Good communication is key to success in building an effective international sales channel. But honesty, clarity and reliability are just the minimum requirements for communications necessary to build trust with your remote sales force.
Whether you are working with a direct sales force, a rep or a distributor, you will be operating in a different time zone, and often in a culture where business does not follow the same rules as it does in the USA. Your remote sales force needs to understand the legalities and process that is required to close a deal with your firm. And your company must embrace the demands that a worldwide marketplace places upon it.
Getting a briefing on the local calendar and its implications for doing business in a different country is a great first step. A sales visit to a country during a national holiday or during a country-wide vacation period can be a frustrating experience. Building a sales calendar that, for example, counts on anything other than delays and disruptions happening in China during Chinese New Year – or closing any deals in most of Europe during the month of August, is an exercise in futility. Knowing when business is open for business – that is a fundamental.
Your next important task is to understand the local sales and negotiation process.
This understanding is necessary for setting your initial price, and will determine, ultimately, the profitability of your global business. What are the customers’ assumptions? Do you control the price that is offered to the ultimate customer?
You need to make sure that you are in charge, and if not in charge, at least aware of what price your product or service will be offered to the final customer. Many a US company has seen its market launch and penetration targets stymied by a sales intermediary that has marked its products up to unreasonable levels. Many a rep or international distributor is shocked to learn that their principal expects to deduct from their commission the entire price concessions that won the business.
Make sure that you discuss and set out in writing how the sales process will proceed. If discounts are required – who will absorb them? If quotations are issued to the customer, on whose letterhead are those quotations sent – and whose signature is necessary for the quote to be honored?
Price is often the ultimate determinant for winning business in China. Many a US businessperson has shaken hands on a deal with a customer in China only to be quickly ushered in to a subsequent dealmaker for further price reductions. So anticipating correctly the number of “bites at the apple” you need to survive will help you set the right first price and discount schedule. Having a “headquarters approval” requirement for a quote to be valid will protect you from crazy pricing agreed upon in the head of the battle.
Understanding what is bundled into the price is also important. You need to know what is required for customer support and whether that support is assumed included in your price or not. Who is responsible for delivering that customer support. In Japan, for example, a piece of capital equipment is often sold with an understanding of lifelong support – including on-site spare parts and 24 hour service response. So, it is important to determine the level of local support required, how is it going to be provided and whether it is included in the initial proposal to the customer.
Although a flat world which demands price transparency will push you to set a worldwide price, think carefully about what is included in that price and what elements of the cost of doing business in a local market are unique and need to be called out (and added on) as a line item.