Focus on the Partner Proposition & the Customer
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Often when choosing a partner in international markets, the focus is on you selling your company and products and hence companies can often fail to ensure that the partner is a good fit for them. Regularly, the criteria for a partner is that the partner is the biggest and hence will be the best. This is time and again not the case. Whilst working for a Hitachi company, I was charged with developing the Finnish market, the partner I chose was not the biggest consumable distributor in Finland but the second. The reasons for the choice was that the second largest was that this company understood the product, senior management was behind our product, there was real hunger about growing sales in Finland and they were customer-centric. The customer came first and then the sale came second. This meant that they had really good customer retention. I worked with this distributor for 6 years and it became one of the largest Hitachi (consumable) resellers in Europe.
When choosing a partner, there needs to be a good fit and a bit like marriage, you should not believe that you can change them into what you want them to be. The less you need to ask the partner to change, the more likely the partnership will work.
When choosing a partner, always focus on the customer. Again the customer can often get lost in partner negotiation and when push comes to shove the customer is still the most important piece of the puzzle. The partner needs to understand their customer and give you a sense that they have the right kind of customer for your product/service. Never forget that a partner becomes you in a new market. They represent your company and brand. Whilst in the end, it is you that has to take responsibility for the success or failure in a market but the choice of partner is paramount to that success.
Look at the partner’s products and services and see what the fit is like. What is their marketing and sales approach? Does it tie in with your approach? As the negotiations come to end, you should have a really good understanding of the partner and you should feel that they have really thought about how they would go to market if they were to take on your product/service. You should get a good feeling about the people and their culture and that they are a good fit with your company.
Take a good look at your potential partner’s acquisition process. Is it similar to yours? Don’t forget that you must take into consideration cultural differences. However, their acquisition process should be clear, professional and compelling. With some products/services, the revenue model needs to be taken into consideration. Does their revenue model affect your revenue model with any other partners? When I was with Hitachi, the revenue model was not an issue, however, the territories that partners sold into could be quite contentious.
Value and sales propositions are key to selling a product but the partner proposition is just as important as this is what the customer will initially look at before it reviews your product/service. Your partner needs to clearly articulate to you what is their partner proposition and often in partner negotiation, this aspect is overlooked. The partner will talk to you about being the biggest, the best customer service etc. but will struggle to give you their partner proposition which is much more intangible.
Ensure that the customer is not forgotten when choosing a partner, as they remain the most important part of a sale. Get a clear understanding of your partner’s proposition and that you believe that this proposition is powerful. Make sure that there are good people, products and a good cultural fit. Once you have decided on the fit of the two companies, you can then move onto contract negotiation and a sales and marketing plan.
OpenVentures specialises in helping companies enter new markets. Suzanne Flood has over 20 years experience in working with companies in international markets.
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