Globalizing Sales in a COVID-19 Environment

Fifty percent of EDA business is typically done outside of the United States. Since COVID, driving global revenue is just as important, but more difficult than ever. I have been helping small and mid-sized EDA companies to accelerate global revenue for two decades. I hope that my experience can help you in these challenging times.

In the technology sector, and EDA in specific, almost all strategic customers have global operations. An evaluation in India, for a customer who will place an order in the United States is not uncommon. A global approach is necessary to serve these strategic customers.

In the COVID-19 market environment, it is more difficult to travel to meet and support new and existing customers. The common “visit from headquarters” is nearly impossible. Suppliers need a local team to reach and support customers locally.

The burdened cost of an experienced salesperson or applications engineer is roughly $300,000 per year.

Field teams can be daunting for a small EDA company. The cost of salaries, cell phones, car allowances, health insurance, taxes, facilities, furniture, and computers require a total commitment of as much as $300,000 in the first year. Each country has their own regulations and can impose additional labor and burdened costs that can read like a Stephen King horror novel.

By contrast, a good local independent representative may charge an annual retainer of $50,000 to $70,000, or up to 25% commission on sales. Independent representatives take care of local regulations, taxes, infrastructure, computers, cell phones, autos, and insurances. Most representatives have excellent customer connections, and many bring an administrative and engineering team. For territory sales of up to two million dollars, the independent representative is the most cost efficient way to go.

I advise my small and mid-sized clients to launch global expansion with independent representatives. This option offers lower fixed costs and the usual concerns related to sales productivity and messaging can be addressed with proper selection, support, and management processes.

An independent representative, with a good track record selling similar products to the same target customers is important.

A local representative with a track record of selling adjacent products in the target market will have a good customer list to open the market quickly. The new product line should be adding more reasons for them to reach out to their existing prospects.

I start by looking at the adjacent product suppliers and their representatives. How long have the representatives been in business? How long with the specific supplier? Longevity usually means success and stability.

Interviewing and selecting a representative is as critical as hiring an employee. Representatives must be knowledgeable in the market, work well as a team, and fit the supplier’s company culture. The representative will be the face of the supplier in the target market.

Hiring the right representative is only the beginning.

I am often called by a new client to “fix” a distribution channel. The common complaint from the C-Suite relates to sales productivity. I usually discover that basic sales support is missing. They feel disconnected and very often do not understand the products, corporate goals, or messaging well enough to represent the supplier with confidence.

I re-onboard the existing channel with training, management, communication, and support processes. Geographical regions have different business cultures and decision making processes that can block or accelerate a foreign company’s success. One-size-fits-all hinders the ability to get results. Each geography requires some adaptation without compromising the company’s objectives, positioning, and branding.

I focus the re-onboarding efforts to each regional market situation beginning by understanding why each of the independent representatives are not selling more. My interest is on immediate actionable items.

At the conclusion of each on-boarding session, I set a training plan and a forecasting methodology to get updates on local business activity. The update frequency is determined by the length of the typical sales cycle. A one month cycle requires bi-weekly updates, a ninety day cycle requires monthly updates. Updates uncover the support required to help the representative to succeed.

Training, support, and communications will improve representative mindshare and supplier success.

It pays to engage a local representative who has the market knowledge, customer relationships, and track record to open the new market. After hiring the right representative, the supplier must manage and support them to help them increase local sales.

Most representatives will focus on the products that make them money. A supplier who helps the representative sell more will receive more attention from the representative. Taking a sales support approach opens communications to bring valuable local market feedback on a timely basis. Management needs to keep asking “how can I help you sell more?” and take quick action.

Tell our readers your own experience. I would love to hear your tips and comments.

Tags: accelerate, EDA, global business, global sales, international, sales, worldwide sales

Categories: business, global, growth

This entry was posted on Wednesday, October 14th, 2020 at 8:59 am. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.