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Friday 10 August 2012

TALES FROM THE ROAD 8 – HOW CAN YOU TELL? PART ONE…



One of the things I have been told most frequently by potential new distributors is ‘we want exclusivity!’ Although it started to sound like an overplayed record, I would probably ask the same if the boot was on the other foot. Distributors mainly ask for exclusivity because they want to commit to marketing and promotional expenses on your behalf, and why should they do that if you are going to side with someone else?

I had only been in post at Gaskell Textiles for a couple of months when I took a call from my sister company’s distributor in Athens, who shall be called Mr. G. He had clearly not been able to impress the previous guy, and probably thought the new boy would be a soft touch. I had barely opened my mouth before he told me he was our exclusive distributor for Greece! However, I had all the performance figures of all our distributors in a chart on my desk and I was able to retort that £18,000 of business this year and £4,000 last year hardly justifies an exclusive arrangement and that there was no distribution contract in place.

It got funnier. About six months later, I took another call from Mr. G. who was on his way to see our sister company ‘in one hour’. He suggested that I dropped everything to meet him. So I said no, but if he waited around until later in the afternoon I might be able to find ten minutes. And I kept my word, and walked into the showroom where the meeting was to take place, warmly greeted Mr. G., shook his hand and asked him about his journey, and then said “Mr. G. I would like to make my position clear. I will not give you exclusivity for our products until you show me £50,000 a year in sales turnover”. That didn’t make him too happy, and for all I knew there could be another distributor in Greece that would have provided a quicker route to my £50,000 a year – which I actually failed to achieve anyway! And the postscript to the story is that Mr. G. stood me up when I visited Athens later in the year. It’s all a bit of a game.

So who would you be prepared to offer an exclusive contract to? The following opportunities are true. The people are real. The cases are real (sorry folks, I nicked that from Judge Judy!). Think about each as you read on, and think about what you would do. The answers are at the end, but first use your own judgement, and see if your gut feelings are correct!

CASE 1
A former sales director colleague of mine was selling woodworking machinery at an exhibition in Dubai. He had gone to exhibit on a whim, to test the waters, to see how the land lies. He had taken a shell scheme and was not in the greatest location, and as a result he ended up twiddling his thumbs for most of the six days of the exhibition. However, on each of those days, one man called onto the stand promoting himself as someone who would build business for the company’s machinery across the Middle East. He had no experience of selling machinery. He had no experience of the construction sector into which our machinery was predominantly sold.

CASE 2
A German tooling company was exhibiting in Accra Ghana in the 1990’s. ‘Joseph’ pestered them daily for the right to sell their tooling into engineering companies in Ghana. He didn’t let up, and was there at the start of every day. Joseph was wearing no shoes at the time because he couldn’t afford them. He had no money and no experience of selling tooling, no experience of selling anything at all!

CASE 3
Two established companies in the USA, one in Springfield Massachussetts (no Simpsons gags please, they’ve all been done!), and one in Charlotte North Carolina. Both persistently demanded nationwide exclusivity for our products. Both had long and successful track records of selling machinery. Both had tremendous knowledge and experience.

CASE 4
I was introduced by a very well connected guy in South Africa to a Nigerian who in turn was well connected in the medical sector in his home country. He was full of energy and very demanding, both in terms of time and in terms of the support he would need to win a share of the market for my client’s incinerators. He travelled regularly to the UK and was familiar with all the necessary logistics and payment issues.

SO WHAT HAPPENED?
1.       Om became our best distributor in the Middle East, bringing a regular £300,000 of business annually.
2.       The German company gave Joseph a chance. At first he dragged his only tooling block around Accra on a homemade cart with a string handle. Within 5 years Joseph was driving a Mercedes and wore shoes.
3.       Neither US company were given exclusivity. The market is too big, and both companies were selling for competitive European companies. We weren’t the only show in town. And by the way, they both hated each other!

4.       I have no doubt that the Nigerian guy would have worked out, but Nigeria was not a priority market, and my client had already sold into the country through another source. He wanted expenses upfront because he was going to have to travel extensively to achieve his goals.
PART TWO will provide a few hints and tips on how to verify new distributors, and make judgements about what sort of contract to agree with them.

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