4. SALES OF PRODUCT IDEAS & NEW PRODUCTS
4.12 O WN SALES OR SALES VIA CO - OPERATION PARTNERS ?
“representative”.
- The sales force can be more easily trained and developed to an acceptable skills level, and continuous internal training is made possible.
- The company’s own sales efforts can be aimed at tasks that do not give immediate results, such as market studies, the launch of new products, customer services, etc.
- Key customers expect service direct from the company. The customer thereby receives direct information.
- With its own sales force, management receives good reports and feedback about the market, competitors, etc., which permits quick decisions on re-orientation.
However, to build up a sales force requires capital and time, which are not always available. This leads to attempts to run sales through retailers, wholesalers or agents, who thereby become close co-operation partners. If trade is not to be solely via the Internet, the choice of retailers, wholesalers and agents is of major importance to how fast the business will develop.
When choosing co-operation partners, the persons in the organization constitute the most important factor to a positive or negative decision. The size of the company on the other hand is of less interest to how successful sales will be. In addition, one should often avoid the market leader or the second biggest company in a sector. The third company in size however, usually is "hungry" for growth and therefore provides optimal work input and commitment. If one works in a large organization, though, it can be difficult to admit that it is not the organization and its good economy that matter, but the persons in the organization, their drive and their incentive.
In choosing retailers, wholesalers and agents on any market, a careful summary of the requirements made of prospective co-operation partners should be made before beginning the search and the time-consuming discussions that this entails. Even if the desired characteristics will vary between companies, the following guidelines are worthy of consideration:
- The co-operation partner should sell her/his present products to the same customer category as for the new product.
- The new product should fit in with the rest of the co-operation partner’s range, so that the employees have experience, knowledge and contacts that are directly applicable to the new product.
- The co-operation partner’s existing products should not compete with the new product. A limited overlap may be accepted, however if there are otherwise marked differences.
- The co-operation partner’s sales methods and approach to selling etc. should be in agreement with one’s own opinions. If one’s own business sells for
example on technological know-how rather than price, then the co-operation partner should do this for the rest of the range.
- The co-operation partner should be financially strong enough to finance her/his outstanding commission and day-to-day costs.
- The co-operation partner should have a good reputation on the market and should be able to refer to previous good results in establishing new products.
The co-operation partner must be a serious-minded representative, so that she/he will give the customer the security that is necessary when selling the new products.
The choice of agent, wholesaler or a retailer should never be made without a preliminary detailed financial investigation of the company and a visit to its own premises. Personal interaction between producer and retailer must also be good for the best results. At the slightest doubt on any of these points, one should try to find another potential retailer, even though this means a loss of tempo in the short term.
When choosing co-operation partners in other countries, the issue is even greater than as described above for reasons of culture, language and other factors. Consultants on the spot are often of invaluable help in this work. Since every country has its own regulations and laws, one should always hire legal staff in the country in question when drafting contracts.
To appoint employees and to choose co-operation partners takes time and means a risk if one does not already know the persons well. If personal interaction is not right or if one has a feeling that problems of one sort or another can arise, without being able to put a finger on anything, one should definitely choose another employee or co-operation partner. Unfortunately you can never have everything you want, and must often compromise on wishes and wants. For example, one may wish for a co-operation partner in a stronger financial position, at the same time as this usually means a partner who is less "hungry" to accomplish a good result with the new product.
Finally, something should be said about the problems of operating in a large organization. To refuse to accept parts of the mother company’s sales organization for selling a new product is easier said than done, but even so, one should put forward this view if one feels that this organization will not function in the best way. The only thing that counts in such organizations is in fact the financial result. Consent hinders good results, to the disadvantage of both one’s own business and the mother company. In addition, competition is always valuable also to the sales organization of the mother company if one chooses another sales channel.