I participated in the conference Partners for Growth organized by Niederdorf Italia; the theme was International Distributors. It was a meeting from which I took away some interesting ideas that I share with you here:
- When you are looking for distributors for a specific area you should not rely on the first one you meet in an exhibition and who says is enthusiastic about your products, especially in developing markets (often they are only stock holders who do not conduct any promotional activities).
- It is preferable to begin, instead, with an analysis of the market and meeting several candidates, taking them into consideration by evaluating several factors such as: the ability to provide technical service to customers, their current product portfolio and the existence of possible conflicts, their team of vendors dedicated to your product line, their willingness to maintain an adequate stock of your products, market coverage, marketing and promotional support, economic and financial solidity, etc.
- Once a decision has been made (and before binding each other with a contract) it would not be a bad idea to sign a simple letter of intent for the duration of six months to see if good intentions are followed up by facts; the contract can follow this trial period.
- Evaluate whether to add a code of ethics into the distribution agreement since we will not only entrust the distributor with our business but also with our image. If within our company there are certain values on which we relied to help it grow, they must be shared with our partners in the new market. Often, cultural barriers do not facilitate the understanding of these intangible aspects.
- Set periodic objectives: in turnover, new customer acquisition, growth and training of personnel, etc. As an incentive, it could be useful to attach rebates or benefits to these objectives if they are attained.
At the conclusion of the conference an important piece of advice was also shared: if your company is not well-versed in these topics then you should consider bringing in external experts. These professionals certainly have costs that should be weighed, but it is a cost that is concrete and certain. If by trusting your instincts you choose the wrong distributor, on the other hand, you will run into costs that are often difficult to quantify.