When breaking into new markets local knowledge and access to key influencers are vitally important. Comopanies should consider the use of local partners. There are a number of reasons why they are important:
Access to sales leads. They will have clients and part of the deal is that they open their clientbase. Ideally if they have a complementary product you could look at the sales pitch as being an upsell or cross sell…whatever works
Access to sales and presales resources that know the end prospect that can help introduce your company and products and support your partnership campaign.
Local brand. Local knowledge. Local customs. In the UK for example it’s still better to find a Scottish company to sell to a Scottish end user.
Access to technical resources for installation and support. It might be an idea to use the first installation as a knowledge transfer exercise to get the local partner up to speed. This allows local knowledgeable 1st line support and a pool of resources for the second and subsequent installs. (Would a british company buy where 1st line support for handhelds and presumably software is in Ireland?..what will happen when product is sold into Europe or say S Africa? Business model for scale suggests 1st line has to be local?)
Deals with local partners can be myriad and shareholding would be way down the line if at all. If licensed and installation and support product the deal could be 1. Share of upfront license (has to be meaty), Installation services – again make sure local partner has a decent element of this part of the contract – to keep the partner motivated, to build local support knowledge for end user, to build pool of local technical staff proficient in product),1st and 2nd line support local agent, 3rd line (change to code or whatever, host company).
Many local partners may look for exclusivity for customer chains or territories. Exclusivity has to be earned and happens by default through success.
If you’re in the software business, you may end up with a partner that does say integration. Be very clear where your code ends and their code starts!
Local partnering works if respect is earned and mutual. They should be given premium levels of service – training, support, literature, powerpoint presentations, logos on websites etc. In return agreed reporting on pipline etc needs to happen on a regular basis. Usually opportunity drives these meetings and the ensuing closeness of the 2 companies.
Nearly last but not least, most deals are going to tender these days and partner may be needed to prime deal and provide accounts.
Partners cannot be managed remotely. Senior people from host company will need to put as much time into partner relations as perceived for end user engagements. However if you get a partnership right, you could get a number of sales from it…and local resources…and a pool of people proficient in your product…..
Beware going direct if you’ve gone into a market with a partnering model…