2020 is a funny year as we all know. And when it comes to successfully exporting for small businesses, I can confidently say that Europe should still be on your radar. The last six months have been extraordinary for some of our Australian customers. And some of them have encountered incredible success, mostly because they are reaping the benefits of their consistent hard work in the European market, making them a reliable supplier for European customers, even during unpredictable times.
Interestingly some of our customers that are more at earlier stages have made very good progress in Europe too. We managed to secure phone calls and web meetings with potential new European customers, distributors, and partners. With our Australian portfolio of technically innovative products, we have been continuously working hard in the first half of 2020. The first reason for our success is the relative stability of European companies. We were able to reach them, we did not feel any panic mode, nor any sense of being unwelcomed when running our cold calling campaign. European employees were working from home or rotating at the office. Factories and offices were reorganized to face the pandemic.
The other aspect is that one of our prime commercialisation strategies to sell innovative products into the European market is to set-up a successful local European distribution network. This indirect sales strategy has proven to be the most effective and low-risk for small businesses over the years. During this pandemic period, it has been a solid way to retain export turnover for our customers.
Building a Europe-wide distribution network enables you to mitigate the risk involved in hiring in Europe. Hiring in Europe can prove to be quite a high risk when you are a small business starting in the European market. At the start of an export journey in the European market, one does not always know which European market is going to be the best. In that case, where should you hire first? If you don’t know where your first customers will be, how do you know who will be the best person to support them?
During the current pandemic, it is also quite a challenge to hire without having met the person face to face. It’s a risky exercise. In Europe, workplace laws are quite restrictive when it comes to dismissing a non-performing employee.
For all these reasons and particularly now, I find that it’s a particularly good time to set-up a successful European distribution network.
To do so, I have developed a 5-Step-framework. This is how we have secured, engaged, and managed great European distribution networks at Exportia. At the moment, my team and I are managing close to 80 European distributors.
Here are the five steps, we go through:
1- Profile: the first step is about profiling the right distributor for your business. You need to have a clear picture of the type of partner you are looking for. You need to think about their size, what type of technical skill they need to have in-house. It is also crucial to know which customer profiles they should be targeting. These customers need to correspond to your ideal customer profile or in other words the types of customers you have a track record with.
2- Selection: A selection process is a must. Once you have your ideal distributor profile in hand, start to map out the distributor landscape in your chosen European country. You need to clearly state to any European distributor you are approaching that you are evaluating several potential distributors in the market. You need to make sure they really target the type of customers you want. You need to have a feel for the type of company and its sales team. And the only way to find out is to quiz them about it.
3- Engage: It’s key to prepare the engagement phase well. Prepare your commercial terms beforehand. Give to your distribution offer a limited validity. This is often what small businesses forget. Indicate the chosen Incoterms you are choosing to express your prices in. Be specific about your credit checking process, as well as your payment terms. During these Covid-19 times, I tend to push to upfront payments every time, we approach a new European partner. Everyone in Europe will find it normal in the current economic climate. A distribution offer is binding like a contract. Make sure your terms are clear. You may not require a distribution agreement, some of our clients feel they do, others feel they don’t need one. Both ways are fine. Distribution agreements provided by large European distributors can be very constraining for a small business, don’t hesitate to say no.
4- Activate: The activation phase is often overlooked by small businesses. To make your distribution network effective, you need to invest time in training your distributors’ teams. Finding your sales champions within their team is a great way to create a fast-start. Then it’s time to generate leads for them, this will show them they can generate revenue and make money with your product.
5- Manage: Keeping your European distributors accountable is part of the game. You need to evaluate their performance on a minimum of a yearly basis. And this is how you can increase or decrease their level of margin. Beware that you can only change pricing levels with a 90-day notice period. If you don’t, your European buyers won’t accept the price increase. You may have to manage them out for non-performance. It requires some good planning.
If you want to learn more about the Exportia -5-Step-Framework for successful European distribution, you can either download our Whitepaper on our Download Section or pre-purchase a copy of my new book “The 4 Steps to generate your first million Euros in Sales”, where you will find a very comprehensive chapter on European distribution. Good luck!