Webinar for the Commerce Department 29 June 2021 on Best Practices in Global Sales

Welcome to the Global Sales Mentor Podcast for conversations that drive growth. When you are ready to grow your international sales, join the conversation with your host, Zach Selch. Welcome. This is my first solo podcast, and this is actually a webinar that I recorded for the US Department of Commerce Commercial Service. They asked me to talk about the dos and don'ts of recruiting and managing distributors, something that I know a lot about. And so I decided this would make a great webinar. Please enjoy it, and I hope it isn't too boring just having me, although you're going to hear some questions and answers at the very end. Welcome and enjoy.

Thank you for registering for the Do's and Don'ts of Choosing an International Partner webinar. The sole purpose of the program is to provide participants information on how to identify overseas partners and practical tips on supporting your international distributors to increase sales. Our featured speaker is Mr. Zach Selch with Global Sales Mentor. Zach has an impressive career. He has lived on 4 continents, has sold in 135 countries, managed sales leaders in 50+ countries, and trained thousands of salespeople. He received the Presidential E Award for Export Sales Growth from President Obama and lectured at MIT London Business School on global sales. Also, Zach is a bestselling author of a book titled Global Sales, and he has graciously offered to send you All you need to do is— to receive a copy is to send him an email. After Zach's presentation, I will provide an overview about the U.S. Commercial Service U.S. Export Assistance Centers. Our basic housekeeping rules include to ask questions, please type them in the chat box and we'll address them throughout the presentation. So without further ado, I'd like to introduce you to Mr. Zach Selch. Thank you, Linda. Zach Selch, the Global Sales Mentor.

Hi, thank you very much, Selena. I hope everybody, uh, can see me. So about 20 years ago, I started the first day of a new job with a multinational. I was supposed to be one of 5 or 6 account managers in Scandinavia for a Fortune 1000 multinational. And when I went in for my first day to talk to my boss, he said, you know, Zach, I have I have a problem that I hope you can help me with. I was just given responsibility for South Asia and nobody's ever been able to make this work. We've been trying to sell in India for 7 or 8 years. We've never been able to make this successful. If you take this on, if you, if you take the job of Director of Sales for South Asia, I promise you in a year I'll give you your job back as an account manager in Scandinavia. I just need somebody to fill the spot. And this was a great opportunity for me, even though this was a real surprise and it really wasn't what I expected and it wasn't what I had signed up for. It gave me an opportunity to try out all these different things that I'd been studying and working on throughout my 20s and picking up all these different ideas, and I'd never had a big enough team or a big enough budget or big enough scale to be able to work with them. And I took this from a plateau where they had been about 7 years at a plateau of half a million dollars. I was able to drive this up to about $30 million, and I learned an awful lot while doing it. And then skip forward about 5 years, I was working for a multinational Midwestern family-owned business, about a couple hundred million dollar business at the end. And I'm talking to my boss. It's my very first job review with my boss. And he says to me, he goes, Zach, you look very pleased with yourself. I hired you to grow sales. And so far, sales are where they were last year. And you seem pretty pleased with yourself. And I said to him, look, when we talked, when you hired me, I told you it was going to take about 18 months. And we've put in place distributors. We've put in place SOPs. We've hit all our milestones. We are going to grow our sales. And he said, Zach, you can't tell me that you're going to be able to grow sales. You can't really forecast what's going on. And I said, as a matter of fact, in my contract is the fact that I have to be able to forecast. If we follow and we do the right things, we are going to see these results. You just have to wait a couple more months because I told you it would take 18 months to hit these goals. Anyway, a couple of months later, the money started coming in. And effectively, we were able to push up the value of this company, which he inherited from his grandfather for about $10 million. We were able to push it up and he sold it for $370 million. And the people who bought it, the PE firm that bought this company, what they said was the reason they bought it was for the global footprint. Now, Why am I telling you these stories? Because I want you to understand how possible it is, what you can do with global sales. Increasing global sales is really something that can drive up the value of your company, and it really is something we should all be trying to do. Now, that said, only about 1% of American businesses successfully export, and about 1 in 2 companies in America that try to export fail. Marcus Alexander in 2008 wrote an article for the Harvard Business Review where he talked about the dangers of attempting to expand internationally and not succeeding. And what we forget is this takes up a lot of resources, it opens us up to a lot of damage, and not doing this correctly can really harm your company. So if you do this well, you can really get a lot of benefit out of it. If you don't do it well, you can really damage your company and put your company at risk. So what we're, what we're looking at is if you do this well, you can be very successful. If you don't do this well, you can put yourself at risk. Now I say that, and the reason I like to talk about the successes I've had is I'm going to jump into some things now in a few minutes, and in about 10 minutes you're going to think that I'm crazy. And what I've seen very often with people I work with is they say later on, they go, you know, Zach had these really unorthodox, crazy ideas, and I'm glad I trusted him because it made us a lot of money. But in the beginning, people see these things as a little bit different. And I can tell you that I've attended a lot of different webinars and discussions about the exact same subject, and I would disagree with a lot of the people who were doing them, right? So what I'm going to say might be a little bit unusual, but I think that you can get value from it, and I think looking at my background as being successful on the ground will help us understand if you can trust what I'm saying or not. So this gentleman is Takeo Kobayashi. And he is one of my real heroes in terms of business, as crazy as this might sound, because he's never sold anything and he's never really done any business. But here's what he did. When he was 22, he weighed about 120 pounds. He was unemployed. He had never eaten a hot dog in his life. And he was looking for a way to make money, and his girlfriend suggested to him Competitive hot dog eating. Okay, and if you think about it, most of the people in the world who do competitive eating are 300-pound American guys who live, you know, in New Jersey and have been eating hot dogs their whole life. But he looked at this and he said, how can I do this better? And the rules basically said you had to go up on stage, you could bring any condiment you wanted, you could bring as much water as you wanted, and you had to eat Both the sausage and the bun. And what he did was he tossed all the sausages into the oil. He brought up a, a bowl of oil and a bowl of water. He tossed all the sausages into the oil and then all the buns into the water. He took the sausages and he sucked them down whole using the lubricant to get them down his throat. Then he took all the bread, he squeezed out all the water from the bread, and he ate it like mush. He was able to eat 50 hot dogs in the same amount of time as the previous world champion had eaten 25. Okay? And why do I like him as a hero? Because I look at him and I say, if this guy can double the number of hot dogs that a person can eat, right, we can all learn to improve what we're doing. Okay? And this is the important part of the first part of my lesson here is we can look and we can improve what we're doing to try and make things a little bit better for what we're selling. Okay, so now let me jump into what you'd more consider possibly the meat of the presentation. And the first thing I'm going to say to people is you have to ask yourself some certain questions: why, who, when, and what. And again, what I'll say is When I start saying this to people, very often they say, you know, Zach, I don't want to ask myself questions. Just give me some tips. I've asked myself these questions. We don't need to be, you know, this introspective again. But the key to succeeding really is understanding these things. For instance, why are people buying my products? And, and what's that important? Well, very often when you develop a product, You actually are looking at the wrong benefits that people might buy. And I'll give you an example. I once sold a ventilator that was developed specifically to work in ambulances. It had a 6-hour battery. Now, when you understand how ambulances work, ambulances have a very good power system. So nobody wanted it to, to put into an ambulance in a Western country. Who wanted it? People who had critical care hospitals where they didn't have good electrical supplies. So when we shifted the target markets, when we shifted the type of distributors we were using, we were able to really explode the sales. And that came down to asking the question why people bought it. Who buys the product? And again, we very often, we look at this and we say, well, we know who buys the product. product, but understanding this could dramatically change how you sell and, and what channels you use, what partners you use. For instance, I was with a company once and we sold through the maintenance people in the hospitals, but we realized that the IT people in hospitals wanted a similar product and had much bigger budgets. So by shifting from selling to the maintenance people to selling to the IT people, We were able to increase sales dramatically by hundreds of percent just by doing that, but it required us to change the type of distributors we were using and that kind of thing. When do people buy our product? And you can look at this from 2 different perspectives. One is, is there a macroeconomic triggering event? Like, do people buy this when there's a growing middle class, when there is a large group of childbearing age people, as people retire, are these things that might trigger our customers buying our product? Or could it be a very specific thing like I sold a product once and what we realized was that people bought our product about a year after they bought a competing product, right? They would typically— we could go head-to-head with a competing product. People wanted that product first, but once they owned that product, they were very likely to buy our product about a year later. The company that sold that competing product, or the biggest company that sold that product, was a publicly owned company. We could buy a share of that company, of that stock, to get the annual report to know where they were selling. So if we followed where they were selling one year, we knew that the following year would be an excellent year for us to sell. So understanding when your customer buys is also really important. And what are you looking for? What would be your success? And by that, I mean, are you looking to expand your footprint to sell your company? Are you looking for revenue? Are you looking for profit? You could also be looking for something totally different. I once worked for a company that wanted me to essentially attack their biggest competitor outside of the US in order to keep that competitor from really attacking them on the US market. Okay, so these are all different forms of success, and it has to be crystal clear to you why you're looking at these things before you get involved. Now I'll get into something that probably is more what you're thinking of as the meat, okay, in terms of, well, what countries are we looking into, okay. And the first step in expansion, and the thing that most people do badly, or poorly I might say, is really going into the international markets and figuring out where they want to go. And there are 2 2 real mistakes people make is they go where they'd like to travel, and this is not uncommon. I'll talk to people and they'll say, well, I, I've always wanted to go to Paris, or my wife really wants to go to Italy, so those are going to be the first markets I go into. And this is a huge mistake in my opinion. And the second thing is people will say, well, I've had 5 distributors reach out to me from different markets and I decided to go with them. And this is really almost randomizing your strategy. You're putting your strategy in somebody else's hands when you go into markets because somebody reaches out to you. And I'll talk a little bit about this later on in terms of choosing distributors, but I can tell you I never ever go into a market because somebody reaches out to me from that market randomly. I don't let myself be pulled around into markets that I didn't decide to go into. What I'm doing when I'm choosing a market is I'm trying to figure out where I will find the most customers that fit my customer avatar. So if I know who buys my product, when they buy my product, why they buy my product, I can figure out what the 5 or 10 or 20 best countries or best markets in the world are to sell into, and that's how I'm going to choose the countries that I go into. I'm not going to let anybody else randomly reach out to me and pull me into a strategy that doesn't really help. There are a lot of people who will help you on this, and I'm going to tell you why you should be very careful of these people sometimes. Okay, I was at a conference a couple of years ago, actually now close to 10 years ago probably, and there were some diplomats up on stage and people were talking, and this lady asked from the audience, and she said, my company only has enough money to go into one Middle Eastern country. What country should I go into? And this diplomat said, Well, we just signed this treaty in Morocco, and it's gonna help you with your taxation. And I would suggest that the best market for you to go into to sell medical products in the Middle East is Morocco. So I raised my hand and I said, so the Saudi Arabian medical device market is $2 billion. The Moroccan medical device market is $200 million. Are you suggesting that this treaty, this taxation treaty is worth a tenfold increase in the market for this lady, and this, this is valuable for this lady to go into that market. So this is the type of thing my wife says is why I don't get invited to more parties. But you should always keep in mind who is giving you advice. So this, this American diplomat who was based in Morocco obviously was going to be suggesting going into Morocco, whereas maybe somebody who didn't really have a reason to be focused on one market or another might not be giving this lady the same advice. When I was a kid, I played the saxophone very, very badly. And I came home one day and I said to my mother, you know, my saxophone teacher says that if I had a new saxophone, I'd probably play better. And my mother says, well, how does your saxophone teacher make her money? And I said, well, she, she gives lessons. And my mother said, yeah, we pay her $7 for a lesson. How else does she make her money? And I said, well, she sells $1,000 saxophones. And the reason I say that is there are lots and lots of people out there who are going to offer you help, and you should be very careful about how they are getting their money in terms of how they help you get into specific markets, right? There are people whose focus is the Japanese market and they will tell you you should sell to Japan. There are people whose focus is helping you get CE certification, so they might tell you you should go into Europe. You should be looking carefully at where the revenue is, where you are going to be most successful, where the people who can buy your product are before you do anything else. How do I typically choose countries and how does that typically work? Well, for instance, let me tell you an example about a product I sold that was typically being put into new hospitals that were slightly higher quality. So what we found was there was great correlation between the growth of a country's middle class and hospital builds. Okay, so when you take a look, for instance, at a place like Turkey, where in the past 2 generations they've suddenly had a huge surge in middle class of people going from being farmers to being urban middle class people, that turned out to be a great market because there was a surge in hospital builds, right? So you can do these type of correlations, and finding the right markets is going to dramatically drive up your revenue and your profitability. Having found the right market, now let's talk about the next part of this, which is essentially building your teams. And I love these old caper shows from the '60s, typically, where they go after— they're doing a diamond heist or a bank robbery, and the first thing they do is they pull together the right team, because success in this is going to be driven by having the right team.

Yeah.

And the first person you need is your head of international sales. And I find this is also one of these things where very often people make mistakes with this because what we're looking for is somebody who knows how to sell, who knows how to sell through channels, and who has experience in more than one market.

Okay.

And what I would always say with something like this is you want somebody who sold in, say, Asia and Latin America or Africa and Europe or something like that. When you have somebody who is a really solid domestic sales manager, even if that domestic market is, say, Mexico, that doesn't necessarily mean this person is going to be good at expanding into multiple markets. The next person on the team is typically going to be the regional sales managers. And again, this is very often a mistake people make. What we want are regional sales managers who will fit in and be able to sell in their markets. And very often what I want is somebody who has existing connections and really will fit in culturally. And very often we're looking for people who are a good fit for our team, right? We want people who we're going to feel comfortable with at the company picnic. And those people might not really be good at selling in their home markets, right? So what we shouldn't be— we shouldn't be worried so much about if they fit in in our company picnic. We should be more worried, will they be able to sell in their home market? And then now we're coming to the piece of the distributors. And from my perspective, the distributors are the backbone of a sales organization. If you are an American manufacturer, of under $500 million, from my perspective, you are going to be working with distribution typically, and you're going to live and die by mindshare of good distributors. Okay, if you can't get the right distributors and the right market to have strong mindshare, you will not succeed in what you're doing. So, so first of all, How do we choose the distributors?

Right.

And I'm going to start again by taking a little step backwards and looking at the questions we asked. But I'm also going to look at their— at the purchasing process within my target markets, and I'm going to mirror it. Okay? Because what I want is to understand a sales process that will be used To sell to these markets. Okay, and if I don't understand this, I can't understand the type of distributors that I need. And typically there are lots and lots of ways to build a sales process map. And I'm not telling you you have to use mine, but this is what I like to use. I say there are 4 elements: finding the customers, building trust, helping the customers internalize That we can help them solve their problem and delivery. Okay. And when we've looked at these and we've broken up how we go from our factory to the end user in market, we can put together a map which basically shows all the different components that headquarters is going to do, the RM is going to do, and then the distributor is going to do.

Right.

And without that, we can't really move forward. So once we've identified What we need from the distributor, we can then build a— what I would call a distributor avatar, where we essentially know what that distributor should look like. Now, one mistake that I see people make very often is they say, well, my product is very, very technical, and so I need a technical distributor. And I'm going to tell you now, from my perspective, What you need is a distributor who can sell. Okay, you need the distributor who can handle the elements of the sales process that you, that you've identified and you want him to handle. You can always hire somebody to do any technical thing cheaper than hiring somebody who can sell. So you can actually say to your distributor, look, you know how to sell, but you don't have these technical skills. I'm going to hire you as my distributor, but I need you to hire this type of technical person because this is an important element of my sales process. It's technical, and I need you to be able to do that. Okay, that's an acceptable thing to do, but looking for a distributor who's very technical is usually a mistake, and I've seen companies do this. And when they change their distributor avatar and they hire distributors who can sell more, their sales go way up. Now, there are 3 things that I like to talk about in terms of distributors when I evaluate them. Competencies, and that's really the things where I say, well, what do I need this distributor to be able to do? Do I need him to be able to present? Do I need him to be able to write a proposal? Do I need him to have specific contacts already in market? Bandwidth. And that means how many boots on the ground can he put out? How many meetings can he have? How much can he get out to the market when I need it? And let me give you an example. Let's say that there are 200 potential customers in a specific territory, and my feeling is I need somebody to get to them every day.

Every year.

I need somebody who can put a person on the ground. That's essentially a full-time employee dedicated to my product. Because if, if a person is doing 200 meetings in hospitals a year, or in customers a year, that's about a full-time employee. So depending on how many potential customers there are and how often I have to visit them, that can be a way for you to judge What type of bandwidth you need. And we very often make the mistake of saying what we really want is the biggest distributor in the country. The biggest is, is not that— is not often the best. And that comes down to focus, which is the third element of the triangle. How much is this distributor going to focus on you? You might have a little tiny distributor that has 2 products, or you might have a little distributor that has 5 products, but you're the most important product in his portfolio and he has to focus on you. He loves selling your product. On the other hand, you might be working with a distributor that has 1,000 products and there's absolutely no focus even though he has giant bandwidth. If you think about this as a triangle, basically you say, well, I need competency times bandwidth times focus. If one of those is zero, The whole thing falls apart. You need to have a minimum of each for this to work. Now, you might say, what's really important to me is competency, and I can make— I can handle a slightly smaller bandwidth or slightly smaller focus. I'll manage that. But one way or another, you need all 3 of these in the minimum requirement. So how do we find these guys? And this is the thing that people always always ask me, and they're always worried about this, and I understand it. Okay, let me say something to begin with. In 30-plus years working in over 135 countries, working with almost 1,000 distributors, I simply never, ever, ever, ever work with a distributor who randomly reaches out to me. Okay. And I know that sounds a little crazy, but that's the way I like it. I like to put together a distributor avatar and then find that distributor in the markets I've targeted. Okay, so how do I find them? Well, if I have this distributor avatar, I know what I'm looking for in a distributor. I know approximately what he should like selling. Okay, I'm looking for, you know, he should be selling to a specific group of customers. I want him to be selling a similar price point, not necessarily the same price point, but let's say I have a $100,000 purchase order. Okay, somebody who's really comfortable selling a $5,000 purchase order probably isn't going to be very good at selling my product. Somebody who's really comfortable with a million-dollar purchase order probably isn't going to be comfortable selling my product. So what I want is somebody who is today selling a similar price point a similar price point purchase order to what I sell. I want somebody who's selling a similar quality. If I'm an American manufacturer, I don't want somebody who only sells Pakistani products or somebody who only sells, you know, something that I would consider a lower quality because I want him to really fit in with my product line. Now, if I know what he should be selling, then I can look and say, okay, These are five brands that this guy should be selling. Not competitors of mine because that isn't going to work. But let's say there are products that I know that a good distributor of mine probably is selling. If that's the case, I can find him. I might be able to reach out to that company and say, "Hey, do you mind telling me who your distributor in Pakistan is?" Okay. I might be able to find them on their website. I might be able to do a Google search. I might be able to call the company. I can also call the commercial office and say, hey, I am looking for the distributor of such and such a company, this particular line in this particular country. Can you help me? Now, I'll tell you what. If you call the commercial office, the U.S. Commerce Department, and you say, I'd like to do a gold. Pakistan, find me 3 distributors. They'll find you 3 distributors, and I'm not dismissing them at all, right? But the less information, the less parameters you give them, the less likely that is going to be to be a good fit. So if you come to the Commerce Department and you say, I want to do a gold key, this is exactly what I'm looking for, they will find you fantastic people. If you come to them and say, find me a distributor, they will find you a distributor The chances are that's not going to be a great distributor. So you have to think about what exactly is the avatar of the distributor you're looking for. Now, once you've identified these, and typically I'm going to identify 3 or so distributors for every country I want to work in that fit my distributor avatar. Now it's sort of like dating. I want them to want very badly To be my distributor, right? I want them to find me attractive. And why does a distributor find me attractive? For 2 reasons. One is they believe they can make money from my product easily. And 2, they believe they can trust me. That's what's important to a distributor. If you go to a distributor and you say, look, my product is made of the highest quality aluminum And, you know, my company's founder has this fantastic backstory about being an immigrant or whatever. Nobody cares about that. What they want is to understand how they can make money with your product easily. And by that, I mean profitably. You're going to give them support. You're not going to make life difficult for them in terms of working parameters. You understand how to deal with international markets. All these things are things they're going to be looking for. So your pitch should explain to them how you're going to help them make money. And then the other part of that is why they should trust you. Okay? And again, I was on a call recently, one of these things where people were talking about distributors, and from the beginning, the guy who was talking was talking about how you should be planning to, you know, maybe change distributors in the future. You should maybe be planning to go direct, these type of things. Now that's your business decision, okay? But if you get a reputation for burning distributors, from screwing over distributors, you might as well get out of this business, okay? Because if you want to be an export manager, if you want to be an international sales manager, your life depends on distributors trusting you and your reputation. Distributors speak to each other, distributors communicate with each other, so you have to present yourself. Now, when I go into a meeting, everybody wants to be my distributor because I basically can say, look, I've been doing this for 35 years. Try and find somebody who can tell you that I screwed them over, right? There isn't anybody because I've been very, very careful Never ever to screw over a distributor, right? And I'll say to people, here's the thing, I'm not planning on going direct. Obviously, I might change you if you don't meet my requirements. I'm going to be very clear what I need from you. If you do that, I won't change you, and I'm not planning on going direct, and I'm not planning on splitting this market because you've been successful. So I'm coming in now. I know this is something that most people will say, well, this isn't the way to do it. There are better ways to do it. You break the market into small pieces. You double up, whatever. If you get your distributor to trust you and to understand that he can make money from you for years to come, you are going to get better results than any other format of business that involves screwing over a distributor.

Okay.

And people might not agree with me, but frankly, I've been doing this for a long time, and I've been doing it very well for a long time, and I firmly believe in this. This is probably the closest thing that I have to a religion, is don't screw over your distributors, because at the end of the day, that's how you make money. Now, I talked a little bit about the triangle. What I'm going to do is, after I've interviewed and met with a couple of distributors, I'm going to matrix I'm going to figure out how they go in terms of bandwidth, in terms of focus, in terms of competency, and then I'm going to choose which distributors I want, and I'm going to offer a distributor to be my distributor, and I'm going to come back with, with conditions. I'll talk a little bit about the mechanics of that in a second. But once I have a distributor, this is just the beginning. Getting, finding the distributor. I know a lot of people will say, well, a distributor is an independent business and you can't really tell them what to do. And so I'm— no, as a matter of fact, what I'm going to do is I'm going to give them standard operating procedures. I'm going to give them a playbook. I'm going to tell them what I want from them. I'm going to tell them how I want them to be reporting to me on a regular basis so that I can keep track of what they're doing. So From my perspective, the distributor is my sales unit, my sales arm, my sales manager in that country.

Okay.

And think about it this way. Imagine somebody says to you at a trade show or a party, hey, I would like to be, you know, the guy who runs one of your manufacturing lines because that would be fun. And you say, hey, great, why don't you do that? And he says, yeah, I'm not going to follow your procedures and I'm not going to tell you what I'm doing, but I'll just stand here and manufacture and hopefully I'll do a good job, right? We would never, ever, ever do that. On the other hand, on a regular basis, we let people be our distributors. We don't watch what they're doing. We let them do whatever they want, and we hope that they're going to send us a purchase order at the end of the year, and it just doesn't work.

Okay.

So from my perspective, from day one, I have a very regimented Onboarding process, how I train the distributors, what I ask from them. Okay, I will ask my distributors— I don't ask my distributors for the first 2 years for numbers. I'm not saying, well, just give me $100,000 and we're good. I'm saying in the first 30 days you need to hire somebody or tell me who is going to be the sales manager who's responsible to me We've contracted that you have to give me 20 hours a week of one person, for instance. And so I want to know who that person is. I want to know his WhatsApp contact. I want to know his email. I want to know his phone number. And I'm going to work with him. He needs to be trained within the first 45 days. Within the first 70 days, I want to see a report saying that he's already been to his first few customers. Okay, and then I'm going to see, you know, at the end of that first 3 months, we're going to do a review, and I want to go through reports on all the visits he's made, all the meetings he's had. I want to see this information going into my CRM. All these type of things are going to be what I request from my distributors in order to be my distributors. So now you understand why I want to make myself as attractive as possible possible to distributors because they're going to hate me at one point for all this stuff that I'm asking them for. That said, I'm really going to help them out because, for instance, what I'm going to do is I'm going to give them a lot of tools. And this is what I, I like to call my sales process pyramid. I like to say a pyramid is extremely functional. It is robust, reproducible, and scalable. So what I want to do is I want to have a sales process that is going to work in Germany and Nigeria and Singapore reasonably well with minor tweaks. I do not want to be making a different sales process for every country. But if I have this prepared, if I have a playbook, if I have SOPs, if I have all this material and I can give it to my distributors, I can train it to my distributor salespeople. They're going to love me, and it's going to be very sticky. Everybody is going to want to be my distributor because I am helping them with the tools they need to make more money. So I don't want to run too fast, but let's talk a little bit about, about the tools that I'm going to use. So I have a pitch, and by that I mean I have a very solid pitch, which is email and a presentation and a document that I can give distributors, uh, who I want to work with. I work with an agreement, and I'm not going to tell you what agreement to use because I'm not a lawyer. I'm going to tell you the agreement you probably are using is probably too long and has a lot of stuff in it you don't need. But again, I'm not a lawyer. What you want in that agreement is a way to get out of it And what you want is a way to say, this is what I expect from you in terms of activities for the first 2 years, and these are the numbers I expect from you after that. Okay, I have what I call a letter of intent, and what I found is until the agreement is signed, essentially your distributors don't want to do any work because they don't trust you.

Okay.

And, and for good reason. Every distributor you're ever going to work with has been burnt at one point or another, right? So what you want is you want to be able to say to them, hey, we can't sign the agreement yet because you're going to send it to your lawyer. It's going to take a little bit of time. But first of all, it is my intention to have you be my distributor. Secondly, this letter of intent is good for 30 or 90 days. And I will not be talking to another distributor during this time because it is my intent to work with you. Thirdly, these are the things I expect from you. Fourthly, this is basically what I do. Okay, so what's your base? This is a mini agreement in place for 30 to 90 days that protects the interest of the distributor with the idea to drive them to sign the agreement but drive them to get working faster. I use a playbook, and by playbook I mean a really detailed— I mean, the last company I was with had a 400-page playbook. I like to put these now online and give the distributor salespeople an iPad that is set up specifically to interact with the playbook. That way I can I can update the playbook at any time I want. The master, the single source of truth, is online in the cloud so that if there are changes or something like that, it's all there. But really, I'm going to walk them through everything, questions they can ask, all sorts of things that they're going to use on their day-to-day selling. And I use a lot of training videos and coaching videos now, and I use A lot of asynchronous tools that allow me to do coaching. So for instance, if I know that a distributor salesperson is going out on a meeting next week, I can send him a short video saying, I know you're going out to talk to a maternity hospital. Here are the 3 best things to mention when you're in a maternity hospital. If you have any questions, please set up a call with me. And I like to work with what I call a funnel in my CRM. I'm basically keeping track of what all the salespeople are doing around the world in terms of their projects that they have open. By doing this, that allows me to coach them better, and it allows me to work with them better. So keeping track of what the whole international sales force is doing through a funnel. Is a very, very powerful tool for people who manage the international sales organization. Again, the question is, what is our job in relation to the distributor? And I see my job working with the distributor as managing the distributor.

Okay.

And I have not had a year of my life where I haven't had fights with distributors and disputes with distributors, and very often that's the biggest stress going on in my life. That said, this is how we really drive business. Okay? And I had a distributor once who hated me. He literally, he tried, he went to my CEO and he tried to get me fired. And he said he didn't want to work with me. He wanted to work independent of my organization and blah, blah, blah. He really hated it. 2 years later, He was bringing in about 200% sales of what he was doing before. About 5 years into my working with him, he had he had increased his sales to about 300% of what he had been selling before I got there. Okay, company-wide, not just my product because of the tools I gave him, and he loved me after that. But the beginning, he hated me because I was always. Pushing him around and he would say, well, I'm an independent businessman. You can't tell me what to do. And I would say, you are part of my sales organization. I have to tell you what to do. Now I'm going to talk very, very briefly about a couple of product issues that directly touch dealing with distributors.

Okay.

And one of them is product changes.

Okay.

And I could talk about product and international sales a lot. I'm not a product person. But here's what's going to happen. Eventually somebody is going to say to you, hey, I love your product. Can you change it? Because if it were only green, I could sell a lot more of these. And again, this is something very controversial because a lot of people who do what I do, who talk and help people grow internationally, they'll tell you the key is if you're selling in 100 countries, you should have 100 products, and I disagree with that. Having spent 30 years inside manufacturing companies as a sales manager, I'm going to tell you that simply isn't sustainable. You cannot profitably change the product for every market. I will do it for specific— not necessarily for specific markets. I will do it for a range of countries. So if you tell me we need a product for Africa, we need a country— a product for countries with GDPs of under $3,000, I'll seriously look at how we do that. Okay, but if you say we need a new product for Myanmar, I'm never going to do that because my experience is it simply doesn't pay off no matter how flexible or limber you think your company is in terms of developing new products, they typically aren't as limber as they would like to think they are. Okay, and when you get into this business of changing products effectively, you're going to be in problem. Now, I remember a while back I was in a meeting with salespeople from distributors and the This one great salesman gets up and he says, you know, Zach, in front of everybody else, he says, Zach, if you could just make these changes, I could sell a lot of the product. And I said to him, so can you not sell the product today? And he said, well, no, I, you know, but, but you really have to change the product so I could sell more. So I said, do you want to resign the line? And he turned totally pale, and my regional sales manager turned pale. He goes, Zach, no, no, that isn't what he meant. I said, well, either you can sell the product today or you can't sell the product today. Can you sell the product today? And he said, well, yes, I can sell the product today. I said, tell me why. And he went through all these benefits of the product. I said, so these are the benefits. What you're telling me is if it were green, you could sell more, but these are all the benefits. Focus on the benefits. And that guy sold a lot of my product without ever making a change to it. So my point is, everybody's going to tell you to change the product. You have to understand if it's really necessary or not to change the product. When I was a kid, I lived in an apartment and I had a dog. And one day I said to my dad, you know, if I had a pony, it would be a lot easier to take the dog on long walks. And my dad Really not wanting to disappoint me, said, well, maybe we'll get you a pony. I'll look into it. Even though we lived in a little apartment. Now, I decided that since the pony was probably coming any day now, why should I bother walking the dog? I will wait until we had a pony and I could take him on a nice long walk. And that poor dog almost died. My point is, if somebody says to you, hey, can you change this? And you make it green, and somebody in your company says, hey, I'll look into this, you might as well just stop selling in that market. Because what's going to happen is people are going to say, hey, Zach is changing his product. It'll be much better next year. I don't want to sell it to anybody until next year because next year the product will be better. Okay?

So focus.

Focus on what you have unless you are completely sure that you can make these changes and you have an ironclad timetable as to when you're going to make these changes. Now, I'm going to say one more thing about these type of changes. I worked with a distributor in Australia once, and there were 3 competing products in Australia that worked differently from ours, and they sort of banded together to fight our prime benefit, and they got our prime benefit sort of pushed out of specifications. So we were now competing without our prime benefit. And my distributor said, well, can't you add these other benefits that they have? And I said, look, we sell all over the world on this benefit. We're going to sell on this benefit in Australia. You just have to— push people to put that back in the specifications. And he said, well, I can't really do that. I said, yes, you can. That's your job as a distributor. If you can't do that, I need to find somebody who can. And sure enough, within 2 years, that prime benefit was back in the specifications and we were selling a great deal of product in Australia. So you have to understand, everybody's always going to push you to change the product. If you have good benefits to your product, you don't necessarily want to be running around changing your product just because everybody asks you to. Okay, you have to be thinking about what is going to be the best way for you to make revenue. Okay, and going with that thing, you have to keep in mind what are specifications and what are regulations. Okay, so for instance, I can't get a device out of the airport in Europe without a CE mark. Okay? But there are also specifications in Germany where people say, well, we tender for this type of device, and that doesn't necessarily mean that I have to adhere to those specifications. I have to adhere to the regulations I don't necessarily have to adhere to the specifications, right? So you have to look at it that way. Now, I've given you guys a lot of stuff to think about and talk about, and basically I'm going to say you now sort of think— have to— you're faced with 2 options. You can basically go home to your significant other or your mother or your spouse or whoever and say, I just heard this wacky talk from this guy who sort of looks like Santa Claus with a pocket square, and he's crazy because he's telling me to do all this stuff that seems like an awful lot of work, and I haven't done it this way before. Or you can go home and you can say, you know what, I learned 50-some new ideas on how to grow my international sales, and And what's really important to me now is to grow international sales this way. And you can. I think, you know, I typically look at people's sales organizations, and I don't want to sound overly confident or not very modest, but typically I look at these organizations and I say, I could figure out how to change these and grow them by a couple of hundred percent. Because typically people are working in a very, very basic way and they're letting themselves be dragged around with, you know, people coming up to the trade shows, with not really knowing how to find the right partners, not really managing their partners correctly, etc. So what I'm going to say is, you know, if this is something that's interesting to you, apply these ideas, right? Reach out, Work at it. Drive your international sales. My whole, you know, my whole thing in life is to try to really get people to be selling more. That's that's basically it. So anyway, thank you very much. I'm going to pass this back to Selena now, and I hope everybody enjoyed it. I'm going to just say again one last thing before I pass it back. This is my book. You can find it on Amazon. If you send me an email, I will send you a copy. And if you ever want to talk about international sales or global sales, reach out. What I do is I help organizations through coaching and training and done-for-you services. I help them expand their international sales. That's essentially what I do. And Selena can talk a little bit about what she does.

Thank you so much. Great presentation. If you could just add your email address into the chat. For some reason, Gina's not able to put it in.

I'm sorry. Also, I have a Clubhouse on Thursdays. So if you reach out to me on LinkedIn, you can find my Clubhouse. And if you're not using Clubhouse, Clubhouse is a great thing. But essentially, for an hour every Thursday, We talk about global sales.

Great information. I learned something new, and I hope everyone else did. So now that Zach has given you tips about working with international distributors, I just wanted to briefly go over the services that we offer through the U.S. Commercial Service U.S. Export Assistance Centers. I like to tag our agency as being the U.S. government promotional arm for U.S. Companies seeking to enter international markets. We have non-fee and fee-based services through our organization. Well, before that, we're in— we have 150 offices worldwide. We're located at the US embassies and consulates, and we have over 100 offices throughout the United States tagged as US Export Assistance Centers. Trade specialists are in there. They're divided up by industry. They reach out to companies and help them navigate the international waters. We have fee and non-fee services. We offer counseling. We can provide you information on tariff and VAT rates, guidance for best export and investment industries in overseas markets. We help you navigate the regulatory and registration process. Process if your product requires that, as well as a whole host of other topics that exporters deem important. We offer trade counseling, business matchmaking, and trade show and conferences. Some of our fee-based services would include the Gold Key Service, which Zach mentioned during his presentation. The embassy or the consulate overseas will pre-schedule, pre-arrange meetings for you with potential distributors. And as Zach mentioned, really give detailed information on the type of distributor you're seeking for in a market. But we help you arrange those type of programs. We can help you with customized market research to determine if your product or service would be acceptable in the market. We can also help you do a product launch. Say you have a distributor in He's looking to increase sales. The embassy will invite all the key players, the decision makers, and we can help you do a product launch. Those are some of the examples of our fee-based services. We also support trade shows and trade missions. We focus on domestic as well as international trade shows. Right now, I'd like to just mention Upcoming signature event we're hosting. It's called Trade Winds 2021. We'll be recruiting companies to go to the Middle East, Dubai, and North Africa to meet with distributors, key decision makers. It'll be held from March 6th through the 8th. It'll be sent out to all of the U.S. Export Assistance Centers around the nation, so you'll be hearing about that. If you want more information, please shoot me an email. We have promotional material coming out. We also support incoming buying delegations that attend major U.S. trade shows. Sometimes we invite foreign delegates to visit other cities to meet with exporters. So make sure that you're in touch with your local U.S.I.A.C. to hear about these incoming buying delegations that should. Be coming to the United States now that we're reopening. COVID is, you know, people are getting vaccinated, so we anticipate that's going to start happening very soon. The last slide I wanted to highlight is a new service that we launched. I feel it's a great service. It's been a few years that it's been up and running, and we ask companies to focus on their digital strategy or their e-commerce strategy. So why are we asking you that? We're asking you that because we know most retailers and consumers are already being sold through B2B sales channels on the internet. So we've devised— our e-commerce team throughout the USIACs have devised a WG, or Gap Analysis Group. So basically Our e-commerce team will run a MOSS and an SEO site checkup on your website, and the information generated from the reports will be put into a gap analysis. We know that Google and YouTube— Google is the top search engine in the world, and YouTube is ranked secondly. The whole idea behind the report is to increase visibility of your website. Want people when they're looking to Google lotions, we want your company's name to come up on the number 1, 2, or 3 list under Google. So the e-commerce team basically will provide you with concrete recommendations on how to update your website so you're attracting all these people that are searching for products. The product is really inexpensive. It's $100. It takes around 10 days to provide you a report. We hope you will review it with your webmaster, and we hope that you would really consider looking at this service. I've done about 15 in the last year. Companies have seemed really satisfied about it. If you have any questions, you have my email address. It's selena.marquez@trade.gov. Zach, again, I'd like to thank you for a detailed presentation. I'm always impressed with you. I always learn new things. I hope everybody else enjoyed the webinar. If you'd like a recorded copy, please send me or Zach or Gina an email and we'll get it out to you. And I'd just like to thank you for your time. So if anyone has any questions, we could just close.

I'm happy to take questions if anybody has questions.

Congratulations. Thanks for the presentation. I would like to ask you How do you handle the local regulations? Specifically, you spoke about the medical industry. I'm also in the medical device industry. How do you work with a distributor, or what do you look into his knowledge regarding the local regulations?

Well, that's a great question. So first of all, I would say I always tell people not to be scared of this, right? Because everybody gets past it. If you have a product that you are selling, a medical product that you're selling in the US and you have FDA, there are very, very, very few places in the world that you're not going to be able to sell your product. You just have to figure out the paperwork. Now, if you're working with a medical device distributor, he will know, he will have that knowledge in-house because when you hire a distributor, you're going to say, well, can you Have you done this before? Have you gotten your local regulatory approval for a medical device in your country? And if he hasn't, then I'd probably say, well, I'm not sure I want to work with him. If he has, he knows how to do it. Now, then it sort of comes down to the details. Do you pay for it? Does he pay for it? Who holds that registration? Now, this is going to depend on the market. And there are going to be a lot of a lot more legal issues. But but let me put it this way: there, you know, and and if you want to reach out to me, there are a dozen organizations that will do this for you on a fee-based issue, right? I would say you never want to walk away from a market because you're scared of the regulatory. The regulatory isn't necessarily the easiest thing, but it is much less. Worrisome than anything else. The impact of how good the sales manager of your distributor is, is a great deal more important than your ability to get regulatory because I've never had a problem where I had FDA, but I couldn't get local regulatory. Now, if you tell me, you know, we have a product that doesn't have FDA, and we don't have CE, then that's sort of a problem. There are countries you might be able to sell it in, but if you have FDA, you can get approval in virtually every country in the world just with a matter of paperwork. And, and I'll tell you what, if you reach out to me, I can hook you up with people who can do this, right? This is, this is what I do, you know, on a regular basis.

And Zach, I'd like to add a comment to that question as well. When Please. Yeah, Zach's spot-on. Basically, I handle the medical sector. That's how he and I met. And yeah, this is an issue that just companies call us about all the time. Sometimes what I've noticed, companies call us, they just want to verify what their in-country distributor is saying about the process, the regulatory process. So we've also I'll also be happy to tag our industry specialist in the embassy who handles the healthcare sector to see if he or she can provide you guidance as well. And then you can kind of spot-check that with what your distributor is telling you.

Yeah, and part of that also is they might tell you, you know, if your distributor says to you, well, this is going to cost $25,000, but it's going to be under my name, then you probably should double-check, right? You know, that type of thing. But I wouldn't— in the end of the day, if you have FDA, you're going to be able to sell in virtually every market you want to sell in. Drew, you're up.

I wasn't able to send that message. It said I was not a member of the chat. Not sure why. But anyway, Zach, what do you think about as an exporter's Negotiating sales tool offering payments to the foreign buyer via letter of credit on terms instead of having to pay it sight unseen 180 days or 3 months?

Oh, so, so sure, like, so that's a great point. Look, um, depending on who your customers are, terms can be a really helpful thing. Just keep in mind that if you give somebody letter of credit on 180 days, they're effectively locking up that money for 180 days, right? They're— no, depending on who they are, their bank is probably going to say that's great, but you still have to lock that money up with us. So it's not a huge— I mean, depending on who they are, if they're, if they're a giant company and this is, you You have $20,000, then it's not going to hurt. If it's a $300,000 purchase order and it's a company that's turnover is $2 million, they're still going to have to lock that money up. Now, it's a good, it's a good thing to give them maybe, but keep in mind what you're giving them because effectively they still have to lock that money in the bank right now.

But also keep in mind Perhaps they have collateral.

Right, exactly. It all depends on— exactly, it depends on who the company is, right? I've worked with distributors who have literally mortgaged their homes a couple of times to get LCs for big deals, and they're fine with that, you know, because they know that's something they do every, you know, once a year, every now and again for this type of thing. Distributors very often are pretty ballsy people, so So it really depends on like what benefit this is going to be to your, your customer, how valuable it is. Now on the other hand, I'm sorry.

But a benefit to the seller is that we could— you could get a discounted LC, and so you're not waiting for that payment at 180 days.

All right, well, I was going to say you could also work with the Ex-Im Bank for that kind of thing, right? Um, so I've done— and again, I'm a big fan of the Ex-Im Bank, but I haven't worked with them many, many times. Typically for really big deals, like deals of over $2 million, I'll work with them. And typically when we're dealing with governments, because the, the, you know, when they're dealing with a government, they know the government is going to pay them, so my fee isn't that The government doesn't want to pay on time. I need my money. It works out really well. So that's another option. So, so there are lots of different things you can do with payments, both from a sales perspective and from your cash flow perspective, right? The one thing I'm gonna say is, and this might not be, you know, something for you, But I'll say for a lot of people, a lot of small companies don't understand LCs that well. And the first time you make a mistake with an LC, you have the potential for sinking your company, right? So what I always say to small companies that are getting into exporting is send your credit manager to an LC course.

Let them come in. I'll educate them.

Oh, there. Oh, is this Dwight? Of course, Dwight. Is this Dwight?

No, Drew Kelly.

Oh, Drew. Okay, sorry. So, uh, sure, let me, let me know and I'll keep you in mind. But yeah, I always say nobody understands LCs as much as they think they do. And what they don't understand is a screw-up on an LC can, you know, if you have a company with $3 or $4 million in turnover, one bad LC can sink your company. Right. So yeah.

And Zach, I'd just like to add a comment on that too. We're the U.S. Commercial Service.

We—

one of our partner organizations is the Export-Import Bank of the United States, Ex-Im Bank. For all exporters out there, Ex-Im Bank offers the multi-buyer, the single-buyer insurance policies. Basically, you would insure your distributors. And it's like a, you know, on an insurance policy. You insure your distributors. If they don't pay you, then Exim Bank comes in and pays you. So if you want more information on that, contact Zach, contact myself, contact your local MEC.

Yep. Any— thanks for the question though, Drew. Any other questions?

Okay, well, thank you everyone for taking time out to hear the presentation. Zach, again, kudos to you. It's always been a pleasure to work with you.

So thanks a lot, Selena. Thanks a lot, everybody. And reach out if you want to talk about international sales or join my Clubhouse on Thursday mornings. We talk about international sales every week for an hour, Thursday morning, 9 o'clock Central.

Thank you.