more than one car and have all of the same type of vehicles in our garages and driveways?   There are 4 cars in my family, a Cadillac, a Toyota, and 2 Chevy’s.  And yes, I have 3 different brands of HDTV’s too!

So much for “Exclusivity” in my family!

How about you?

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