Zach Selch walks through 30 years in international sales, from turning a failing South-Asia operation into a $30 million business to growing a company from $10 million to a $370 million exit. He breaks down how to enter new markets, pick distributors, and build sales teams, arguing most problems are process failures, not product failures.
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I've known Zach Selch for many years through professional networks, and he's the first person I reach out to when I'm traveling to someplace new. I know he will give me advice on what to see, meaningful advice and tips on conducting business, and of course, where to eat. I asked Benjamin Levy, the Chief Strategy Officer at BNext, about Zach. He said, the best recommendation that I can think of is this: if I had a chance to hire Zach in the future in any sales or business development role, I would. Very, very few people around the world know the world as well as he does. If international sales experts are what you need, then you need Zach. The Arabian Peninsula? Check. Europe? Check. South America? Check. Asia? Check. Africa, check. Pretty much any other part of the world, check it too. Zach has sold and closed deals pretty much everywhere, and that is really saying something. So I'm sure we all need to hear what we're doing wrong, but if anyone is able to tell us how to improve how to sell internationally, it is Zach. Please join me in welcoming Zach Selch.
Thanks, Karen.
Sure.
20 years ago, I walk into my first day at a new job. I was one of 6 account managers for a multinational in Scandinavia. And I go in and I talk to my boss. And the first thing he says to me, he goes, I have a problem that I'm hoping you can solve. I said, yeah. He goes, well, up until this morning, I was the Vice President of Sales for Scandinavia and the UK. And now they made me the Vice President of Sales for Scandinavia, the UK, and South Asia. India's been bouncing around with us for, for years. We've never been able to get any revenue out of it, and now it's my hot potato, and I need somebody to take it over. And I know I gave you a specific job, but what I'd like to know is, would you be willing to take over South Asia for us? Nobody's ever been able to make it succeed, and if you can't, in 2 years I promise you back your job in Scandinavia. But if you can, if you can get even a million bucks out of this, I'll give you the UK. So even though this was surprising and I knew it was gonna throw my family into turmoil, I realized I really had no choice. For a decade, I had been reading and studying and trying to figure out ideas for growing international sales, but I'd never really had the resources at my disposal. I'd never had a big enough team. I'd never had a big enough potential market. And this, for me, was a huge opportunity. to really jump into it. So I went out to India for this company, and within about 3 years, I was able to increase sales from a plateau of about $500K to just over $30 million a year. And it was a blast. And then we jump forward a couple of years. About 5 years later, I've moved to the Midwest, and I'm sitting in my first review with my CEO after being with the company for about a year for a family-owned corporation. And he says to me, he goes, Zach, you seem awfully proud of yourself considering I hired you to grow sales and sales are exactly where they were 12 months ago. And I said, well, you know, I said that it was gonna take about 18 months to grow sales, but we put in place together milestones We put in place milestones and we've hit those milestones or beaten those milestones every month for the past 12 months. So I'm sure sales are going to come in. Sales are just a matter of months away. And he said, Zach, you're talking like you can forecast sales. You can't forecast sales. I said, as a matter of fact, there is such a thing as sales forecasting. That's, that's actually in my contract. It's part of my job is to forecast sales. sales. And he says, sales aren't engineering or anything like that. Sales are voodoo. So first of all, I decided I wasn't going to talk to this man again for the next decade. And that worked out pretty well for me. But I said to him, I was like, look, here's what we've done. We've taken— we've put in place a plan. We've changed our distributors. We've hired regional managers. We have a funnel with over 100 verified opportunities in it. Sales are just a matter of time. They're gonna happen. I said, what if, if I had a pipe and I knew how long that pipe was, I knew the diameter of the pipe, I knew what leakage there was in that pipe, and I put water through that pipe at a certain velocity? I could tell you when and where and how much water was gonna come out of the pipe. And he goes, yeah, that's engineering. That isn't sales. And I said, it, it's the same thing. We should be treating our sales as though we have a process. That's the way it works. Anyway, a couple of months later, sales started coming in. And then more sales started coming in. And we grew our sales by about 1,300%. And a few years later, my CEO, who inherited a mom-and-pop shop that was worth about $10 million, sold his business for $370 million.
Wow.
And the purchasing CEO's only remark about the company was he liked the international footprint. And he knew that he could leverage that international footprint to grow the sales of his other businesses. So what we can see is growing your international footprint, your international sales is probably the best way to grow the value of your company on the one hand. On the other hand, lobsters. Lobsters live their life on the bottom of the sea, and they live for finding scraps of food and foxholes, right? Lobsters need places to hide. So as they get bigger, they eat, they fight, they get better hiding places. They eat, they fight, they get better hiding places. Until one day they lose a fight.
Oh no.
And what marine biologists will tell you is that once a lobster loses a fight, a couple of months later he's going to be in somebody's pot or an octopus is going to eat him. Because once he loses a fight, he's weakened just enough so he's never going to get strong enough to win another fight. And he's going to get pushed out of foxholes for the rest of his life until he ends up in a pot. So how does that relate to you? Well, Harvard Business Review report in 2008 by Marcus Alexander wrote about the risks of attempting to go international and failing. And what we find is that if a company tries to go international and does a half-assed job of it, what they're gonna find is 2 years later they're gonna have weakened themselves substantially. They might find themselves even going bankrupt. They might find themselves dropping in value so much that they get acquired by a hostile entity, okay? So you're faced with 2 choices. You either do it right and you grow the value of your company, or you do it wrong and you end up in a pot like a lobster. And I talk to people and they say, well, yeah, I'm doing everything I can. There's nothing that I could do better. I'm doing everything I can. I know my stuff. I've been doing this for a couple of years. This gentleman, Kobayashi, is a Japanese guy who in 2000, he was a 130-pound, 22-year-old unemployed guy. And he was looking for a way to make money. And his girlfriend said to him, I hear there's competitive eating and you seem to like to eat. So he looked into the competitive eating business. Now at that point, Pretty much everybody who was in competitive eating were American guys who were 200 to 300 pounds. And they ate hot dogs the same way everybody else does, just a little bit faster. And he looked at the rules and he looked at the constraints and he said, what do I have to do? I have to eat the bun and I have to eat the sausage. I can bring up as much water to the table as I want. I can bring up as much condiments as I want. Those are the only real limitations. So he played around with it. He showed up at the Nathan's Hot dog eating competition. He put a bowl of oil on the table, a big bowl of water, and he took the hot dogs, he knocked the sausage into the oil, he dropped the bun into the water, he took the lubricated hot dogs, sucked them down his throat without chewing them, he took the bread, squeezed the water out of it, ate it like mush. He ate 50 hot dogs in 20 minutes, twice as much as the then world record.
Okay.
The judges did not have the equipment or the signage to go to that high a number. Nobody had ever anticipated that anybody was going to be able to eat that many hot dogs. Now he changed the whole face of competitive eating in the world, right? And, and it's never gone back. So I look at that and I look at that as a guiding light, because if you can find a way to eat hot dogs twice as fast As some fat guy from New Jersey, then you can find a way to improve international sales no matter how well you're doing it. Okay? So let's think about how we're going to go about doing it. Now the first thing I always say to people is before we jump into action, let's ask ourselves some questions. And what I find is this is the time that everybody gets up and helps themselves to coffee because they say, Zach, I don't want to ask myself questions. I don't want to ask myself questions. I know everything. I've thought this through. We have strategized. We've, we've thought about this. We've had focus groups and discussions and all this. It isn't going to help. Just tell me some tips. But what I find is virtually everybody needs to start off with the basics, with the questions. And what do I mean by the questions? Well, why? Why do people buy my product? Right? And I'll tell you what, if you go to 100 manufacturers and you ask them that, 95 are going to say, well, we use the best quality steel. available, or they'll say we have the lowest electrical resistance, right? And that really isn't why people buy your product. People buy your product because it solves a problem that they have, right? And the question is, do you understand that? And can you leverage that? I worked for a company once where we sold a product, and that product was basically required by everybody. So we thought that, you know, we— that people were buying this To use to pass the legal requirements. Okay? But— and they were, they were buying it to pass the legal requirements, but they were paying more for our product because we gave an improved patient experience. So on the one hand, they were willing to pay $50 to get past the legal requirement, but they were willing to pay $2,000 if we could improve the patient experience. So The reason they were buying it was for a totally different benefit than our founders had conceived of, okay? So by understanding that, we could really shape the direction we were going into in terms of selling. Who buys it? Okay, and again, that's the type of thing where you say, well, who is going to buy my product? And typically it's very simple. You talk to your founder, you talk to the inventor, you talk to somebody from engineering, and they'll say, I know exactly who's going to invent— I designed this product for such and such a person in the company. And then when you take a look at it, very often it's a totally different person, a totally different job definition. So for instance, again, I was with a different company years ago where we had designed a product and we thought that it would be great, or the founders thought that it would be great for Mobile— for transportation, for transportation of patients. It was a ventilator that was— you could use it without— on battery power for about 6 to 8 hours. And the idea was, well, we're gonna sell this to transportation services, to ambulances. But in the end, the ambulances didn't like the feature set, and they didn't really need 6 to 8 hours of battery time because nobody transports patients quite that long.
And the—
the vans, the ambulances have electricity. Who really wanted our products? Critical care hospitals in the third world because they had a problem with electrical supply. So we answered a problem. The people who were buying this product were different. Now by changing our strategy, by changing our channel organization, by changing our sales material, we were able to grow our sales dramatically. And so very often just being able to look at these questions helps drive how things are done. The question of when. One of my bosses years ago introduced me to a term called a compelling event. And a compelling event is effectively, from my perspective, in a sales perspective, it's the reason they pull the trigger. OK. Now I've divided that up in my mind into 2 things. What I call a macro compelling event. Something that's involved with economics, legal issues, regulatory issues, demographic issues, that kind of thing. So what, what would be a macro compelling event? Well, let's say you have a country that has a dramatic surge in the demographics, in the number of women of childbearing age, or a big surge in the middle class, and those happen to be your target markets. Okay? So if you can keep track of countries where you have a demographic surge or a change that re— that would be attractive to your product or would make it your product attractive, that's a great market to go into. What's another macro, uh, compelling event? Well, what about if they change a law and they make a law that requires purchasing a product similar to yours? For transportation, for healthcare, for education. Those type of things, very often those are compelling events that drive sales in specific markets. Now I also like to talk about what I'd call a micro-compelling event. What's something that's going to trigger a specific customer to buy from you? And I used to sell something once that, that involved installation in hospitals. And what I found was our kill ratio would go up about 5 times if we could identify a hospital that had already decided to do renovations because they basically said, well, if I'm already breaking the wall, I might as well buy everything that requires installation. So by understanding that compelling event, it made it really easy to choose markets and choose distributors. Okay, so that, that's the question of when, and very, very seldomly do we sit down and think these things through. What about what? What would be success? Okay, and again, when you take a look at salespeople or a sales organization, you say, well, obviously success is money. Money, it's a number. And most of the time that's the case, but what is that number? Are we talking about this year's sales? Are we talking about the, the next 3 years' sales? Or are we looking at a 20-year steady, slow growth? Is that what we're looking for? Are we looking to drive the value of the company up? Now, it might not even be a number. I was once hired by a company because their biggest international competitor was poking around the U.S. market, and what they wanted me to do was go over and wreak havoc on their home market. And by doing that, we got them to pull out of the U.S. market and pull out of all their international markets to defend their home market. Now, that was a perfectly valid strategy. So you have to identify what it is you're trying to do because you can't succeed if you don't know what really is success. Okay, so now we've talked a little bit about the strategy and the questions and all that. Let's get down to doing some real work. Let's pick some countries to go into. So I have a hat here full of names. I'm going to pull out, say, Australia, Korea, And the United Kingdom. Okay, so now we have countries to go into. Does that, does that make sense? How many of you pull names out of a hat when you want to go into a country? You ever use that? Or you ever use a dartboard? Dartboards work. Sometimes you set up a map, you just toss some darts, and you choose countries that way. How many of you do that? Okay, how many of you are doing business with somebody who walked up to you at a trade show, and asked to buy your product? How many of you are doing business with somebody who sent you an email and asked to be your distributor? And how is that any different than pulling names out of a hat? Okay? So from my perspective, I want to be going into countries that I decided those are the countries I want to be going into. I do not want to be yanked around and let somebody else decide my strategy. And I know it seems like a good idea because you say, well, this guy came up to me and he's from Portugal, he wants to buy from me. Obviously I have a market, I should sell to him, right? It makes perfect sense until you find yourself 10 years from now servicing an installation in Nigeria, an installation in Venezuela, and an installation in Indonesia, and none of them are profitable, right? And I see this all the time. Now when I go into a company and I talk to them and I say, where are you selling? What were your first markets? Very often they'll say, well, you know, France, Italy, and Japan. And when they say that, I know, I know you wanted to go on vacation to France, Italy, and Japan. That's what happened, right? And that is way more common than you would think. I went into a company once and they had put 5 solid years of effort into Australia, which wasn't a profitable market for us. And they had— the previous vice president of international sales had lived in Australia. They had thrown way more money than their top-line sales into sales costs. And it turned out that his wife wanted to live in Australia, right? That was why they put Australia at the top of their list. So when you're looking at markets, you have to be thinking about what's the rational way to choose the markets. And from my perspective, the questions we just asked are how I'm going to choose the market. I'm going to say, well, what is a compelling event? If I want a country with a growing middle class, if I want a country where I know that they're building a lot of hospitals, if I want a country where they just passed a law that requires schools to have my product, those are the countries that are going to be first on my list. And you have to be careful about who you ask for advice. So a while back I was at this conference and there was a panel on stage of experts and this woman raises her hand and she says, so if I only have money to go into one Middle Eastern country, which country should I go into? And there was this diplomat on stage, he looked just like that with top hat and everything, and he goes, well, the United States and Morocco just closed a taxation agreement, so if I were you I'd go into Morocco. And I raised my hand and I said, so Morocco is a $200 million medical device market and Saudi Arabia is a $2 billion medical device market. So are you suggesting that that tax agreement will offset that tenfold difference in market size? This is why my wife says we don't get invited to more parties. But you really have to be careful about who gives you advice. When I was little, I tried to play the saxophone. I wasn't very good. I came home one day and I said to my mom, you know, my teacher says that if we buy a $1,000 saxophone, I'll play, I'll play better. And my mother said, how does your teacher make her money? And I said, well, we pay her to teach. And my mother said, yeah, we pay her $7 a lesson. What else does she make her money from? And I go, well, she sells saxophones. All right, so you got to keep in mind all these people who are giving you advice where they make their money and why they make their money. Let's go back and let's think about this. We have a strategic list of countries we want to go into. These are the countries that fit the questions that we asked ourselves. I like to have a secondary and a tertiary list too. I know that sounds a little strange because I just told you to focus on the strategic markets. But here's what I've found. There are 3 really good reasons to go into secondary markets. One is sometimes, especially when you're selling to governments, a small market can help you get into a big market. What do I mean by that? If I'm selling to the medical industry, if I can sell to Honduras or Guatemala or Costa Rica, their governments work a lot faster than Colombia or Chile or Peru or Brazil. And I can use them as a reference site. So sometimes I want to go into a small country, get a quick deal, and leverage that as a reference site into a big country. That's one thing. Second thing is I like to work in what I call geographic proximity clicks. So let's say Peru is my number one market that I want to go into in Latin America. Colombia is a little bit farther down the list. Chile is a little bit farther down the list. Ecuador is farther down the list. But the cost of onboarding 5 distributors is just a little bit more than the cost of onboarding 1 distributor. So I might as well put together 5 distributors, and that's a good work week. So I can go down Sunday, hit a different country every day of the week, come back on Saturday, and I'm not wasting my time flying down to Peru and flying back. Okay, so I'll do that. And then the third thing, and this is probably the most important, I am terrified of putting all my eggs in one basket. And this is a principle that I'll tell you is very hard sometimes to convince upper management. I've found for some reason people don't like to think about the fear of putting all your eggs in one basket. But 2014, oil prices dropped by more than 50%. At the time, 60% of my revenue was coming from oil-producing countries. Now, I was selling to governments, and government revenue is tied up to taxation, taxation is tied up to their principal commodity, nobody was buying anything. Luckily, I had 40% of my market that wasn't involved with oil. It wasn't an extraction economy. And because I knew that the oil prices were dropping early on in the year, I was able to shift my focus to the non-extraction economies and pretty much make up what I would have lost from those oil-based economies. So, So spreading out your risk. If I find that my top 8 countries all have similar economies, they're all located next to each other, I'm going to shift and I'm going to spread out my risk to other parts of the world, other economies, different types of countries. It's very, very important. After I've chosen my countries, I'm going to choose my team. And I love those old caper movies from the '60s where they spend half the movie pulling together their team, because when you're doing this type of selling, you need the right team. And the first person you gotta think about is who's heading your international sales. And it's a very, very difficult position to fill. I bet, you know, I, I, if you go to, to talk to a bunch of international sales VPs, you're gonna find people who have come to it from all different places. I know people who were chosen for that position because they were a waiter in Italy for 3 years. I know people who were chosen for that position because their wife is Korean. I know people who were chosen for those positions because they, they immigrated from Sweden as a teenager, right? It's very, very hard for companies to figure out who they should put into this position, but it's a very, very important position. And once you get somebody into this position, even if they're not right, there's nobody to coach them, right? They're in the cold water. There's nobody they can ask any help from. There's no training for them. People assume they're going to figure it out, and if they don't figure it out, they sink. Primarily, this is a sales position. I would never take somebody for this position who didn't have experience bringing in purchase orders, preferably from 2 or more markets. That would be my preference. Now, if you simply can't find somebody who fits your industry or who you can find to do this job, or you want to promote somebody from the inside, you got to make sure that you can support support them and train them because this isn't the type of thing that you figure out yourself. This is the type of thing that years later you end up calling somebody like me in to take over because you screwed it up so completely for years. That's typically what you see with a lot of these companies. Now, the next level of personnel are the regional managers, the people in the field. What we like to do is just hire a bunch of good guys who are going to fit in with our corporate culture because There's a great quote I saw recently that said, strong companies hire for culture and weak companies hire for a task. But what if you have a task? What if you need to sell, right? I mean, it's great that you can say, hey, great, I'm going to get a bunch of good guys who work out really well at our Christmas party. But how are you going to sell? And what you really need for this job, the regional manager's job, is to build up trust and rapport on the ground in the territories and manage the distributors. So if you don't have somebody who can do that, you're in trouble. And what you probably want are people who are going to fit in and who look a lot more like the, the right-hand column than the left-hand column. For virtually every American company that's expanding internationally of, say, under $500 million in sales, I'm going to say International sales is distribution. Now, there are exceptions to this. Sometimes you can do direct selling if you're a small company. Sometimes you do original equipment manufacturer selling. Sometimes you're going to be able to do franchising and stuff like that. But for virtually everybody, it's going to be distribution. And again, this is the type of thing that people very often screw up because they're not quite sure how to go about doing this. And I gotta tell you, I have met some of the wildest distributors you could possibly imagine dealing with high-tech companies. I knew a distributor who was selected, he was given distribution in Asia because his family had a chain of very successful donut shops in California. He was ethnically Chinese and he convinced the founder to give him distribution across Asia. I know a guy who was a car dealer in Detroit, and his market focus was Lebanese immigrants, so he was given distribution of a high-tech medical product across the Middle East when he retired from selling cars, okay? And what I hear more than once is I'll hear somebody who says, well, my distributor's wife went to school with the wife of the president of Pakistan. And I said to a founder recently, I said, hey, great, let's play this out. I have a garage and I buy 1,000 sets of brake pads every year. And my phone rings and I say hi. And somebody says, hey, I sell brake pads. I'd like you to buy them. And I go, okay, tell me about them. He goes, my wife went to school with Melania Trump. Will you send me a purchase order? Right? Because how is that different from the idea that your distributor is leveraging off of being a friend of the wife of the President of Pakistan? And people think it is. People think it's different. People think that people are very exotic in these countries and they do things without thinking it through rationally, right? So how do you find a distributor? How do you identify the profile of the distributor? And the first part of this is putting together a sales process map. And I know you're going to think, well, I can't put together a process map until I understand the markets. But you can. You really can. You can put together a draft and you can change it later. And the way I like to look at sales process maps is I think that there are essentially 4 sections of activities. OK, there are activities involved in finding the customer. There are activities involved in establishing rapport with the customer. There are activities in telling the customer about my product. And then there are activities that are involved with installation and servicing and delivery and stuff like that. But what you have to do is divide this up into pieces and figure out what your headquarters is going to do, what your regional manager is going to do, what your distributor is going to do, and what you might have other people do. You might have— add agents to the mix. You might add consultants to the mix. But everything has to be accounted for, and you have to figure out what you want from the distributor. Because if you don't know what you want from the distributor, you don't know how to choose a distributor. You don't know how to build a profile for the distributor. Now, once you've built a profile for that distributor using the questions you've asked— who buys from me, when do they buy from me, why do they buy from me— you can say, well, this distributor is probably going to sell other products. Okay? So you can put together an idea of what type of person you want. Now typically I like to think of the idea that there are 3 legs to a distributor. There's focus, and by focus I mean how much is he focused on your product. There's bandwidth, how many boots can he put on the ground. And then there's competency, what do you want from him, what does he need to know? He might need very specific things, he might actually need to know how to install your product or service. Service your product. He might need to know certain types of sales things. He might need to have certain connections, those type of things. Picture triangles. If his competency is zero, you don't have a triangle. If his bandwidth is zero, you don't have a triangle. You need to have a good solid leg on all 3 sides or the whole thing's going to collapse. That's the way you got to look at it. You got to think Well, what do I really need? What is acceptable for me and what is not going to be acceptable for me? You put together a profile. Now, again, I know what you're thinking. You're thinking, Zach, I have trouble enough finding anybody who wants to sell my product. I'm happy that some guy walked up to me in a trade show and told me his family has a donut shop and I gave him— I signed him up because I have no other options. Right. And that typically is what happens. So over the years, I've onboarded about 1,000 distributors covering a little bit more than 130 countries. And I've been doing this for about 30 years. I find that I don't like to be looking— I don't like to be working with distributors that I didn't go looking for. Okay, personally, I like to go out and find distributors. I like to put together a profile. And I go looking for them. Now I could talk for 3 days about how you go about finding distributors, but let me just throw out a couple of ideas. If we know what the distributor's competencies should be, we know what they probably are selling today, right? So can I contact the manufacturer of a non-competing product that they should be selling today and ask for a list of distributors? I've done that many times. Sometimes they don't want to give it to you, sometimes they will. Can I look online and find that list? Can I contact the American commercial attaché in the target country and say, who represents this company in your country? Okay, those are 3 really easy ways to find people that fit that profile. But I've also reached out to end users and I've said, hey, I would like to sell to you. I need a good distributor. Who's a good distributor that you like working with? Right? So there are— those are just a couple of ideas. But you can find distributors if you go looking for them. I was recently at a really big trade show, and I'm talking to this woman, and she's selling a product which is essentially a sheath to put a medical device into. So I said to her, I said, do I understand correctly, is that a device that is only used with another device? And she goes, yeah, that is. I said, so the only reason somebody would buy that would be if they bought Another medical device? Another medical device. And she said, yeah. So I said, why aren't you talking to the distributors who sell that other medical device? And she goes, well, that's what I'm doing. I am sitting here looking for them. And I said, you are sitting here at a medical show with 100,000 visitors and 10,000 vendors on the off chance that the, um, The, the right distributor is gonna walk by your booth and decide to work with you. And she goes, yeah, you got it. Again, why my wife says I'm not invited to more parties. But, but that's the thing, people do this passive way, and I said to her, you could look for these people. And she says, no, no, there are too many of them, it would be impossible to find them. And that's the way it is. Once I've found distributors, what's really important is to make them want to sell my product, right? And I always liken this to dating. The whole distributor-manufacturer thing is sort of like dating. And here's the thing. Let's say I were to go out on a blind date, right? First of all, I think my wife would be pissed off. But I would not want to present myself by the things that I like about myself or the things that my friends like about myself. I want to present myself from the things that the woman might find attractive, right? So I might present myself from the side of my sensitivity and how my potential for being a good father and those type of things. And that might be what I'm trying to show off. And if I present those things in a good way, maybe we'll move forward and we'll find a way to, to, to move forward and, and make a deal. When I'm dealing with— now, what is the, the woman in a date like this, what she's scared of? She's scared that basically I'm going to knock her up and take off, right? And, and that's really what women, you know, what they're scared of and, and what they're looking for, you know, we have to balance that out. From the distributor's perspective, what are they looking for? They want to make money in the easiest way possible. So they want to understand that they can make money from your product easily. And what are they scared of? They're scared that they're going to do a good job selling, and then you're going to divide the market up into other distributors, or you're going to go direct. Effectively, you're going to knock them up. And leave them, right? So they don't want you to give them— they don't want to give you what you want and not get anything in return. They want to get an even deal out of this. So what you want is you want to first of all present in your, your, your presentation to your distributors, you want to make it clear that they can make money from this easily. You want to make it clear that you have No intention to screw them over and that you are going to work with them and that you have a plan in place. Now here's the deal. I'm going to make it very clear. If you have a plan in place to screw over distributors or your company thinks it's acceptable to screw over distributors, you might as well close down your international expansion right now because it's a small world. People talk. People are going to hear about it.
Okay.
You have to have a clear-cut strategy in mind that you're gonna treat your distributors fairly from your career perspective as well as from the company's perspective and ability to, to grow. Now when I go into markets, typically I'm gonna interview anywhere from 3 to 20 distributors. I've never gone into a market without interviewing 3 distributors. I've sometimes interviewed as many as 20. Sometimes I'll go into a market, I don't find anybody I like, I'll come back a year later, I'll leave it open. Choosing the wrong distributor is a disaster. The absolute best thing that can happen to you when you choose the wrong distributor is you don't see any revenue. That's the very best thing. A bad distributor can shut you out of a market forever, right? Because sometimes they just have much more legal rights than you have. A bad distributor can create a horrible brand image for you. A bad distributor can do lots of different things. So you don't want a bad distributor. You'd much rather leave nobody in place. But once I have distributors, in this case, I'm doing a very simple matrix where the size of the bubble is their capacities, right? And the y-axis is their focus, the x-axis is their bandwidth. So basically what I'm doing is I'm setting down what I know about these distributors, I'm comparing them. And I'm going to choose the distributor that's going to be best for me, right? Now, once I have a distributor, how much guidance do I give them? And again, this is the type of thing that a lot of people are going to argue about. Some people will say, well, they're an independent company, you can't give them any guidance, you just have to sign them up and wait for them to send you purchase orders and checks. That's the way it works. That's just the nature of the world. I am a strong believer in giving a great deal of guidance to my distributors. Not only that, I'm going to put it right in the distribution agreement how involved I'm going to get in their activities, and I'm going to give them a playbook, which is an appendix to the distributor agreement, which basically says you have to do this. You have to flow information a certain way, and you have to, um, You have to— you play by my rules. And why would I do that? Well, again, what I've found is that over the years you get to know your sales process. You get to know how things should be done. And your job really is to work with the distributors and make sure that they're following the rules, that they're doing what they're supposed to. The distributors have lots of different products to be selling.
Right.
Right, they have a lot of different things to be doing, and today they might think they can make more money from one thing or something else. It's your job to keep them moving. We've been making pyramids for about 7,000 years. We make them out of mud, we make them out of glass in Paris, we've made them out of brick and different types of rocks, right? A pyramid is effective, it's robust, it's reproducible, and it's scalable. That's essentially what your sales process should be. Okay, your sales process in Brazil, in Russia, in Germany, in Greece, in Malaysia should pretty much be the same with minor tweaks, right? You should have something that is so robust, so effective, so reproducible, so scalable that you can use it anywhere in the world. You can teach people how to do it and you can let them run free and move with it. And I'll tell you, when I went into India, one of the things I picked up was we understood that the earlier we could get into a customer organization, the more money we could see from them, right? It was very important to get on early, but we couldn't figure out— nobody could figure out how to do that. And we came up with this idea that there were a finite number of senior executives in the Indian market who could work for our customer organizations. So if we kept tabs on them, if one of them disappeared and didn't start with another organization right away, the chances were he was going to work for a new organization we didn't know about. And by using that tool, we were able to get into several organizations that were brand new before they did anything, while they were still on the drawing board, we could get in. And this one little tweak to the sales process was probably worth $20 million to the company over a period of a couple of years. And then we taught a lot of different people to use it, and it became very effective in other places. So over the years, I'd say I've come up with probably 20 things like that, either that I came up with myself or I essentially curated. I found different ideas from books or whatever, and I passed those on to distributors. And, and that's part of your job in international sales, working with your distributors, is to come up with these ideas that are going to work for your product and feed them out to your different distributors and sales teams around the world and improve their sales processes. So let's talk about one more thing, which is product. And this is probably going to be the most controversial thing. You go on LinkedIn and you find 100 people who call themselves international sales or marketing consultants, 95 of them will tell you that the key to international growth and international sales is making a product for every market. If a company, if a country wants a blue widget, make it blue. If a country wants a pink widget, make it pink. And that's how you grow internationally. So let me make a clear statement, unambiguously. In 30 years, more than 100 countries, I have never changed a product for a specific specific market. Absolutely never. I've tweaked the labeling. I've tweaked the insert that goes with the product. That doesn't mean nobody's asked me to. Everybody asks me to. I've had people say, if you don't change this, we can't sell in this market. It will be impossible to sell in this market if we don't change this product. Salespeople, distributors, end users. I did the math and I said, okay, this doesn't make any sense. It's a sales problem. Sell the damn product. This is what we have. And we've sold the product. So it really depends on how you frame the issue. And going back to how people get paid, how many of these international marketing consultants are product engineers? A lot of them are, right? What they want is they say, well, you have to change your product. And by the way, I can change your product for you, right? I'll bill you on an hourly basis. That's the type of thing that happens. So when I was little, 8 or 10, I had a dog. And I said to my dad, you know, if I had a pony, I could take the dog on much longer walks. And my dad, being, you know, a dad of that generation, didn't want to say no. He said, hmm, that's a good idea. We'll see what we can do. Now, I understood from that that my dad had rushed out to the nearest pony farm and ordered a pony. And any day now, we would have a pony delivered to our apartment. So I figured, why walk the dog if in a few days I'm gonna give him a lot of long walks? And my poor dog almost died of atrophy. There are 3 things that we can say to a distributor or a customer when they ask us to change a product. We can say, yes, I'll change it, this is the timetable, but then you have to mean that you're going to change it and you have to make it cost-effective to change it. And I don't believe you can do that for the most part. You can say, no, I'm not going to change it, it is not going to change, do you want to resign the line? Or you can say, we'll see. Now if you say, we'll see, You are essentially killing that market for the next 3 years, right? Don't expect to sell anything because what a salesman hears when you say, we'll see, he hears, I'm going to make a product that sells itself. Don't bother putting any effort into selling anything. And that's what happens. He's basically not going to do any effort in that market for the next 3 years. You might as well have just written that country off.
Yeah.
So a few years ago, I was in a sales training with a great sales manager, great guy from a distributor. And he raised his hand and he said, Zach, if you made a few changes, and he listed the changes, I could sell a lot of this product. So in front of a whole group of people, I said, so are you resigning the line? And he turned pale. He goes, no, no. What do you mean? I said, well, can you not sell the line today? So he goes, well, I guess I can sell the line, but I could sell a lot more. So I said, well, I'm not gonna make the changes, but can you sell the line? What's— what can you sell about the line? So he's— now my regional manager was sweating. He was like, Zach, Zach, he's a great— don't, don't, don't, don't do that. And, and, but the sales manager, the, the distributor sales manager, he started to say, well, you know, it does this, it does this, these are some great benefits. I said, yeah, focus on those benefits. I'm not gonna change the product. Focus on the benefits because don't think about these things as an engineering problem. This is not an engineering problem. This is a sales problem. If you can't sell the product, it's not about somebody else's department. It's about the sales department. And, and specifications fall into this. How many times do you go into a market or a distributor comes to you or somebody comes to you and says, you don't meet the specs, right? The job of the distributor, the job of the sales department is to change the specs. Of course we don't meet the specs, right? We haven't been in that market before. We're new to that market. Once they understand our product, they're going to change the specs. That's your job. I sold for this company, and when I went in, we had a situation in Australia where, again, this was a product that required installation. We had the best R&D department in the world. And what we had done was we had figured out a way to cut out about 70% of the wire and about 70% of the labor involved in installation, which lowered the price. Then we threw all of that money essentially into better features. So we had a beautiful product that required less money for installation. The 3 competitors in Australia ganged up, changed the local specifications, to essentially forbid using our system of wiring. Okay, now our system was perfectly safe. We had certifications and we, we could prove that it was safe, but essentially we couldn't use it. It couldn't fit in with the local specifications. And the previous VP of sales and the local distributor accepted that. They said nothing we can do about it, it's specifications. And when I came on board in the company, that was one of the things I noticed. I said, so We're specced out of the market. This is making it unprofitable for us, but there's no good reason for this. This is, this is a marketing campaign by our competitors. And the VP, the local distributor said, well, it's not, it's the specs. I said, okay, here's the deal. You have to change the specs. That's what you have to do. And I phrased it as a sales problem. And within a couple of years, we changed the specs and our sales shot up. But until then, they had seen this as an engineering problem and not their problem. So it's like the Serenity Prayer. We have to think, what can we change? What can't we change? And we have to have the wisdom to tell the difference. And specs are not something that you can't change. Specs— now let's differentiate. There are legal things like a CE mark. You can't get out of the airport in Germany without a CE mark. that. For the most part, most local specifications are changeable, right? There, there's a committee that does this, and that's your distributor's job, and that should be a strategic focus of your company, is changing those specifications. Okay, so let's jump back to where we started. I worked for a couple of years in, in India for this multinational, and then I went and I spent a couple of years in in Europe for the same multinational. And then my family decided we were going to move to the States to join this corporation in Chicago that was a family-owned, 100-year-old corporation. And they made a product that I knew nothing about in an industry I knew nothing about with people I knew nothing about. And I took the job even though I knew that for 30 years, they had never been able to make this succeed. And why was I so confident that I could do this? Well, remember those old cars? And I talk about the cars like before the year 2000 or so where you could actually lift the hood and see something. It wasn't just a chunk of plastic. And you could open up the hood and you could look in and you could say, hey, that's a corroded wire and that's a band that's come off or that's a, you know, there's a tube that's snapped or rotten or something like that. And you could see and you could say, I don't really know anything about cars, but I could probably fix this. So when I interviewed with the company, I looked around a little bit and it was clear to me from, from just a quick peek under the hood that there were problems with the company that I could fix. So what did I do? When I got into the company, I rolled up my sleeves and I opened up the hood and I looked in and I said, you know what, we have never asked ourselves these We don't know who buys or why they buy or when they buy. Let's ask ourselves these questions. I got some people together and we had a little workshop and we figured that out. And then I thought, okay, let's take a look at the countries we're in. And we were in this random group of countries that didn't make any sense because people had walked up to us at trade shows or reached out to us. And I said, okay, let's put together with the list we made, Let's put together the countries that we want to go into. And we figured that out and we put together a good list. And we had now a place to go. And then I looked at our regional managers and I said, okay, okay, you know, you guys are really nice, you fit into the culture, you got to go. Because they, they weren't able to sell anything. And I looked at our distributors and, and our distributors had come into business with us in good faith. They weren't the right distributors, but I didn't want to just let them go because they weren't the right distributors. It wasn't necessarily their mistake. But what I did do was I said, okay, you have 2 years to make these changes. You don't have enough bandwidth. You don't have enough focus. You don't have the right capabilities. I need you to change these things. And one of them had to go because there was no way he could build up enough bandwidth. But I was able to turn the others around, and then I was able to add about 30 or 40 other distributors pretty quickly covering the whole world. And doing these things really allowed us to build up our sales from literally under $1 million to about $13 million in a couple of years, and then really drive the value of the sale of the company. Now, this isn't terribly easy or fun. Nobody liked me. People really didn't like the fact that I was pushing them to do things a different way. Regional managers get on planes, fly to America to complain to my CEO that I didn't know what I was doing and they should fire me. I had a group of distributors actually form an organized rebellion against me. But I also had distributors who, 3 years later, suddenly their companies were worth 3 times as much because I had driven up the value of my company, of the principal, and now the value of the distributor was that much more. By doing these things, I was really able to achieve the goals that I wanted to achieve and bring in the impact that I wanted to bring in. Okay, so the way I see it, I've given you about 56 little tips that you could get up tomorrow and use in driving your own international sales. So you have 2 options now. One is you go home and you say to your significant other or your mother or whatever, you say, Hey, I heard this wacky talk from this guy who looked like Santa Claus with a pocket square. And what's for dinner? Right? That's option number one. The other option is you say, gather up your team and you say, here's what we're going to do. We are going to drive our international sales. We're going to become the world leader in what we do. We're going to increase our international sales by 300% or 400%. We're going to increase the value of the company by 500%. We're going to add 50 manufacturing jobs on our floor. We are going to pull together and do this. Those are your 2 options. Now, the second option isn't that easy. And I'm going to end with my favorite quotation from my favorite Roman emperor, Marcus Aurelius, Stoic philosopher and emperor. One of the things he said was, every morning, you look at what you have to do and you say, prefer the hard. Whether it's something simple like choosing your daily activity or it's something like going out and fighting on the frozen Danube. And the way you achieve this type of sales success, the way you increase the value of your company by hundreds of millions of dollars or increase your revenue by hundreds of percent is by preferring the hard, by not looking for the easy way out, by really focusing on what you can do. Thank you very much. When you decide it's time to grow your international sales, call us.
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