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I wrote a series of columns in 2005 about protecting yourself from your salespeople, specifically from the situation where a salesperson leaves and takes customers along. Those articles prompted a call from a printer who is going through a situation that will probably go all the way to a courtroom. He has asked me if I would be willing to testify as an "expert witness," describing the industry's attitudes toward who "owns" an account. I can do that, of course, but I've been thinking that I might be able to provide value to the entire industry by publishing my "expert opinions" here as well.
Expert Opinions
In my opinion, a salesperson has no claim to "own" a relationship and therefore take that customer along when he/she leaves the company which employed him/her when the relationship was established. To put it succinctly, creating that relationship was what the salesperson was paid to do, so the printing company has in fact "paid to own" the customer relationship.
Experience has shown, though, that many printing companies have abdicated their ownership of accounts by allowing a salesperson to take the business away—by not managing defensively. I still maintain that this situation does not deliver "ownership" of the account to the salesperson when that salesperson brings the business value of his/her established relationships to a new printing company, unless that "ownership" is specifically granted by the new company. Again, it's a question of being paid to deliver the business value of those relationships. More often than not, a salesperson changing employers is promising that at least some of his/her customers will come along, and that's part of both the hiring decision and the compensation decision for the new company.
If I were a salesperson, of course, I would ask for written acknowledgement that the customers I was bringing along were mine, and that I could take them away if I ever decided to leave. If I were the owner of the new company, I'm not sure I'd make that agreement. In any event, I would manage defensively to make sure that every customer—even customers a new salesperson brought along with him/her—became my company's customers, not just the salesperson's customers.
Poor Performers
Another printer responded to those articles by posing this question: How about the situation where you fire a salesperson who has signed a non-compete? This is another area where a judge might be reluctant to enforce your agreement. It would be one thing if a salesperson was fired for something not strictly related to sales performance—for example, one of my clients fired a fairly solid sales performer a while back for getting into a fight with another employee. It's another thing entirely when you fire someone who simply hasn't performed.
One of my neighbors tells a story about the firing of a salesperson in his industry, and an attempt to enforce a non-compete agreement when this salesperson took a job with a competitor. "You fired him for being a lousy salesman," the judge said, "you should be thrilled that he's going to work for your competition!"
David M. Fellman is the president of David Fellman & Associates, Cary, NC, a sales and marketing consulting firm serving numerous segments of the graphic arts industry. Contact him at 919/363-4068 or visit his website at www.davefellman.com.
author: DAVID FELLMAN