We recently hosted the webinar “Pitfalls to Avoid When Launching and Scaling an International Channel”. Channel Mechanics VP Sales, John McArdle was joined by special guests Justine Cross, Managing Director, EMEA Channels and Nehul Goradia, Co-Founder, Enabler ONE to share their experience of where they see vendors, who utilize the channel to scale internationally, often go wrong or even come unstuck.
Established technology vendors who are successful in their domestic market, often engage the power of the channel to scale internationally. And because they’re coming off of what they see as a successful baseline or successful blueprint, they often think scaling their international channel will be a continuation of that success. However, building an international channel is not always as straight forward as one might think. For vendors that are looking to scale up, there are a number of areas where they can come unstuck, in international markets.
When it comes to areas in which established vendors scaling internationally can come unstuck, Nehul Goradia has seen many examples. If he were to sum up in one word the most common area, he would say localization. “So you’ve got a program. You’ve got a process. You’ve got the network structure that you want and then you slap it unilaterally across all the geographies that you want to enter into. But this never works.” There are a number of reasons for this. Take EMEA for example. EMEA has over a hundred plus countries. And each country, has it’s own wants, it’s own laws and it’s own norms. To successfully scale an a channel internationally, you will need to figure out what works and what doesn’t work for each of the individual countries within the geography that you wish to have a presence in.
Just because something works in Europe, doesn’t mean it’s going to work everywhere else.“Most vendors opt for a centralized channel organization. So, if you take EMEA for example, everybody will be sitting in Europe somewhere driving EMEA as a journey. But, you have no idea how the Middle East works, no idea how Africa works“. Therefore, localization needs to be taken into consideration. You need to localize. You need to understand the nuances that exists across all your geographies. By doing so, you will begin to “understand whether that channel program or process makes sense, and whether you’ll be successful or not”.
When scaling an international channel, vendors often get enamored and want to go after the biggest distributor to sell their product. Or they look to the biggest reseller to promote their product, regardless of whether they are the right fit for them. Vendors can have tunnel vision in that they only want the biggest distributor or reseller associated with their brand. However, Nehul sees two issues with this mindset:
Firstly, the big distributors and resellers are established organizations. They are well-oiled machines, so to speak. They’ve got vendors with whom they’ve been working with for years. All of whom are earning good revenue for them. And unless, or until , you have a sizable revenue already coming out from that region, you won’t be able to afford to spend the effort needed to grow your brand with them. While unfortunate for you, it’s not their responsibility to grow your brand awareness.
Secondly, by focusing on the biggest distributors and resellers, vendors often fail to look at specialized distis or partners who could ideally be a better fit for their product. By putting the same effort into those who are hungry for your business and how your new technology strategically fits with their business goals, your sales could blossom. But “because you’ve gone with the bigger disti, often the smaller, more suitable disti won’t come looking for you”.
While you may not want to look at the smaller distis, they might actually be a more viable fit for you. Nine out of ten times, we see vendors go after some of the bigger names. And then a year later, they sit down and review to ask if the relationship was successful. It’s only then that they figure out that it didn’t work. But by then they’ve lost a lot of time, effort and money in that market.”
Working with alot of startups, Justine believes that “if you’re a start-up outside of your success region, you must act like a start-up. You need to engage with partners who are willing to work with a start-up mentality”. Vendors who consider themselves established, often fail in international markets because they don’t realize that nobody’s going to do the entrepreneurial work that’s needed in order to make sure you’re successful in each country. “It’s absolutely true that if you have a relationship in place with a large distributor, who will openly admit they’re not the best at bringing emerging technologies to market, the people who are really good at bringing new technologies to market, will not take on your product. So, you really need to think about where you roll the contracts.
From Justine’s experience, she sees vendors with “the best” mentality , often come unstuck. Here, vendors who are successful in their home market, believe they’re going to be instantly as successful and brilliant when they enter into new countries. But that doesn’t happen. All too often Justine hears: “We’re best in our market. We’ve got everything working wonderfully so why wouldn’t it work in Germany? Why wouldn’t it work in Spain? We have the best references in New York, we have the best references in London.” But that doesn’t mean someone in Dubai actually cares about that. What they want to know is what have you done for their region? And that’s where vendors, all too often, can come unstuck.
Download the full webinar here: “Pitfalls to Avoid When Launching and Scaling an International Channel”