EXPORTING – SEARCHING FOR DISTRIBUTOR PARTNERS: PART 2

Exporting

In the first part of this article, I talked about what distributor partners do, when to use them, and how effective they can be.  Let’s now see how you can go out and find good distributors.

Initiating the Search                                                                                                               Firstly, create a specification of your ideal distributor with all the factors important for you.  For example, what are the preferred market sectors and product/service expertise? Should they have installation and maintenance capabilities?  What size of company should partner?

The biggest operations with lots of products in their portfolio to compete with for selling time may not be the best for you as the smaller entrant business.  At the same time, you do want the partner to have adequate selling resources to make an impact with your product or service in the territory.

Next, start building your list of candidates.  You can use consultants to do this or if you are an Enterprise Ireland client, you could use the excellent support of their overseas offices.

Or do the search yourself.  For example, look at websites of players (not competitors) in a similar space and see if they have suitable distributors.  Ask other people in the industry for names of good distributors.  Visit exhibitions, review past catalogues, or view attendees at exhibitions on line.  Review industry associations. Use LinkedIn’s excellent market research resources.

Study the resellers’ websites and other sources to check out if they look to be a suitable partner.  For example, for sector focus and geographical reach.

Draw up a list of possible candidates and telephone the MD or a senior manager.   You might want to email them with first to introduce your business and product before following up with a call.  Give a brief pitch and ask if they would at least be interested in discussing representation.  Find out what you can in the telephone call and see if there’s some chemistry there for building a mutually beneficial relationship.

Don’t expect the distributor to be begging to represent your products.  The supplier isn’t usually in the dominant position.  Most reseller companies these days are very professional and review opportunity against risk for new potential suppliers.  Most will also want to spend some time assessing the market opportunity before making a full commitment to avoid wasting time and money.

Draw up a short list of companies to visit and don’t be surprised if it’s only two or three companies on the list seemingly meeting your specifications.

Some distributors may be seriously interested but might want to delay a visit while they do the market assessment with your product information.  That way, they will be in a more informed position when you do meet up.

Otherwise the next stage is to go out and visit the short list which hopefully will take you to the next stage of selection.  We’ll talk more about that and other steps later.

Happy exporting!

Stuart

EXPORTING – SEARCHING FOR DISTRIBUTOR PARTNERS: PART 1

Exporting

There is a raft of sales channels which can be used in international marketing. All have their ownmerits and optimised situations when to use them. This article talks about distributor partner channels and ways to search for them. I’ll talk about signing up and managing distributors and other sales channels at a later date.

In the selling process, distributors represent your brand and take title to your goods by buying from your company at a discount on end-user market prices. They then sell on to the end-user with a mark-up. Distributors frequently add value by getting involved after the point of sale by providing services like customer helplines, addressing warranty issues, installation and service support.

Using distributors, also called resellers, is a low-cost way and effective way of entering an overseas market compared with setting up your own, expensive sales office and sales team. It’s a widely-used sales channel in export marketing.

Here’s the caution – establishing a network of proficient distributors requires careful selection, set-up, and management, and it does take up a lot of your time in your export activities to do it properly.

Now I’m going to blow the ship right out the water by sharing this with you! A typical global distributor network might have 15% of distributors as top performers, another 20% or so are in the category of “high maintenance, and should we fire them and look for another?”. The balance is a mix of those reaching targets or thereabouts with some management focus from the principal. These figures aren’t validated as it depends on such as the nature of the industry but from my experience, they reflect the task involved to start building up and maintaining an effective international selling network.

The steps for setting up distributor partners can be compared with recruiting and retaining good employees. The process involves searching for candidate companies, selecting, appointing, managing, training, supporting, and developing them so they are fully competent to sell your offerings as if they are your own employed sales team. And just like with employees – you have to prepare at the appointment stage for possible future termination scenarios.

In part 2 of this article, we’ll talk about ways to go and search for your partners.

Stuart

THE KEY TO GROWTH IN HARD TIMES: PART 2

Untitled

This post follows on from the three factors selected in Part 1 of this article to consider for growing your business in hard times. Those points highlighted the importance of strategic marketing, considering which products or services you sell into which markets, the need to significantly differentiate your offerings against the competition, and the use of market research to ensure you get everything right surrounding your product for your target sectors.

The final four points are more about human interfacing side of the business – internal and external, and about adaptation:

  •  Always be prepared to adapt to change. Just because engrained ways of doing business worked successfully in the past doesn’t mean they’ll work in the future. Communications marketing has changed like this in the way it utilises technology-enabled social media compared with the traditional marketing channels.
  • Quality and customer service excellence as one issue is an area that the business community in general has room to improve on – some organisations more than others. Don’t forget that it’s an important differentiator when looking to stand out from the competition. Getting it right doesn’t come overnight and it should be part of an ongoing “continuous improvement” programme in the business.

I buy new car tyres online from a UK company because the prices are competitive, they’ve never got it wrong, deliver in three days or less, and keep me informed during the entire buying process. Due to their service focus, in the last five years they’ve expanded from selling in the UK and Ireland to all across Europe.

  •  For almost all business organisations, the way that we market our wares has changed. It’s changed so much that for most businesses, to avoid embracing modern marketing communications methods – meaning social media and “content marketing” – is both at your peril and missing key selling opportunities.

It’s not the intention to talk about digital marketing strategy here, but there’s enough expertise available in the form of books, online information, marketing institutes, and consultants to start doing a lot with little outlay.

  •  The old adage that your employees are your greatest asset is remarkably true. Looking after your teams tends to give a good payback.

Here are two suggestions: Firstly, run a consistent programme of training so that employees can keep pushing out their boundaries and maybe take on board new activities. In vibrant economies, one percent or more of turnover spent on training might be considered reasonable.

In harder times, even a portion of this spent in the right areas should provide a benefit. One way is to integrate the training with a HR-led Performance Development Review (PDR) programme.

Secondly, employees are motivated by knowing what’s going on in the business. Regretfully not all managers follow this practice so keep your staff regularly informed of both what’s happened recently and what’s planned for the next few months.

All these points suggested are proven to make a positive difference to real growth in harder times.

Stuart Allcock

THE KEY TO GROWTH IN HARD TIMES: PART 1

Business Growth

It’s now five years since the recession really hit Ireland. If we haven’t caught on already, we need to understand that this is the now normal level of economic activity in which business will operate for a long time to come. Sure I could write down a shed load of economics statistics but we all know that business is still tough for many micro-enterprises and SMEs. So instead of just hoping the situation will get better, we have to be proactive in the current climate to grow our businesses.

To do this, we need to work smarter and understand modern business methods and how trends in business cultures are changing.  Business cultures are continuing to change rapidly and two examples of how is due to social media technology and all-round limited cash availability.

Earning a crust for our businesses nowadays is much more difficult than it used to be in the Celtic Tiger days when there was plenty of cash around.   The process of selling is changing in many sectors.

Buyers are far more discerning than five years ago.  For B2C selling for example, limited disposal income has helped to change all that.  Buyers want to decide when and where they will buy and no longer react positively to the hard sell methods.

When they do buy, they often know more about the product that the seller because of the vast amount of product information online.  They demand quality product and service as a “given” and are not afraid to complain to all and go elsewhere if they don’t get the standard of service they expect.  Parallel trends are happening in B2B sectors.

There’s no ultimate single panacea to grow your business and different factors affect different sectors – be it industrial manufacturing, professional services, or retail etc.  However there are some common business factors that apply in any industry and below, I’ve selected seven points to consider for growing your business in tough times – three in this Part 1 and four in Part 2 to follow.  Realistically these factors apply whether the economic climate is good or bad.  It’s just that in tougher times, each point is critically important to address to have a chance to survive and thrive.

  1. Let’s consider strategic matters first. Strategic marketing is about which products and services you sell into which markets and it’s what successful senior management in larger companies and SME owner/managers spend much of their time working on.Remember Ansoff’s Matrix (Igor Ansoff 1918 – 2002) for growth strategies? It was first published in 1957 in the Harvard Business Review and it’s about existing and new products and markets, and diversification strategies relative to business risk. Things change in business but this issue is every bit as important now as at anytime in the past.Take advantage of new market opportunities, get the product right and the market sector – volume or niche, and you’re already on the road to successful growth.
  2. Does your product differentiate sufficiently to stand out from your competitors?  It needs to be something different to just cheaper prices – such as added value by lasting longer, solving a persistent problem, making life easier or providing a better experience.Two independent competing eating places in Kerry where I live offered similar food and eating experiences until one of them started offering lower prices.  What do you think happened?  The other did the same and so it went on.  No-one thought about being innovative by creating a different eating experience to avoid or rise above the competition.
  3. To get the above two points right, you should be constantly researching your markets.  New needs and trends can develop, and very quickly too.  Done continuously, market research becomes a natural function in the business, doesn’t cost a lot in time and cash, and helps to reduce business risk.These points aren’t exhaustive by any means but each topic on its own – when addressed in your business, can make a positive difference to real growth in these harder times.See the remaining four points in Part 2 coming soon.

Chat soon.

Stuart Allcock

EXPORTING – WHICH COUNTRY FIRST?

ABS

As we mentioned in an earlier post about exporting, an issue that crops up for a company looking at exporting for the first time is which territories to research for your first export target market.

Sometimes the choice of territory is a “no-brainer” but what if it’s not so obvious?

In this case, here are just a few suggestions to help you decide which countries to research to sell into:

Which are the easiest?

When you’re starting out in exporting, easiest means “low risk”.

From Ireland, in many cases the UK would be at the top of the list, given its ease of access from here, no language issues, market size, and broadly similar ways of doing business.

It’s usually the first one for market research unless you already have clear reasons why the country isn’t viable for your product or service. Alternatively you might want to consider the Netherlands and Belgium which, except for being smaller markets, generally tick the same boxes in most industries.

Where are your competitors operating?

Do you know where your local or regional competition is selling? You have a choice of what to do. You could join in and compete in the territory. To do this, do you have adequate differentials to stand apart or will you be just a “me-too” follower?

If your competition’s been established in the country a long time, you could for ever be seen as the number 2 or 3 or more. In which case to help make a decision, key market information is needed such as the overall size of the market (is there enough for a number of players?), sustainable growth rates and trends, and for example niche sector opportunities appropriate for your goods.

The alternative is to avoid the region like to plague because life with all this competition might be too difficult.

One company, an Irish leader in its field, did exactly this. They were dismayed by what they’d seen of competitive activity and low margins in mainland Europe. Instead they started researching other territories and found good opportunities in specific parts of Africa.

The territories are more difficult to get around, but competition is minimal, payment terms have been sorted, and better margins are enjoyed. This might be a risk too far for new exporters, in which case it might be a tactic worth looking at for future territories to target.

Where are the biggest opportunities?

Where are your biggest market opportunities? Would they be established developed countries such as the US, or one of the rapidly developing BRIC countries? Are the markets there big enough to take another competitor and do you have sufficient differentials in your product to stand out above the others?

Remember that this would be a much higher risk initial strategy and you’d need to have good commercial reasons to proceed with it – and ensure you’re going to get paid. The costs of doing business would be much higher and you’d need to visit the market at some time and meet potential business partners.

An engineering company with a state-of-the-art new product is doing this in China. The risks are high but they have very sound strategic reasons why they want to capture some of the Chinese market.

Their approach to researching and developing the market is simple, step-by-step and with caution all the way!

Can your product or service solve region specific problems?

Even if it’s not seen as the main feature of your product or service, does it have the ability to solve unique problems experienced in certain regions?

This is another way of looking at niche market sectors in some countries where your company could command a prominent place.

One Irish company has a product usually used in large capacity power generating plants. In India, they found that the product worked well in a different application in tea plantations where they went on to gain good market share.

Fit with strategy

Opportunities can sometimes appear well off-strategy at first. In a technology start-up with which I’m involved, our plan was to establish ourselves in Europe first before expanding further.

Some time ago, I got an email from a Japanese reseller interested in marketing our analytical equipment. After very carefully checking them out, we agreed for them to assess the market on our behalf. After all, the reseller had already perceived an opportunity. A few visits later, we are establishing a good relationship with the distributor partner and the sizeable market.

When starting out in exporting, the perceived range of choices of countries to target is often wide.

Only after carefully checking out the choices can you decide on the best to target for returns vs acceptable timescales vs minimised risks.

Happy exporting!

 

STARTING EXPORTING – PLANNING IT OUT

Exporting

We’re aiming to do a series of articles on the topic of exporting. Instead of working through the process sequentially, we’ll just hop around various topics of interest in the export space and even come back to some for more viewpoints.

So here we go then – this first article is about planning for first time exporters. And as you can’t have planning without market research (MR), we’re including that too.

Planning for exporting isn’t really much different to business planning for the start-up. Some owner/managers argue that you can’t really plan a business strategy until the company has already got some hard trading experience behind it. This may have merit.

However, the flaw is that sound business planning is done on a foundation of diligent MR which if done properly, uncovers important facts about what pitfalls and risks to avoid in a venture as much as opportunities to exploit. It’s like arranging a car vacation to mainland Europe country you’ve never visited before.

First you need to research what the country is worth visiting for such as culture, countryside, coast, food specialities etc. Otherwise you could be unaware of all these tourism opportunities, at best coming across them by chance. Then you would plan out where you are going to visit, which route you will take, and where to stay.

As best you can, you’d maximise the best use of your resources – mainly your quality time and money for an enjoyable vacation. With no planning you might go nowhere of particular interest and pay a lot for mediocre hotels etc. See any analogies with business planning?

Simply put, with export planning you’re still looking at selling products or services into markets and territories, taking into account all the resources needed, calculating the financial impact for commercial viability, and addressing risk. If export planning wasn’t already part of your original start-up and ongoing business planning, then there are quite a few additional things to consider.

Some of these points are mentioned below. It sounds a bit dramatic to say ignoring them is at your own peril – that might be a “worst scenario” situation, but there is some truth in the statement. Realistically exporting can be fun (if you like travelling and experiencing different cultures!). It also has to be lucrative so it helps if a bit of common sense and good MR and planning is employed at the start to mitigate potentially costly risks.

Risks can usually be reduced and costs minimised if a few general things are observed in the export initiation process. A few suggestions are:
Do your research diligently. You don’t even need to leave your desk to collect a lot of usable MR information. All you need is online access and a telephone.

Supports may be available from Enterprise Ireland, County and City Enterprise Boards, and other agencies to assist with export preparation.

Exploratory visits to the selected country will be essential as part of the initiation process and even before selling starts properly. This could be for visits to potential end-users for validating the product or service, meetings with future sales partners, or research at local exhibitions.

Differences in cultures (= the way we do things) may mean your existing products/services aren’t quite right – or even could be downright inappropriate for some countries! Apart from such as the UK or Benelux, it’s almost certain you will come across this issue at some time so it does need checking out very carefully before selling starts.

Different ways of doing business in different countries can impact on things like debtor days, how your goods are sold such as needing field trials beforehand, and the extent of shared responsibilities with in-country partners such as paying for certain marketing outlays.

Be cautious about proliferating the number of countries you try to sell to when you start exporting. This especially applies to the small business with limited external sales resource – often the owner/manager him/herself.

Are you personally geared up for exporting? Often, unsociable travel times and lugging suit cases around required a certain level of fitness. Spending time away regularly can also impact on family relationships. All this needs taking into account time because different people react to this in different ways. Do you need to carefully schedule time away or should you consider recruiting a sales person – even part time if you can afford it?

Last but not least, be careful not to take your eye off the ball with your established domestic customer base while you’re preparing for export activities.

One other issue we come across is which territories you should consider researching as your first export target. Sometimes it’s obvious but there are some pointers which help you to decide which we will talk about in a future article.

Happy exporting!

Stuart Allcock