The practical business of finding highly productive agents/distributors and joint ventures in the foreign market for many still remains an enigma. Often, US companies are relying on luck instead of strategy in identifying their international representation.
Many companies get into exporting almost by happenstance: Most export sales are simply a spin-off from domestic contracts.
Similarly, most agent and distributor relationships are born from random inquiries or chance meetings at trade shows. When asked how they obtained their international representation, many companies have no recollection whatsoever of how—or why—the relationship began. Strange as it may seem, the same is true of joint venture relationships. With the growing use of the internet, one could be fooled into thinking the odds of success in finding that elusive, top-performing trade partner will be increased. The key is to remember at all times that promotional materials are not stand alone, clean “information.” The internet can be used to provide indicators of activity and reach; however, these benefits in no way eliminate the more conventional, strategic wisdom that highly successful international sales organizations, in one way or another, employ.
Surprisingly, this hit-and-miss approach to international expansion is not exclusive to small- and medium-sized companies. Many well-recognized large companies spin the same wheel of chance. Experienced international executives and substantial budgets for foreign expansion will contribute to success, given the right opportunities. The problem is that the “right opportunities” are rarely “given.” However, they may be created using the five following steps.
Step 2: Define Your Ideal International Partner(s)
Many companies partner with the first seemingly viable company that expresses interest in representing them. Invariably, this is a mistake. When agents and distributors emerge from nowhere and stand alone without comparison, they will always appear to be “golden opportunities.” Avoid the pressure of hasty decisions by taking the time to identify and write down what you consider to be the essential qualities of a top-performing trade partner. Some fundamental questions to think about are:
Into what customer base would the ideal trade partner be selling?
What technical/commercial skills should this representative company possess?
What marketing skills and resources are necessary to effectively launch your product/service?
How much investment is required/ possible from the trade partner?
You should identify and analyze the specific elements that have made your company successful domestically. From this analysis, a profile of the ideal trade partner will begin to emerge and can be used to qualify all would-be agents and distributors. Nevertheless, you do need to remain flexible in your approach.
Step 3: Do Your Homework
Comprehensive preparation has been found to be key for companies that successfully export over 50% of their products. Unfortunately, many companies are overwhelmed at the prospect of a thorough and comprehensive search to identify all of the prospective trade partners in a selected market. Instead, they rely on making the most of opportunistic encounters. There is good news, however, on this front. With the ever-increasing volumes of quality data and electronic access to information, finding the right trade partner is easier than many imagine.
If you choose to invest in data, make sure that it is specific to your industry and easy to manipulate according to your search criteria. Good data will give you what you need to identify the right companies. However, this is only half of the battle.
Step 4: Sort Through the Diamonds in the Rough
Don’t overlook high-potential trade partners because they don’t appear enthusiastic at first. The important thing for companies to understand when first approaching potential partners is that most agents and distributors that go on to become top-performers are characteristically irritated when initially contacted.
This is because they are busy selling to a clearly defined customer base, as differentiated from the “line collecting” organization—those with one or two employees and scores of product lines—that are only too willing to passively represent you.
Good trade partners must be won; you need to sell your company and its products to them. The way in which you approach a potential trade partner is critical. The most successful initial approach is a strong, marketable, and focused introductory letter. This letter should be designed to pique a potential partner’s interest and should concentrate on the credibility of your company and its products/services as well as the value of the proposed trading opportunity.
Step 5: Select the Best of the Best
Provided that you have been thorough and systematic in the earlier steps, you should now have a pool of potential candidates that—at least on paper—seem promising. They should also, by now, have expressed some interest in you and your products.
Resist the temptation to rush in and make a quick decision without asking the right questions. Prepare your questions and organize a screening process. The marketing information that you’ve gathered will prepare you for meetings with a short list of the best companies that the target market has to offer.
A systematic approach to constructing strong trade partner relationships is successful in a staggering 94% of cases. These principles can be implemented at a relatively low cost and will significantly reduce the risk of entering into non-productive relationships. You can be successful in the foreign market if you are prepared to reject the broad path of luck and, instead, concentrate on creating the right opportunities. wt
