The Case For a Manufacturer’s Agent
After researching and choosing a new market to penetrate, exporters often rely on recommendations and referrals to seek out potential agents to represent them. However, many do not take the next step – visiting the target market to seek out and personally meet with more than one potential agent so that all these individuals can be personally compared, evaluated and assessed for their potential.
Investing And Budgeting
While everybody knows that it takes money to make money, exporters that want to penetrate new markets are often unwilling to put aside a budget for the effort. They hope that by promising a good commission they will get a good ROI from their new agent.
If the exported product or service is new in the target market, the agent-on-the-ground will often be doing “missionary work”, using his knowledge and contacts to get the brand known, hoping that commissions will be forthcoming when sales start. This can take time and the agent will not be earning a commission, while the exporter will benefit by becoming known in the foreign market through the unpaid efforts of a local representative.
Because of a focus on their own activities at home, exporters often forget that the agent lives in a completely separate world, with different pressures such as other clients, interests and/or local business activities which are not necessarily related to the exporter. While the exporter’s plans are important, they may not be top-of-mind in the agent’s schedule, particularly if the agent has no income as yet from the new arrangement.
Covering some basic expenses like the agent’s car mileage, business-club attendance fees, entertainment/representation, mail-outs or even providing a draw against future commissions implies a commitment by the exporter and results in a deeper allegiance and involvement by the agent.
Companies who want to penetrate new markets will often decide to appoint agents/reps and once done will quickly turn their attention to other new territories where they repeat the process. However, the newly appointed agent requires support because by agreeing to represent the exporter he is putting his own local reputation on the line.
The insightful exporter will welcome the new Agent into the fold by providing training at home office, planning regular visits to the territory to back-up the agent and developing a professional two-way interchange so that both parties are actively involved in the effort to develop the new market. As a result, the newly-appointed agent feels that he has become an important part of the exporting client he now represents and becomes an active member of the exporter’s team.
Agent/representation agreements require commitment from both sides. An example of the exporter’s commitment to the agent could be an exclusive agreement. This ensures that the only competition the agent will face will be from other firms offering similar products or services, and not from his new client appointing others in the same territory. Agreement to territorial exclusivity implies a deeper long-range commitment from both parties and creates a stronger bond. This helps the new agent to willingly add the new company’s name to his website, assume responsibility for the new client’s reputation locally and generally agreeing to being seen as his client’s “face” in that market.
Leap In Trust
The agent offers the new client his contacts, personal reputation and support, all of which have taken years to build and develop. As a result, the agent makes a major leap in aligning himself to the new client, often not necessarily aware of what is happening in the exporter’s home office, nor what the company has done in other markets.
Considerable trust is therefore required by both parties, but the agent’s investment is far greater because he is offering his hard-earned reputation and local network of relationships to the exporting client, while the client is merely offering money in the form of commission, and then only if sales are made.
Ennio Vita-Finzi was appointed as Ontario’s Trade Commissioner in Europe, Latin America and the U.S., was President of the Canadian Council for the Americas during NAFTA negotiations and then qualified as a Certified International Trade Professional (CITP). He is now a College lecturer and keynote speaker in Montreal. email@example.com