There is a raft of sales channels which can be used in international marketing. All have their own merits 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.
Initiating the Search
Firstly, create a specification of your ideal distributor with all the factors important for you.
- 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.
Stuart Allcock – Owner of Applied Business Support