It Don’t Mean a Thing if…
In 1931 Duke Ellington wrote the now, jazz standard, “It Don’t Mean a Thing (if It Aint Got That Swing).” According to Wikipedia, the title was based on the oft stated credo of Ellington’s former trumpeter Bubber Miley, who was dying of tuberculosis. The song became famous, Ellington wrote, “as the expression of a sentiment which prevailed among jazz musicians at the time.” It introduced the term “swing” into everyday language and presaged the swing era by three years. Ellington and Miley certainly understood the importance of their genre as the end all-be all that glued their existence and lifelong profession. “It” didn’t mean anything until it had swing.
In business, I sing a similar tune, daily. It goes a little something like this (please sing along) “It Don’t Mean a Thing (if It Aint in Writing).” Indeed, having a signed agreement in writing legitimizes a sale. It can be said a written agreement defines the existence of the sales profession and serves as confirmation of performance success. A sales agreement, in most cases, is that glue that connects sales efforts with payment/revenues/sales. And, its importance is clearly understood as an ongoing sentiment by successful sales professionals everywhere!
When is the best time to suggest an agreement to a customer? What should go into a binding written agreement?
When to Introduce an Agreement
It’s advised to propose a written formal agreement at the moment a buyer has expressed serious intent and/or has agreed, in verbal terms, to a transaction or purchase. Unfortunately, it’s not always easy to read “serious intent” of a buyer. Therefore, it makes sense to ask for permission in advance of sending along a formal agreement, to test the waters, in certain cases. “Would it be OK if I sent along an agreement stating the terms we just discussed? If all looks fine, please feel free to sign it and send it back (via fax or email) and we will get started right away.” If the buyer is not serious, it will be made known at that point. And, there is nothing wrong with asking for the sale. It’s what you do. Furthermore, an agreement illustrates a level of professionalism, honesty and integrity from your end. It communicates the intent that you want to deliver products and/or services in both of your terms and clearly set expectations early on.
It’s not advised to send a written agreement to replace a proposal in hopes that a client will, by chance, sign it and send back. This could be taken as offensive and presumptive.
A formal agreement can more quickly steer a sale to close or can derail it depending on the type of buyer you are working with—we know there are various ‘types’ of buyers. Bottom line—if you’re at that close/no-close point, and it’s time to consummate the transaction or move on, by presenting a formal agreement, it could expedite the cycle.
Anatomy of an Agreement
What goes into a formal agreement clearly sets expectations, protects the best interests of both parties and confirms a sale. For smaller sales I like to provide a one-page “Fee Authorization.” A Fee Auth is simply a condensed formal written agreement that includes:
– Client information
– Description of Assignment/Deliverables
– Payment Amount Authorized including Contract Period
– Additional Comments/Notes (any details of products/services paid for and/or delivered throughout the contract period that could be questioned or should be noted)
– Payment Terms (amount per invoice, frequency/schedule and billing contact information)
To reiterate, having a “Fee Authorization” for each project legitimizes invoicing, deliverables and payment terms; each of which can be questioned throughout your sales relationship with your client.
Following are some suggested components of a more formal written agreement; usually for larger sales. I also try to keep written agreements simple, concise and easy to understand. In addition, it helps to have an attorney review your agreement to make sure all of the necessary legal terms/issues are included and/or stated properly with your best interests in mind. It’s likely your customer will have to have their legal representation review and approve the agreement. The back and forth could take weeks or even months, and severely delay the sale. Therefore it makes sense to have it be as straightforward and clear as possible.
I. Overview and Purpose of the Agreement: A summary of the agreement goes here. Who are the parties involved? What is the contact & billing information? What is the date of the agreement? What is the contract period? Who is the sales representative responsible for the sale?
II. Program Terms: What specifically are the deliverables & expectations of each party? It’s best to clearly state the quantity of products and/or services being provided as well as the pricing agreed upon and how that is broken out. What is the expected payment schedule and conditions for payment (as well as tax implications)? Who will be the point of contact for each party?
III. General/Legal Terms: What are the conditions for termination of the agreement? Where will any dispute be governed (usually the state of the party that drafts the agreement)? How will branding and publicity be treated? Vendor status (i.e. contractor or otherwise)? Legal points such as severability, waiver, limitation of liability, survival, notices and force majeure (some unforeseen event beyond each party’s control) are also included in this section
IV. Addendums &/or Schedules: If necessary, this section is used to explain with greater detail the products and/or services being provided; the processes of deliverability and any other information that should be required if there were to be any question.
V. Signatures: Name, Title, Date of each representative should go here. Sometimes this is includes as the cover page to the agreement. Regardless of where it’s placed, it’s the single most important inclusion in the agreement.
Delivery & What Comes Next
Pending a signed written agreement, it is suggested that invoicing and payment processing be implemented immediately. Depending on deliverables agreed to and contract period, implementation should also begin at once. Sure “It Don’t Mean a Thing if It Aint in Writing.” However, some sales people would argue that “It Don’t Mean a Thing if It Aint in the Bank.” (Yes, it doesn’t rhyme but the message here is clearly understood… so, process payment for the sale immediately following agreement signing!) It’s likely you will not need to reference the agreement throughout the life of your sales relationship. However, by having it formally written and agreed to will likely protect you should the relationship go south and/or changes happen in personnel or among either party.
About the Author
Angelo Biasi is General Manager of SMART Marketing Solutions, LLC, a leading full-service integrated marketing company in Naples, FL since 2001. He has helped create and execute marketing plans and integrated marketing solutions for companies such as Playtex, Bic, Rogaine, Tauck, and over 35 colleges and universities, to name a few. Angelo has an MBA in Marketing from the University of Connecticut and has taught Marketing at New York University for over five years. For more information or to learn more, email him at abiasismartmarketingllccom (abiasismartmarketingllccom) , visit www.smartmarketingllc.com or call 239.963.9396.