Commercial agent

From CEOpedia | Management online

Commercial agent - is a person employed by the relevant company to acquire customers. It is defined as both:

  • a profession
  • a business opportunity.

Commercial agents are interested in finding clients for various types of businesses. From real estate agents to oil companies. They are independent sellers whose remuneration is usually determined by the commission they charge for the volume of the product sold. It is a useful business entity, as it makes the costs of its activity dependent only on the sales value generated by it. As a result, as a company's profits increase, so does its profits, which enables it to increase the scale of its operating activity at a rapid pace. This is one of the most common forms of sales cooperation because of the above-mentioned bilateral benefits.

Commission-based selling

As mentioned above, commercial agents mainly operate on the basis of the rules for receiving commission fees. As highlighted in the literature, this type of remuneration leads to high financial results. This applies in particular to insurance agents. However, leaving such a sales model in the company also has negative consequences. Because commercial agents focus on increasing commissions, they resort to illegal market practices, thereby exposing consumers to unfair offers[1]. Despite the increasing effectiveness of the company, its intangible value in the form of a personal brand and image is decreasing. Companies should therefore be cautious when using commissions as they expose themselves to significant intangible losses[2].

Principal of commercial agents

Like all professions, commercial agents also have their own code of conduct. Such rules should include in particular the obligation not to mislead them as to the scope of the offer. In addition, when representing the client, they must be empowered to undertake specific activities and should not exceed their scope. This is due to the fact that good ethics requires them to respect the legal force entrusted to them[3].

All goods entrusted by the trader should be used by the trader with due diligence. If the agent notices that the goods he or she offers violate any quality standards, he or she should refrain from doing so. In addition, the consequences of a breach of these rules should always come down to a deduction from the commission or termination of a contract with an agent.

The last rule is to always be considered as a customer benefit. It happens that agents establish a relationship with several different entrepreneurs. In the worst-case scenario, these are the competitors. Irrespective of the conflict of interest, they provide products of given entrepreneurs in a change depending on the commission received on a given transaction. Such action is not only consistent with the commercial agent's ethics, but may also constitute a basis for liability for damages resulting from unfair competition practices.

Finally, it is worth noting that Directive 86/653/EC stipulates that commercial agents are always entitled to receive remuneration, regardless of their performance. This is intended primarily to safeguard them from potential poverty and inefficiency in the performance of their duties.

Examples of Commercial agent

  • Sales Representative: This person works on behalf of a company to find and acquire customers. They are responsible for researching potential leads, making sales calls, and negotiating deals to close sales.
  • Business Development Representative: This person is responsible for researching and identifying new business opportunities for the company. They work to build relationships with potential customers, create and deliver proposals, and close deals.
  • Account Manager: This person is responsible for managing and developing existing customer relationships. They work to ensure customer satisfaction, identify and solve customer challenges, and maximize business opportunities.
  • Brand Ambassador: This person is responsible for promoting a brand or product. They work to increase awareness of the brand, create positive buzz, and engage with potential customers.

Advantages of Commercial agent

A commercial agent is an individual employed by a company to acquire customers, and they can provide numerous advantages to an organization. The following are some of the benefits of hiring a commercial agent:

  • They can provide companies with expertise and knowledge of the industry and market, allowing them to identify potential opportunities and be aware of customer trends and needs.
  • They can establish and maintain strong relationships with customers, providing them with high-quality service and ensuring customer loyalty.
  • They can increase the visibility of a company in the market, helping to expand their reach and customer base.
  • They can negotiate better deals and prices for their employers, allowing them to maximize profit and minimize cost.
  • They can keep track of competition and monitor changes in the market, allowing them to stay ahead of the curve and make informed decisions.

Limitations of Commercial agent

A commercial agent is a person employed by a company to acquire customers, but there are several limitations to this role. Below are some of the limitations:

  • A commercial agent is only an intermediary between buyers and sellers; they cannot make any decisions or commitments on behalf of the company.
  • The commercial agent must comply with the company’s policies and regulations when representing them.
  • The commercial agent is only responsible for sales and marketing activities and does not have any authority over other business operations.
  • The commercial agent is responsible for their own expenses and must be compensated for their work.
  • The commercial agent is not able to set their own terms and conditions with customers. They must abide by the terms and conditions set by the company.
  • The commercial agent is not able to provide any legal advice or services to customers.

Other approaches related to Commercial agent

A Commercial Agent is a person employed by a company to acquire customers. Other approaches related to Commercial Agent are:

  • Negotiating contracts on behalf of their employer - Commercial Agents are responsible for negotiating the terms of contracts with prospective customers. They must be knowledgeable of the relevant industry and have a keen understanding of the customer’s needs.
  • Promoting products or services - Commercial Agents are responsible for marketing their employer’s products or services. This includes researching target markets, creating promotional materials, and engaging with customers through various channels.
  • Developing relationships with customers - Commercial Agents are also responsible for nurturing relationships with existing or potential customers. This involves engaging with customers in order to understand their needs and ensure customer satisfaction.
  • Generating sales leads - Lastly, Commercial Agents are responsible for generating sales leads. This involves researching potential customers and identifying opportunities for the employer to make a sale.

In summary, Commercial Agents are responsible for negotiating contracts, promoting products or services, developing relationships with customers, and generating sales leads.

Footnotes

  1. ↑ Jankowski A. 2015, p. 16-19
  2. ↑ Kimutai B. 2015, p. 20-22
  3. ↑ Marsden A. 2019, p. 9-14


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References

Author: Klaudia Urbańska

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