Tips On How to Expand Internationally Using Channel Partners
If commercial globalization has ensured one thing, successful businesses will eventually dip their toes in international market waters.
In any profitable business model, channel partners play an essential role by expanding your product or service reach to a broader customer base. For an unfamiliar territory like an international market, channel partners become even more vital to your business growth.
Managing your channel partners the right way can turn them into assets that will not only help you enter the international market but sustain and grow there. Read on as we discuss foolproof tips on using channel partners to expand your business internationally and set you up for long-term success.
Why Do You Need Channel Partners to Expand Internationally?
Before we discuss how you can expand globally with the help of channel partners, it is prudent to understand why you need their support for international expansion in the first place.
When you think about expanding globally, the biggest challenge is understanding the new market. Even if you have the best sales strategy in your home country, international sales are a whole new genre, and you need someone well-versed and experienced for market entry. That is when local channel partners come in.
Once you enter a new market, all your previously successful business strategies go out the window – you need help from local distributors who already know the market, the customers, and what techniques to take up to drive sales. Thus, even more so abroad than at home, you need to work smoothly with channel partners, provide them with the necessary support and use their expertise (as well as customer base) for global expansion.
10 Tips on How to Manage Channel Partners for Success in International Markets
International expansion is a business growth opportunity like no other, and statistics prove that. According to the World Investment Report, in 2018, from the total sales of the top 100 MNCs, 60% sales were international.
However, even when successful businesses venture into international markets, they lower risk by opting for local channel partners to distribute their products at the market-entry level. More often than not, after an initial boom, sales become stagnant. Companies usually blame distributors, citing reasons like channel partners have lost interest or have run out of ideas.
Despite the usual blame game, there is no denying that corporations need local channel partners to enter the market, manage personnel, meet various legal regulations and reach potential customers (even if for the first few years). The trick is to form a solid marketing and business development strategy from the get-go so that you can work together to sustain sales growth in the longer run.
Companies need to understand that channel partner resources at (and after) market entry require organizations to commit to different financial and management aid sets. The major takeaway is to be prepared for these eventual changes in the market and support channel partners from the onset. And here, we tell you ten tips on exactly how to do that.
1. Know-How to Sort Through Potential Partner Proposals
One of the biggest mistakes you can make is jumping into the international market based on partner proposals you get. The only way for efficient channel partner management is to choose the patterns yourself rather than let them choose you.
Going for the strongest channel partners might not always be the best thing either as they seek to take control of the particular market category and likely serve other MNCs. Thus, despite their contacts, they may not offer anything new to beat your competitors as the market structure suits them the best.
Choosing the right market for your company and then going for the best channel partners drives more sales because it uses a much more systematic approach. More carefully selected channel partners fit your market approach better and are easier to manage.
2. Go for Channel Partners Who are Willing to Change The Market
When selecting a channel partner, you may think of opting for someone who is already serving similar services or products to a broad customer base.
However, for long-term sales, this might not be the best idea. When you enter a new market, the plan is usually to break the norm and intricate something new. A channel partner benefiting from the market status quo may not aid you in that. Rather than going for someone successful in the market, choose someone you might think will be successful in your company.
For a channel pattern to succeed in your company, you need to be on board with their business practices, sales strategy, personnel training, and the kind of support they expect from you. You may land yourself someone with lesser experience. Still, the strong partnership foundations make for better long-term alliances that serve both parties much better and help you break internal markets much more efficiently.
3. Curate Long-Term Relationships With Local Channel Partners
Keep in mind that local channel partners are your company’s representatives in their country. Many companies let local channel partners know from the get-go that their marketing plans are only limited to market entry and nothing else.
Most contracts chalked between companies and regional channel partners come with buy-back clauses for distribution rights after some time. At the same time, this may feel like averting risk in the first place, but it also demotivates the channel partner to go out of their way to market your product to their customer base.
With no incentive, the channel partners also focus on short-term goals, often deviating from the company’s marketing practices to generate higher revenues than hurt long-term business goals.
Make sure you add good incentives for high performance or achieving set targets, like getting new customers on board.
4. Have A Solid Marketing Plan from The Get-Go
Having a proper marketing strategy in place is essential to achieving success globally. Rather than giving complete marketing control to channel partners, the organization should have clear plans about which products to sell and their budget.
That said, too much rigidity in implementing a marketing plan may backfire. Be firm about your positions on product sales, but allow the channel partners to use their expertise to mold your strategies to fit better local conditions (Remember: adaptation, not authority).
Ensuring your marketing strategy is being carried out by local channel partners requires you to send employees to work with channel partners physically. Alternatively, you can also appoint country managers who can keep a check on channel partners (and assist them when needed) and be aware of changing local customer needs.
5. Boost Market Entry by Early Resource Commitment
When a company is entering a new market in a foreign country, committing too many resources to channel partners may seem daunting because they are not confident of the venture’s success.
However, investing early on in financial, managerial, and tactical aid helps you gain strategic market control that would otherwise be with the channel partner.
Besides, resource commitment also allows sharing information, resulting in a cooperative marketing strategy, beneficial for both the local channel partner and the company. Showing confidence in channel partners from the onset leads to a trusting relationship that generates more business revenue.
Moreover, suppose you worry about controlling independent channel partners on international turf. In that case, you can more or less apply the same strategies that you have in place for channel partners at home.
You can show your commitment to channel patterns by setting up training sessions for local partners or sending in someone from the sales team to help propagate things in a new market. Some companies even go as far as to buy small stakes in independent channel partner companies; however, more experienced organizations may be more comfortable with this.
There are other ways of showing commitment to your channel partners during market entry, like manufacturing products that meet local standards rather than those incompatible in a new market.
Rather than committing to more resources later on (which almost always happens), doing so earlier helps build better relationships with channel partners.
6. Data Wins You The Long Race
For any organization to do well in a new market, you need financial and performative data.
The quality of information you receive from channel partners often indicates how well you can sustain a long-term relationship with them. A detailed report on how your product or service is faring in a new market will give you the edge over your competitors, as it helps you mold your sales and marketing strategy accordingly.
Most of the time, channel partners are your only data source from a new market. Thus, having good communication with them is key to achieving sales targets set out for a new customer base.
Moreover, asking for regular data about market performance and price levels keeps the local channel partners in check, making sure there are no discrepancies in how you want your product or service to be marketed and sold.
7. Provide A Platform for National Channel Partners to Communicate
Now that we have talked about why communication is essential with international channel partners, let’s talk about the platform you should provide to channel patterns for a smooth flow of information.
When you provide a platform for various channel partners to communicate, it results in exchanging ideas that introduce products better suited for the local market. Besides, who knows the new market better than the regional channel partners.
You can set up regional offices or form a channel partner council for local channel partners to interact on a common platform.
Moreover, you can also use the power of technology to communicate with your international channel partners regularly. Be it e-newsletters, social media, or online training material. You can use various social channels to get your message across.
However, keep in mind that when you communicate with channel patterns from a foreign country, word-to-word translations may not be enough for them to understand your message.
Curate content and instructions that genuinely consider their culture to better implement what you communicate.
8. Provide Multilingual Content
We cannot emphasize this enough. While communication is essential for better management to channel partners and to convey your sales goals for a new market, how you communicate them is just as important.
Facilitate international channel partners by providing informative content like training videos and sales plans in various languages. This makes it easy for the channel partner to understand precisely what you expect from them in terms of performance.
Moreover, it also sets you up for a better relationship, showcasing that you went the extra mile to provide localized content to assist your channel partners better.
9. A Dedicated Channels Team is A Must
According to the Harvard Business Review, hiring a dedicated channel manager saw companies observe a top-line revenue growth increase by 11.1 percent on average.
However, many companies mistake using their sales team to manage channel partners – and that is when things go haywire.
The job of the channel manager is very different from that of a sales manager. The channel manager has to train distributors on how to sell the products. He also manages and positions them for success. While local channel partners come with their knowledge of the local market, they need a channel manager to ensure they stay on brand when selling the company product in a new market.
A dedicated channel team also understands that various international channel partners are different and adapt to their needs by providing the right resources to market and sell your product.
10. Don’t Overcomplicate
Lastly, do not overcomplicate things. Understand that you are working with people from a new country with entirely different cultures and business practices.
When communicating with international channel partners, keep your messages and content easy to understand, so there is no room for misinterpretation.
Major Takeaways
Channel partners are essential to the successful global expansion of any business. Local channel partners come with comprehensive knowledge of the local market, their customer base, and an understanding of the business practices and legalities.
However, many companies lose out on the opportunity of genuinely taking advantage of local channel partners by using them in short-term partnerships only intended for market entry.
When managed properly and provided with the right incentives, channel partners can become long-term marketers of your products in various markets.
Providing resources, adapting to new market cultures, and keeping up efficient communication channels can help you broaden your business beyond your home country, all with the help of the right channel partners, managed the right way.