I have worked with many small Australian businesses in high-tech industries, ranging from medical devices, biotechnology, clean technologies, ICT to electronics and advanced manufacturing during the past fifteen years. I noticed the common mistake they commit is hiring the first European distributor they come across when they decide to export. They believe hiring a distributor can generate instant extra revenue. As they build their knowledge about the European market, they realise this distributor isn’t the best fit for their business.
When my clients start their exporting journey, I consistently advise them to set up a proper distributor profile. Here are the 3 key factors to help you profile your ideal distributors to help you be successful in the European market:
- Choosing the Right Type of Distributor for You
- Be Clear With Your Distributor : Where to Focus?
- Identifying Complementary and Competitive Products
Choosing the Right Type of Distributor for You
Various distributors may be more suitable for your business than others. You must determine this first during the initial phases of recruiting a distributor for your business. To help you choose, here are the 2 types of distributors:
Certain distributors are more focused on catalogue-based sales. Typically, they offer a broad range of products, making it difficult to attract their attention. The advantage of partnering with this type of distributor is that they may have a strong market presence.
When you have a product or solution that is more technical (such as many of our clients), a distributor who sells solutions is needed. A sales representative in this scenario will focus more on selling a solution that solves a problem rather than on a commodity.
Although you may not locate this exact type of distributor in every European country, you need to take advantage of your experience.
Be Clear With Your Distributor : Where to Focus?
Here, you need a list of the target clients you want to focus on for your current and future sales. It is easier to check a distributor’s suitability by building in your mind an ideal distributor’s profile. If you want to choose the right distributor for your business, you need to know which industry you are targeting and the type of clients associated with it.
For example, if I am targeting the public sector, I will most likely be targeting cities with 10 to 50 million people. My target customer is someone who manages all assets owned by the city (e.g. gardening equipment, vehicle fleets).
When you have a clear vision of who is your target market, it will be easier for you to find the right distributor. It will help you decide which one to focus on. You must show them where the low-hanging fruit is for your business. Let them understand what they need to know to sell more quickly for you. Determining your target market is essential to overall success. Don’t waste your time with a distributor who doesn’t sell in your target markets or industries. Ask yourself, “Which end-users should they be targeting for you?“
Identifying Complementary and Competitive Products
As soon as you have a proper understanding of your customer profile, it is now time to locate distributors who already sell complementary products to yours and who have a portfolio of clients who match yours. Ask your distributors to explain what types of complementary products they sell. Make sure these complementary products have the same positioning as yours. You may also check if they sell a competitor’s product.
In addition, you can also see whether selling your products through a distributor who sells similar products or solutions to your competitors would be helpful. This approach may be a suitable alternative for distributors looking to expand their product offerings. Furthermore, your product or service may represent a good competitive differentiator that may allow them to gain some market share. It is also possible to decide not to work with distributors who sell a competing product and take the opposite approach.
If you explore this avenue, you may be able to benefit from a distributor sales team that is already experienced in selling your type of product. You should remember the fact that they know the clients, and they already have well-developed sales skills with your type of product.
As a starting point, these three characteristics help you to build an ideal distributor profile. An important factor for your success in your exporting journey is the profile of your distributor. To maximise your sales, you need to identify what benchmarks will work best for you. Remember, what does your current best distributor look like? Here are some questions that will guide you in the right direction for a small business in the high-tech sector:
- How big or small is the company?
- Do they have a wide range of products?
- Do they carry complementary/competitive products in their range?
- What type of customers do they have in their portfolio?
- Are they selling directly to end-users or through a network of resellers?
- How does their sales team look? Do they need to have technical skills?
You may also download our tool at https://www.exportia.com.au/downloads/ that will help you choose the right distributor for your business when exporting to the European market.