What she's asking for is common and fair, imho. (However, I'd probably push back to 6 months.) You just have to document what constitutes "ownership" of the lead. E.g., the fact that she had a 5-minute conversation with ACME, and they said no, should not entitle her to a piece of the action if you resurrect ACME and sell to them 6 months after this rep leaves. Usually, your sales system can handle this; e.g., the prospect has to get to a "pending PO" status, verifiable, for her to be paid if she's gone. At the same time, you need to look at this from her perspective: If she builds up a whopping pipeline for you, what's to stop you from firing her and pocketing all her commissions? I know, you're a good guy, and you'd never do that, but the world is rife with employers who would (and who have). She is entitled to some protection. But yes, you're right, the definition is the tricky part. In fact, as long as you can nail down the definition of ownership, then the time period becomes meaningless. A weird/hypothetical example: She works a lead from January through June, hard, and gets them right to the precipice of buying, but for whatever reason, they don't. She leaves in July. No one else talks to the prospect. Then, out of the blue, in the January of the following year the prospect sends you a purchase order. She did all the work, she deserves the credit, so why not pay her?
Categories: Sales and Distribution
I am putting together an agreement for a 1099 sales rep. Given the 6-9 month sales cycle, she is asking for commissions on any sales from relationships she was involved in prior to contract termination, out to 9 months after termination. I find this to be a bit onerous, particularly since there is no language stipulating the level of effort applied to a given relationship subject to commission - in other words, an introduction is treated the same as leading customer demos, customer sales meetings, and other tasks necessary for closing. So my inclination is to shorten the post-contract commission period and define "significant participation". Any thoughts?