Even with the best partners, local employees are critical to success abroad
In North America, the primary driving force for many purchase decisions is value (rules 26–29). In most other markets, relationships come first, and business rationale second. The low-tech, high-touch business conducted in most of the world relies on preexisting relationships. As any company with offices abroad knows, in-country presence and partners are indispensable to local relevance.
Partners can handle everything from sales and distribution to deployment and customer service. As with all alliances, such partnerships require commitment to a joint business plan with clear accountability and metrics. Start with building relationships and articulating how the partner organization will benefit from the relationship. Create rules of engagement and define timelines for investment and progress. Less structured relationships in which the local partner views little commitment or investment are likely to yield disappointing results.
When you engage with local partners, determine what the partner can and cannot deliver and how you plan to compensate them. An agent helps establish relationships, makes sales introductions, and gets paid referral fees for specific contacts or transactions. Working with them can help you gain entrée into customers and partners you may not be able to access alone. When Datap, a Canadian systems integrator, was expanding from North America into Europe and Africa, it benefited immensely from working with local agents. The company’s ability to break into a tough Middle Eastern market is a great example of the power of local partners and the need to find the right ones. The company was targeting the oil and gas industry in Saudi Arabia and doing all the things recommended by embassies and trade publications. Unfortunately, it was unable to build the needed connections with buyers. Finally, the company hired a well-connected local agent who had already worked with the target customer. The agent accomplished in a few weeks what might have taken years of business development and sales efforts.
Other types of partners require deeper, longer-term commitments. A reseller takes greater responsibility for ongoing sales and customer relationships, than does an agent, and is rewarded through a reseller discount. A total solution provider often resells but may also refer or influence sales made directly by you. They receive a combination of reseller discounts and referral or infuence fees.
Even with the best partners, local employees are critical to success abroad. “Always portray yourself as a global company. You need local offices staffed with local people speaking the local language to show commitment to the area. Get people who know the culture and have the connections. Decide whether you want to be Co. Japan, or Co. in Japan,” advises Jeremy Cooper of Salesforce.com. When Salesforce. com expanded into Japan, the company faced an especially difficult challenge in balancing local representation with company know-how. Salesforce.com’s unique, new-technology delivery model of software as a service required a new approach. Even experienced salespeople would need the support of managers with tenure and experience in the company. Salesforce.com found talented local resources and used the expat staff to transfer skills and knowledge. The early interaction among expats and locals created long-term relationships that fostered collaboration between the region and headquarters.
Local presence from headquarters is required to recruit local employees and pass on critical product and company information. Executives’ early presence also helps bring knowledge of foreign markets back to corporate when the expats return to headquarters. Over time, as local staff takes over the day-to-day management and execution, they will also need greater autonomy to adapt sales, marketing, and alliance approaches to the market. Even so, management must be committed to regular visits to field offices in order to observe local needs firsthand. Visits by executives from headquarters are also invaluable in demonstrating the importance of international accounts, and for building relationships by mixing with the locals.