Reigniting International Distribution via Assessments

While thought-provoking ventures such as Starbucks' foray into Colombia or Target's abysmal failure in Canada tend to grab business headlines, most companies' international fortunes continue to hinge on reliable, tried and true local distribution partners. Relationships with in-country distributors -- or "channels"" -- are a proven way to ignite sales and brand recognition for a range companies based abroad. If managed well and consistently, distributors can form part of a distribution network offering foreign firms considerable go-to-market advantages not the least of which is that it will allow them to focus more closely on core competencies such as product development, R&D, manufacturing, and brand marketing. This post focuses on channel assessments as a key practice for active management of international distributors and distribution networks.

Good Channel Management Requires Good Listening Habits

As is the case in all relationships, even the most successful distribution partnerships need regular attention and nurturing to stay in top business form. Companies that take proactive steps to reach out and listen to their channel partners over time stand the best chance of understanding and anticipating current and future benefits of a distribution arrangement. By contrast, companies that rely only on the initial reasons that brought the partners together, run the risk that their channel partners' interest will eventually fade and even turn to new and, in some cases, competing market players.

The risk of growing apart is heightened in international settings where physical distance and time zones tend to create separation between manufacturers and their channel partners. Too often, we see that companies that owe a great deal of their international success to distributors begin to only speak at their distributors at occasional channel events and by churning out one-way communications. They forget to how to speak with their distribution partners in an active dialogue that takes into consideration what is happening with the channels and what they may need to increase sales in the middle and long term.

The Importance of Regular Channel Assessments

Companies that depend on international channels should consider actively assessing their channels' ongoing capabilities through well planned interactions via questionnaires, interviews, and other tools that provide channels an opportunity to share information on a range of topics important to them as well as the manufacturer. If configured well, these channel assessments can provide international companies highly practical visual tools such as those below that demonstrate the relative strengths and weaknesses of channels as well as their readiness to continue to distribute a manufacturer's products over time.

It is important to note that these channel assessments should not be approached as audits or "tests" that a channel can pass or fail. Rather, assessments should be approached as way to identify areas where channels are doing well and where they have needs that require attention. If approached in this manner, channel assessments can also be a springboard to launch updated programs and initiatives geared to keeping the manufacturer and channel relationship top of mind mutually beneficial. In one recent client engagement, for example, a client used assessment results to confirm that its channel engagement strategy had become antiquated and required a new approach to segment and relate to its partners.

For more information on Nextant's work with channel assessments, click here.

For a PDF version of this document, click here,

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Andres Snaider is a founding partner of Nextant, a consulting firm specializing in assisting companies expand their businesses in international markets, with a strong focus on Latin America. With a degree in law and experience working as an international attorney and businessman, Andres has advised clients on a range of commercial matters and investments across the Americas. He is a graduate of the Harvard Law School and currently lives and works in Boulder, Colorado.

Email Andres at: asnaider@nextant.com

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