Partner choice is important but post-contract support is fundamental to new market entry success.
Strategic Partnerships
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Expanding internationally should be quite a significant moment in a companies life. It should mean that the company is doing well nationally and its sales in its national market are stable and the company has some cash to invest in expansion.
As already discussed in previous blogs, market entry to one new market at a time is advised and the choice of which market is done by means of in-depth market research, so that when you come to look for the route to market in the new market, you already understand the challenges of that market, the gap your product /service is filling in that market. You have spent considerable time working on the value proposition for that market and that you can clearly articulate why somebody should buy your product.
Most companies will go down the indirect distribution route at the beginning. This gives them reach and local support and is generally a good way for new companies to enter new markets. In general, you will find lots of distributors who could sell your product. However, before you start the research for a partner, create a profile of your ideal partner, for example: you are entering the Italian market and so you think that the partner should be in Lombardy (many flights to Milan from many cities around the world), the partner should have a reasonable sales team (10 people), not a family company and that they sell complementary products but not identical. The profile of your ideal company can be made up of anything that you deem to be important when working with a partner.
During your research, you will probably find at least 30 potential partners, companies that look like they sell the types of products that you are looking for. They appear to be of a reasonable size and they are in Lombardy. Unfortunately, you still need to spend time trawling through the internet, looking for any information on these companies and on the products they sell. After this research, you will probably be able to half the number of potential partners.
Shortlist the top 10 -15 partners. Look for the correct contact but before you start to call them, make sure that 1) you know exactly what you are going to say to them. I would recommend that the initial call be done in their native language, however, one cannot know all the global languages and I have done considerable business development in English but if you are cold calling in English, make sure that the person you want speaks English. Your elevator pitch needs to be clear and concise and that you articulate it relatively slowly to the person on the other end of the phone. Before you pick up the telephone, understand what is your ideal outcome of the call. For example, to send them some information or to set-up a call in a few days to discuss your products in more detail. Let them know what you are selling, why you want to speak with them, the USP of your product/service.
Often companies that are looking for new partners in new markets are so focused on selling their products that they do not do their due diligence on the potential partner. The seller needs to ask lots of questions and build a relationship with the partner. Sometimes one can get the feeling that a partner thinks that they are doing you a favour by listing your products. You must ensure that the potential partner is committed to your product and that this commitment has the buy-in from the partner sales team. Make sure that you meet with all the key people in a partner so that you can get a real understanding of their culture. A partnership is only a partnership if it is a win-win for both parties.
Key to successful partnerships is the careful selection of a partner but it is NOT the only contributing factor to success. Post contract support to the partner is fundamental to success. Training of the sales team or support team, market development funds, field support etc. The signing of the contract whilst immensely important is only the start of the relationship. Relationships can only be build by supporting and working with your new distributor. Before the contract is signed, sit down with the sales team and understand what they need and develop a sales support programme that meets those requirements. By making your product easier to sell, will encourage the sales team to focus on your products. This whole area of post-contract support is often overlooked and is often the reason why a company’s expansion into their new market has been a failure.
Choice of partner when entering a new market is extremely important, due diligence on them is imperative and one needs to also let them sell themselves to you as well. Developing a relationship with the distributor, not only with the executive team but also with the sales team, ensuring that your products are at the top of their list to sell. Post contract support is so important that it usually means the difference between success and failure and with new market entry the line between success and failure can be very narrow.
Contact us to discuss your strategic partner requirements: sales@openventuresconsulting.com