Move to Exporting 201
Editor’s note: This is the first of a series on moving from Exporting 101—an opportunistic endeavor—to Exporting 201, a strategic part of a business.
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 were a strategic part of their business, with predictable double digit growth quarter after quarter, but they aren’t sure how to get there from where they are.
This series will outline 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.
Step 1 in this process: Change your mindset.
This is the most important step, and without it, the remaining steps will fall short.
The good news: this step requires no monetary investment. The bad news: it is by far the most difficult step.
And a fair warning: many companies will never make this shift without outside assistance, whether by hiring an experienced dealer/channel manager, bringing in a consultant, or through peer group or industry mentoring. Why? Because most companies are too close to the issues, too engrossed in the day-to-day processes. Like any shift in corporate culture, it’s hard to do organically without an evangelist or two.
A key step in the mindset change is to truly accept that every sale is not a good sale. To make your export business strategic and to grow it sustainably, you must relentlessly focus your limited resources on your highest and best markets.
This sounds self-evident on its face, but many exporters struggle with the concept in practice. It means accepting that you will say goodbye to some non-strategic distributors and countries, and further, that your export sales will probably drop in the very short term.
Here’s a typical exporting 101 story. A company we recently visited had one guy managing distributors and other partners in 42 countries, and that was not his only job. He looked frazzled, and admitted as much. He very much wanted to expand his foreign sales. But when we recommended that he first identify his best prospect markets and focus efforts there, and let go of several countries and distributors, he reacted with horror. He clearly did not want that! What he wanted was help to identify still more countries and distributors to grow his sales.
Make no mistake: chasing more and more distributors in more countries will not get you to the next level. And that is true no matter how many people you dedicate to the business.
Why is that? Because almost certainly several markets/or distributors are non-strategic and are simply costing you more than they are worth.
These non-strategic distributors cost you in many ways: they typically take up a disproportionate amount of your time—your scarcest resource—compared to the sales they bring in. Many companies think the distributor that only orders periodically and makes few demands is one that doesn’t cost them much.
In our experience, however, most companies seriously underestimate just how much those partners cost them in terms of conference calls, samples, literature, order fulfilment, tracking down sales reports, and travel, not to mention the distraction and loss of focus. True, one of these distributors doesn’t cost all that much, but when you have several non-strategic distributors, the cumulative cost to your team and organization typically mounts to unsustainable levels.
All that is time and energy that can and should instead be focused on more strategic markets and distributors.
If there’s one thing our work with more than 400 clients over our collective nearly 100 years of experience has taught us, it’s that to truly grow your international sales, you must identify your highest-prospect partners and markets, and single-mindedly focus on growing sales there.
And that means you will just need to let some of your non-strategic partners—and the sales that come with them—go. But don’t worry. The growing sales in your strategic markets will soon make up for and outpace all the lost sales from the non-strategic markets. And your organization will run smoother, with far fewer crises.
Doris Nagel is managing partner of Globalocity, and has over 25 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. Get a free excerpt from the book here.
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