Finding Global Sales Partner Requires Global Thinking, Strong Strategic AlliancesBy: Andy Marken
For a number of reasons, including the fact that the U.S. represents one of the largest and most lucrative technology markets on the globe, foreign firms have always been more aggressive in their efforts to gain a foothold here first and then expand their activities to other countries. American companies on the other hand have often taken a defensive posture and retreated from activities outside the U.S.
According to leading economic indicators, the result has been record trade deficits of nearly $900 billion. By circling the corporate wagons rather than bravely moving into new territories, U.S. businesses have sent clear signals to these major competitors that we aren't interested in selling to 95 percent of the world's population. Granted, sales in most of these areas are only now showing strong promise but the potential is enormous.
As important to a firm's long-term global success in its respective market area is that by retreating from markets outside the U.S., they also abandon vital intelligence outposts. Outposts that can keep firms abreast of plans and actions of foreign competitors as well as provide solid inputs for next generation products and solutions.
As foreign firms become more aggressive in the U.S. market as well as on a global scale, many American companies are struggling to determine how they can increase their global activity and presence. Firms usually have three choices:
International distribution often appears to be an easy way to increase sales, but more is involved than simply signing up a distributor in each target country. Those firms that have attempted to impose U.S. policies, programs and activities have found that rather than providing a blueprint for success, they became a roadmap to disaster.
Although it's almost unheard of for their U.S. counterparts, international distributors develop and carry out their own marketing and promotional plans and programs. In most instances they take almost total ownership of the products and their success in their respective countries...including sales, support and service.
Because the distributors are so important, U.S. firms that establish a relationship with them must view it as more than simply signing on a distributor; it's a strategic alliance. Too many firms fail internationally because they fail to fully come to grips with this important distinction, its requirements and its ramifications.
U.S. firms often lack a clear, concise set of international objectives. They often haven't determined which products/services have international appeal and haven't considered the training and support that will be required. In addition, they haven't set down the physical and fiscal commitments they will have to make to ensure the program's success.
Equally important for the company is the development of a strong profile of the ideal distributor or partner they want/need...even for domestic markets. Overseas, the selection process becomes even more difficult. The biggest distributor in a given market isn't necessarily the best organization to represent your products.
Since you are establishing a strategic alliance it is extremely important to ensure that management styles can co-exist and thrive together and that sound personal relationships can be developed.
In making the choice, it is important to understand how distributors operate in different parts of the world. In Europe, distribution varies dramatically from country to country, region to region and often from city to city. The same is true in the Pacific Basin, South America, and the Middle East except in these areas the distributors are often national in nature. While numerous distribution organizations have expanded their global reach, their "image," influence and penetration can be quite different from country to country.
In most of these international markets, distributors not only play a key role in the sale and distribution of goods; they are also a strong marketing and support factor.
They stock inventory. They have extensive lists of important contacts at the governmental and sales level as well as in-depth knowledge of their target markets. At the same time, they spend considerable time and money developing and maintaining their technical, training, and support expertise.
Even as the Internet eliminates country borders to produce a global economy and global marketplace, too many U.S. manufacturers fail in overseas markets. They never fully come to grips with each area's important distinctions, their requirements, and the ramifications of these differences on how it affects the image, sale and use of their products. Instead, they rush to sign up distributors, fire them, and then sign up new distributors, much as they would in their own backyard.
This trial-and-error process delays sales success and in some instances has caused marketing and financial disasters.
On the other hand, firms that carry out a careful selection process, conduct positive support and training programs, continually monitor their foreign relationships are likely to increase sales and profits.
There are several other reasons for choosing international distributors with care. Because of the distances involved in these strategic alliances as well as the language and customs barriers, U.S. producers, by necessity, relinquish a part of their marketing and sales authority to the local distributor. Thus, it is important to ensure that their respective management styles can exist and thrive together.
It is also advisable to document a potential local country's partner's market connections. As aggressive as the global market is today, a company simply can't afford the luxury of establishing a relationship with a firm that doesn't understand its target markets or doesn't have strong relationships in those markets. Management has to keep in mind that one of the key things they are "buying" is the distributor's ability to quickly and economically tap into their markets...with your products.
In most areas of the globe being "the new aggressive, hungry kid" on the block is less desirable. Usually you're looking for an established (dare we say entrenched) organization that has extensive, long-term relationships with senior management and key technical personnel at prospective customer organizations. Key personnel in most countries make less than their U.S. counterparts but they have often come up through the ranks and move less frequently from company to company.
Finally, because of the distance between a U.S. company's headquarters and an overseas distributor's territory, it is important to ensure that the distributor's sales force has solid technical expertise, as well as the ability to service customers. With the slim margins firms are forced to deal with today, it is seldom economically feasible to fly service personnel across the country, let alone across the ocean to handle customer problems.
When the supplier doesn't or can't respond to the overseas customer's or distributor's requests, the relationship sours quickly. This is especially true when the company is focusing all of their resources on protecting their market position at home rather than trying to build marketshare in the new territories.
Whether corporate management likes it or not, the local firm will be the company in that country. As we are all coming to realize service and support are becoming increasingly important for future sales. They become pivotal decision factors on the long-term success of a company and its products.
If the company isn't willing to commit the time, money and effort required in helping the individual country distributors become successful for your products and services, management will be wiser to forget about looking at the greener pastures on the other side of the fence and focus on staying in their own back yard.
It's better to be considered fairly good at home rather than a fool on a global scale.
© Copyright 2003, G.A.Marken, Marken Communications
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