When an agent leaves: what stays with the company and what goes with them

The end of an agency mandate produces two consequences, and the second does the most damage.

The first is economic and predictable. On termination, the end-of-relationship fund accrued over the years must be paid out, and the portion accrued in the current year is paid directly by the company. To this is added the customer indemnity, compensating the agent for the client base they leave.

It is an expense that arrives at the worst moment: while you are already looking for a replacement and while that area is producing nothing.

The second consequence has no line in the accounts. The customers in that province knew them.

The practice owner does not have a relationship with your company: they have one with the person who called round every couple of months. If that person now works for a competitor, the next order often follows.

It is a known risk, accepted by anyone with a sales network, and there is no way to remove it entirely. It is part of how that channel works.

It can be reduced, though, and the way to do it is to have a share of revenue that does not rest on a personal relationship.

A customer who orders from an online catalogue orders from your company. There is nobody who can take them away by changing principal, because there is nobody in between.

This does not make that customer more loyal in absolute terms: they can always buy elsewhere. But whether they stay depends on things you control — availability, punctuality, price — and not on a person who might leave.

There is also an effect on the value of the company worth naming. A client base held in the relationships of three agents is a fragile client base, and anyone valuing the company discounts it.

Revenue arriving through a documented channel, with order history and customers registered in your name, is worth more precisely because it does not carry that risk inside it.

This is not a reason to give up agents. It is a reason not to have all your revenue there.

In summary: ending a mandate means paying out the end-of-relationship fund and the customer indemnity, the customers in that area know the person rather than the company, a direct channel depends on nobody who might leave, whether customers stay depends on factors you control, and a client base concentrated in personal relationships is worth less when the company is valued.