Finding The Right Channel Partner When Developing Your Export Strategy.

As the year end is fast approaching, now is the time many companies start thinking about goals for the upcoming year. One of these goals may be expanding to an overseas market, and for a lot of first-time exporters this can be both an exciting yet challenging task.  However, this is a great opportunity to enhance your export strategy by looking into additional sales channels ideally suited to your product or service. This can be achieved through a local sales agent, representative or distributor with specific industry expertise in your target market.

Successful export companies understand the value and importance of engaging in extensive and methodical due diligence before appointing a new channel partner. By following a prescribed channel partner search and selection methodology you can reduce the risk of false starts and wasting resources on contract terminations down the road. Below is my recommended approach for finding and selecting the best channel partner in your target export market.

1) Make a List of Potential Partners

The first step is to draw up an extensive list of potential partners using as many information sources as possible. Some suggested sources are: government agencies that have offices in your target market (e.g. Enterprise Ireland have an international office network); Chambers of Commerce in the target export market; Embassies in your home market; websites of your competitors; websites of companies that have complementary products/services who export to your target market; trade publications and trade associations; trade show exhibitor listings; and LinkedIn which is an invaluable source if used correctly.  Plan on getting approximately 30 names which you would ultimately aim to narrow down to about 5 qualified leads.

2) Develop Your “Ideal Partner” Profile

The second step is to narrow down the pool by developing a checklist of criteria representative of an ideal partner profile for your product/service. A lot of information can be gleamed from a company’s website and social media channels. Your checklist could include, for example:

  • Size of the company/agent
  • Number of employees
  • National or regional reach
  • Number of years in business
  • Products/Brands in their portfolio (complementary and competitive)
  • Sectors they operate in
  • Annual sales turnover
  • Sales and distribution structure (warehouse facilities, distribution fleet, sales team)
  • Advertising and promotional activities
  • Awards/Accreditations/Certifications

3) Pre-Qualify

Once you have narrowed down your list, send an email introducing your company, product/service which sets the context for you to follow up with a pre-qualification call where you can determine their level of interest and identify any conflicts of interest. Other information that could be gleamed through a pre-arranged telephone/conference call could include:

  • Do they require exclusivity?
  • Do they serve your target end users?
  • What margins do you usually work off?
  • Do they have credit insurance?
  • Where would your product be positioned amongst their other products?
  • Is there a language barrier between key staff?

4) Meet

Arrange to visit your final list of partners.  This is an opportunity to view their place of work and meet the people who will be representing your product/service. You can also get a sense of their corporate culture based on how you are greeted on arrival, who attends the meeting and if you are invited to tour their offices and facilities. It is important that you are comfortable with the “fit”.  Any information gaps should be filled during a face-to-face meeting and will be your best opportunity to see if they meet your criteria as well as to sell your own attractiveness. At the end of this process you should have a list of 2-3 qualified partners that meet your requirements. It is advisable to request trade references before making a final selection.

5) Deal

Once you have identified a partner that meets your requirements it is recommended to first seek legal and professional advice before signing an agreement. There is strong legislation in Europe for the protection of commercial agents therefore you should be fully aware of the implications of signing a commercial contract. As well as the basics, an agreement should also cover items such as exclusivity rights, territory, duties of the partner, trial period, termination, post termination duties.

In Summary

Channel partnerships are no guarantee of success, however by using a prescribed channel partner search and selection methodology you have a greater chance of success than just randomly or hastily selecting a sales partner. Once you have found the “ideal” partner/s, remember your success is dependent on them and effective channel management can only happen if you take the time to support them and constantly build on your relationship.

You can read our previous blog on Channel Development in Export Markets here.

If you are considering entering a new market in 2020 and need assistance on selecting the right channel partner for your business, please send an email to [email protected] or call us on +353 91 739450