The Importance of Sales Channels for your Business
Sales channels play a critical role in having a successful expansion into Europe. They are also known as distribution channels or channel partners for the IT industry. The fastest, most cost-effective, and lowest risk method to enter the European market is to establish good sales channels. This is because you don’t need a European subsidiary to generate revenue.
Four fundamental processes that will help you identify the most suitable sales channels for your business are:
- Profiling your Ideal Distributor
- Selecting a Distributor for your Business
- Engaging and Working with the Distributor
- Activating your Distribution
- Manage your distribution
Profiling your Ideal Distributor
The first thing you need to do before sealing a deal with a distributor overseas is to assess if they are the right match for your business needs and goals. These processes are well known to small businesses working with channel partners in the ICT sector.
As for other industries, business owners should review their current distributors and identify which ones have been successful in the past. In this way, business owners can maximise their chances of recruiting successful distributors. To begin, let’s identify three characteristics that define the profile of your ideal distributor or channel partner.
Which distributor is right for you?
There are different types of distributors – catalogue selling and solution selling. Depending on your product or service, you can choose between them to find the perfect match for your business needs.
Catalogue selling distributors have a broad range of products, and mostly they have a reliable footprint in the market.
While the Solution selling distributors are great for businesses that offer more specialised products or services. They focus on selling a solution to solve your potential customer’s pain points.
Where should your distributor focus their efforts?
From the last blog, Identify your Ideal Customers in the European Market, we talked about how important it is to identify your customers. The same goes when partnering with your distributor. Let them know who your ideal customers are. It saves time when the distributor is already serving the same market or industry as your business.
Why? Because they already know the ins and outs of the market. They have a good grasp of what sells best for that audience.
Analysing complementary and competitors’ products
Product research is as valuable as researching who your ideal customers and competitors are. When you have considered which product or solution you want to sell, there’s a chance you will have an item in mind that you think will be a great complementary product.
You might also consider selling your products through a distributor who already carries competitors’ products or solutions that are similar to yours. This approach may provide an excellent alternative for distributors who are seeking to expand their product lines.
Remember, they already have access to different customers around your market, and taking advantage of that will help you in your business. To profile your ideal distributor, you can start with these three characteristics. You may download our online tool here to learn more about your ideal distributor profile.
Selecting a Distributor for your Business
After profiling your ideal distributor, it’s time for you to select which one you want to work with. Many small business owners in Australia sign up with the first distributor who approaches them. Rather than reviewing a range of distributors, they select one without examining the options.
Here’s a quick tip on how you can select a distributor for your business.
Carefully select your distributor.
After establishing a list of potential distributors, evaluate them based on the selection criteria you defined in your ideal distributor profile. It should include both small and large distributors. To narrow down your list, fill in all the relevant information on a spreadsheet and compare it to your selection criteria.
Keep it concise when approaching a distributor.
You can make it easier for them by sending a brief and ‘to the point’ email. At this stage, let them know you intend to launch your product into the market and would appreciate their feedback. A brief description of your positioning can then be added, along with your company profile. In addition, let them know you plan to go through a selection process to find the right distributor for your business.
Engaging and Working with a Distributor
Working with your selected distributor is a crucial part of your business success or failure. Most small businesses don’t know how to approach their sales channels. Working with an overseas distributor, you have to know a few tricks to have a long-lasting business relationship.
Make sure your trading terms are suitable for you. Make sure you specify your Incoterms relating to the price and the city and country. I recommend you sign up for a training session with your local export organisation if you’re not familiar with Incoterms.
Know your payment terms. Payment terms in Europe usually range from 30 to 60 days, depending on the country you are dealing with. You should accept only ‘60 days end of the month’.
Don’t be afraid to negotiate with your distributor. Your business should start from the best viable position. It’s fair to pay a new distributor in advance. My business team usually sticks to 30 days net, or end of the month, when dealing with European distributors.
Activating your Distribution
It may not be necessary to develop a sophisticated distributor program during the initial stages of your exporting operation. In most cases, your focus will be on ‘hand holding’ your distributor and showing them what you need.
To begin with, you will need to train their sales representatives. You will show them how they can get quick wins and where the easy opportunities lie.
The tools you use to develop sales can be as simple as making sure your distributors can access brochures in their language and having technical information readily available on your website. It is reassuring to a client to hear that someone else has bought your product and is happy with it.
They want to know that they will have local technical support. As mentioned in the previous blog, How To Succeed in Europe with the Right Product, there are many ways to have local support. They are in charge of level one support, which handles calls and preliminary investigations on your behalf.
These are just some processes you can do to help you identify which sales channels or distributor fits your business needs and goals.
Would you like to identify European distributors? Start with profiling the right distributor profile for your business! Download our Ideal Channel Partner Profile here and get some help if you would like to get started with setting-up a high performing European distribution network! https://bit.ly/3qIROZ0