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Export Pros Identify The 10 Best Ways to Expand International Sales
 

IOMA

From the March 2001 edition of Managing Exports

What strategies should you be implementing to strengthen export sales and marketing? According to the just-tabulated results of ME's annual survey of export pros coast-to-coast, the answer is threefold. Developing new or stronger relationships with foreign sales reps was the top strategy for fully 56.5% of respondents, developing a new or more effective international sales/marketing strategy generally came in second, and begin selling in new countries/territories was third (see Table 1).

Most Successful Strategies for Improving Export Sales/Marketing

Top 3 Across 3 Categories & 2 Surveys

Though other strategies are also popular (see below), those mentioned above are the only three to break the 50% barrier in our poll's overall results. Moreover, these three strategies remain the top three with remarkable consistency when our survey results are broken down by categories of company size, industry, and the percentage of overall company sales generated by exports (Tables 1, 2, and 3). The only exception is in the fiercely competitive consumer goods industry, where changing international pricing is the top strategy of fully 53.8% of respondents (see Table 2).

These results gain added weight because the same three strategies were ranked the Top 3 when ME asked the identical question of readers in our 2000 annual survey. They clearly deserve to be framed in banner format and hung in a prominent place in every export department as the three commandments of successful international sales and marketing.

When results are broken down by industry, export managers at industrial companies highlight the importance of building relationships with sales reps, distributors, or agents significantly more (by 63% to 42.3%) than do their peers at consumer goods exporters, who clearly rely far more on direct marketing methods (Table 2). For managers in both the industrial and consumer categories, however, the importance of breaking into new international markets is equally vital for increasing a company's exports, at 53.8% and 50%, respectively.

Beyond Top 3

Rounding out the top five strategies in the overall results are asking staff to take on more responsibilities█the choice of 41.8% of respondents, and changing international pricing█of 36.7%. The latter figure, while lower than the comparable 53.8% favoring this strategy among consumer goods exporters, nevertheless testifies to the overall competitive pressures being felt by U.S. Exporters in international markets█particularly from their European and Japanese rivals. Again, these two approaches to improving export sales and marketing hold fourth or fifth place in the survey with remarkable consistency across categories.

An exception to this pattern is at companies with more than 500 employees, where working more closely with the international credit manager (eight in the overall results█at 26.6%) bumped out changing international pricing█at 35.7%, to move into fifth place (see Table 1). This result highlights the continuing importance of the vital credit function in screening potential customers and ensuring payment.

Beyond the Top 5, four other strategies are essentially in a statistical tie. Selling to more customers on open account is the most successful strategy for 29.9% of respondents, while obtaining better international credit information on customers was followed by working more closely with the international credit manager, and renegotiating international credit terms. Once again, the appearance here of three strategies involving the international credit function█even if they don't make the Top 5 list█is a reminder of how important gathering reliable credit intelligence and enforcing a consistent credit and collection policy is for success in exporting.

Open Account As Competitive Tool

Selling to more customers on open account, cited by 29.9%, represents a significant decline from last year's survey, when it was ranked fourth overall by respondents and was the top strategy for fully 43.1%. It is of course as a result of competitive pressure from Japanese and EU Exporters, who have long offered these terms, that U.S. Exporters began adopting this strategy to increase export sales over the last few years. The decline recorded between the two surveys, rather than indicating any lessening of such international competitive pressures, may simply indicate that U.S. Export professionals have simply adopted this approach and learned how to apply it selectively for maximum benefit.

Changing letter of credit terms and qualifying for ISO 9000 certification, while they are near the bottom of the rankings, are still the top single strategy for 18.1% and 11.3% of respondents, respectively. Use of either countertrade or an Export Management Company (EMC), by contrast, is a strategy favored by only a tiny minority of ME readers.

Sales Rep, Agent, Distributor Relationships

Just as useful as the raw statistical data, if not more so, are the comments. Survey respondents provided details about how their favored strategy for improving international sales and marketing was implemented and resulted in improvements to the company's bottom line.

For a consumer goods exporter in New Jersey, the key to forging stronger relationships with overseas sales reps has been ¤executing sole/exclusive agency agreements.Ë At the same time, achieving growth also means demanding results and accountability: ¤Ineffective overseas agents/reps were replaced,Ë explains the International Traffic Manager at a 300-employee exporter of industrial goods in Ohio.

The many ways international sales reps can be put to work to increase exports is illustrated by the remarks of the Export pro at a Michigan firm: ¤Our foreign sales department secured more aggressive reps who also assist with customer credit evaluation and collections.Ë Similarly, ¤establishing distributor contracts that will save on shipping costsË has brought impressive results for a Pennsylvania exporter with 600 employees.

The extent to which initiating and managing such partnerships can affect the bottom line is graphically illustrated by the experience of another Ohio industrial goods exporter. ¤We have added several new foreign reps in territories we had not been able to pursue with strength,Ë he notes. ¤This increased our international sales by 60%.Ë For the distribution manager at a Midwest exporter with 250 employees, building stronger relationships with international sales reps resulted in ¤easier order placement and faster problem resolution,Ë helping win repeat customers.

It's not just larger companies that are getting results partnering with overseas representatives. The vice president of International Operations at a New Jersey exporter with just 30 employees found that ¤new relationships with foreign partners opened new countries and expanded sales in old ones.

For one exporter, sending U.S. Employees abroad rather than partnering with foreign agents or distributors has brought results: ¤We added direct sales reps (our Employees) in Asia and Latin America, because focus, effort and commitment are better. Customer response is very positive.Ë

Sales/Marketing Strategies: Specifics

Among those respondents who cite developing a new or more effective international/sales marketing strategy, what exactly are the better strategies they've come up with? For the vice president of a Tennessee consumer goods exporter, in 2000 that meant ¤moving where business and the economy is growing and away from stagnant Northern Europe.Ë

Table 1. Most Successful Strategy for Improving Export Sales and Marketing During the Past Year (by number of employees)

  Less than 500 More than 500 Total
Developed new or stronger relationships with foreign sales reps 57.4% 55.4% 56.5%
Developed new or more effective international sales/marketing strategy generally 48.1 62.5 52.0
Began selling in new countries/territories 48.1 53.6 50.8
Asked staff to take on more responsibilities 38.9 44.6 41.8
Changed international pricing 42.6 33.9 36.7
Sold to more customers on open account 31.5 30.4 29.9
Obtained better, more timely international credit information on customers 27.8 28.6 28.2
Worked more closely with international credit manager and/or export manager 21.3 35.7 26.6
Renegotiated international credit terms 28.7 19.6 24.9
Changed L/C terms 19.4 16.1 18.1
Qualified for ISO9000 certification 12.0 7.1 11.3
Used or expanded use of countertrade 1.9 1.8 2.3
Used/expanded use of EMCs/ETCs 0.0 1.8 1.1

(Source for all tables: Managing Exports Survey)

Table 2. Most Successful Strategy for Improving Export Sales and Marketing During the Past Year (by industry)

  Consumer Goods Industrial Goods Total
Developed new or stronger relationships with foreign sales reps 42.3% 63.0% 56.5%
Developed new or more effective international sales/marketing strategy generally 46.2 53.8 52.0
Began selling in new countries/territories 50.0 53.8 50.8
Asked staff to take on more responsibilities 38.5 42.0 41.8
Changed international pricing 53.8 35.3 36.7
Sold to more customers on open account 26.9 32.8 29.9
Obtained better, more timely international credit information on customers 19.2 27.7 28.2
Worked more closely with international credit manager and/or export manager 15.4 29.4 26.6
Renegotiated international credit terms 34.6 24.4 24.9
Changed L/C terms 11.5 16.0 18.1
Qualified for ISO9000 certification 0.0 14.3 11.3
Used or expanded use of countertrade 0.0 2.5 2.3
Used/expanded use of EMCs/ETCs 3.8 0.8 1.1

Table 3. Most Successful Strategy for Improving Export Sales and Marketing During the Past Year (by exports as a percentage of overall sales)

  Up to 9% 10% to 25% 26% to 49% More than 50% Total
Developed new or stronger relationships with foreign sales reps 36.8% 69.1% 69.0% 50.0% 56.5%
Developed new or more effective international sales/marketing strategy generally 52.6 58.8 48.3 57.7 52.0
Began selling in new countries/territories 68.4 38.2 62.1 69.2 50.8
Asked staff to take on more responsibilities 31.6 50.0 37.9 38.5 41.8
Changed international pricing 47.4 44.1 34.5 34.6 36.7
Sold to more customers on open account 31.6 41.2 24.1 38.5 29.9
Obtained better, more timely international credit information on customers 21.1 27.9 27.6 30.8 28.2
Worked more closely with international credit manager and/or export manager 31.6 30.9 17.2 30.8 26.6
Renegotiated international credit terms 21.1 29.4 27.6 11.5 24.9
Changed L/C terms 10.5 20.6 20.7 19.2 18.1
Qualified for ISO9000 certification 5.3 11.8 17.2 7.7 11.3
Used or expanded use of countertrade 0.0 1.5 0.0 7.7 2.3
Used/expanded use of EMCs/ETCs 0.0 0.0 0.0 0.0 1.1

(Source for all tables: Managing Exports Survey)

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