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.
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