Managing Agents & Distributors - Part Two - Setting & Achieving Targets

As I said in the previous article, finding a suitable representative in a target market is often half the battle in export success.

But having found the ideal contact, we need to work to make it work.

As in any business activity, planning is vital. As the saying goes, failing to plan is planning to fail. It’s really important to have a realistic notion of what you expect to achieve, how you going to do it and when.

In my experience, agents and distributors are often reluctant to commit to a target, especially in the early years. This is understandable, as it can be seen as a possible justification to terminate a contract, and these representatives often feel their position is a bit precarious at the best of times.

The exporter needs to take the lead. In the course of conversation, drop a notional figure into the conversation, ideally based on some kind of reasonable comparison. Express it as an aspiration, and be sure to make it clear that it’s a shared ambition. You might say something like this.

“You know, we are really excited about working with you in your country. Just looking at what we’ve done in other markets, I honestly think we can reach 10,000 units a year. That’s going to be a lot of business, isn’t it? Do you think it’s possible?

All we have done is drop an idea, a dream even, into the conversation. Listen carefully to their reaction. They may be guarded, but try to gently push them for their opinion. Take careful account of any objections they have, and welcome them. Talk them through and suggest some ideas for dealing with any perceived obstacles.

If you can have this conversation in a non-threatening way, and treat it as a casual, non-binding conversation, you have made an important first step. There is no point setting targets unless the representative really buys into them.

In some circumstances, the exporter’s job might be to manage expectation that seem unrealistic. It doesn’t help to have a distributor expecting to achieve more than is feasible. Remember that one limit to growth may be your own ability to deliver, so always be careful to avoid making a rod for your own back.

What starts out as a conversation can reasonably be followed up with an email. It’s important to take the representative with you on this, so ensure that the discussion is open and honest. It  might be sensible to offer a carrot or two. For example, proposing that as we think the potential is what we discussed, we might now be prepared to give extra support to the early work, such as covering the cost of bringing that expert speaker over for the conference, or contributing to the cost of an initial advertising campaign. This putting our money where our mouth is. We said what we thought was achievable, now we are prepared to demonstrate our faith in it by going an extra mile or two.

The conversation may take time, and there may be a considerable number of issues to discuss. But the outcome is likely to be that the exporter and distributor are in accordance about their expectations and, in broad terms, what both are going to do to make it happen.

When you have these broad details agreed, write it down. And turn the broad objectives into concrete steps. Create a clear and simple action plan, that sets out who will do what and when. Even if you don’t adopt this as a formal document, stick by it. Ensure that you keep to your promises, and be bold in ensuring the representative does the same.

It’s very rare that a business plan works out as expected. Look out for the unexpected outcomes, and discuss them in a supportive way. If one party can’t quite deliver on a promise, discuss it calmly, and work out where to go from there. If the agreed actions aren’t delivering the results we expected, think carefully about why and try to understand what went wrong.

Remember that the whole point of having a representative I a foreign market is that they know the market better than we do, and in most circumstances, they always will. We know our products, but we need to appreciate that market conditions vary, often surprisingly, and that markets that seem to be similar will not always produce similar results.

Every market is a unique journey. Avoid making rash assumptions and listen to what your representative is saying. If you chose the right partner, their suggestions will be invaluable.

Article written by Tim Hiscock - Associate of Strong & Herd LLP

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