Move to Exporting 201
Companies that have had some export success selling though distributors often reach a point where their sales growth flattens or stalls. They wish their exports had predictable double-digit growth quarter after quarter, but they aren’t sure how to get there.
This series outlines the key steps needed to truly move your distributor export business to the next level – one where exports become a key strategic business unit. But warning: this is not an easy process, and requires some investments that may take a little time to pay back, as well as a bit of faith. Take comfort that many companies have made this shift, and have never looked back.
In our previous articles, we discussed the importance of changing your mindset, the way you find distributors, and the way you invest in your partners.
In this installment, we’ll look another key step in moving your export business to the next level: enhance your skill sets.
The first place to start is with your channel management skills. And that begins with a dedicated distribution manager, one of the best predictors of export success.
Experienced channel managers have a wide variety of skills. Selling through channels is significantly more challenging than direct sales. They’re almost polar opposites. What makes a great salesperson is their ability and desire to control their environment. They can do their own planning, they can select their own accounts, and they can manage the entire sales cycle.
Channel management, in contrast, means selling through an independent third party – somebody who runs their own business. Management and influence skills become more critical. Sales skills are still needed, but leadership, strategy, project management, and communication, are also important.
The best distributor managers listen actively, constantly put themselves in the shoes of their partners to clearly see the world through their eyes, and smoothly deal with change. They also manage up effectively – educating their entire organization to better support their indirect partners.
It’s a big and complicated job, and having someone who also has other responsibilities is not enough. If your channel manager is inexperienced, get them plenty of training and ensure they are well-networked with peers. To get even better and faster results, hire an experienced distribution manager.
There are other skills that will likely need upgrading if your company truly wants to create a strategic, high-performance export business. Some of these include:
Better logistics/supply chain capabilities. Many beginning exporters rely heavily on their third-party logistics providers. Over time, they often find that in-house capabilities result in better, more responsive customer support, easier IT systems integration, and sometimes cost savings by planning containerized shipments and consolidating logistics. There is enhanced focus on better forecasting and demand planning as well.
More sophisticated finance skills. Exporting 101 companies tend to insist on payment in their home currency and cash in advance. They tend not to hedge foreign exchange, and are unable to assess the creditworthiness of foreign companies or do financial due diligence on them. Tax planning is often minimal. In contrast, exporting 201 companies build capabilities in all of these areas, either internally, or through highly capable external advisors.
More robust compliance capabilities. Exporting 201 companies have calculated all the expenses of outsourcing things like duty calculations, export, free trade, and anti-corruption compliance, as well as compliance with other things like data privacy and environmental product laws. They recognize that outsourcing compliance piecemeal is a band-aid approach that often misses key issues and puts their company and their executives at peril. By bringing compliance capabilities in-house, they not only save money, but minimize risks by having more comprehensive and integrated programs.
Greater focus on overall partnering skills. Your distributor or channel manager needs to have a strong focus on being a good partner. This needs to extend to the entire partner-facing team, however. If the partners have a bad experience interfacing with customer service, logistics, or product specialists, the channel manager’s skills will be of limited help.
Exporting 201 companies need different and stronger skill sets, starting with their channel management skills, and extending out to the entire distribution channel support team.
Doris Nagel is the CEO of Globalocity, and has 25-plus years of hands-on global experience, focusing on strategic partnering, indirect sales channel management, and market entry. She’s a frequent speaker and author, and is currently working on a book on international distributor networks. Learn more about how to systematically find better distributors by downloading Globalocity’s latest e-Book.