How To Build Up Partnerships - Remotely

How to Build up Partnerships

(Lothar Stadler, December 2020)

Nothing stays as it was – global business changes, fast innova ons are emerging, and new developments in digital solutions help us to work diff erently. Today’s search for business partners is diff erent – no traveling, no physical meetings, no personal checks. Different approaches to build up rela ons can make it possible to reach our goals in this changed world.

Check your business strategy before star ng to search for partners

In the current global situa on companies suff er from uncertain es and some may suff er from lower customer demand. Business leaders have basically two possibili es: downsizing or fi nding new markets. This is the main reason why many companies look outside their home country’s markets for growth opportuni es. Entering new markets bring a lot of opportuni es, but also a lot of challenges. Many obstacles must be overcome to achieve success in a new market environment. Before star ng your partner search, always check your general business strategy. Does your products and services fi t the new market? What compe ve se ngs do you fi nd there? What value can you add to your new customers? Defi ne your go-to-market strategy and set up a me frame for your new venture. Focus on your company fi rst. Before companies set out to fi nd partners in distant countries, they should take the time to solidify their business fundamentals such as strategy, off erings and resources. This will help build the business case and pla orm they need to mone ze eff ec vely in new markets. Currently we see that data and analy cs aff ect business prac ces most in sales and marke ng func ons. The energy, high-tech and healthcare industries are par cularly concerned. Involving data and analy cs before entering new markets may also lead to reconfigura on of opera ng models or even core business func ons - from product development to marketing (Go lieb, Riifai, 2017). Even when businesses are facing high demand, like the healthcare industry at the moment, it makes sense to deeply dive into your business strategy and defi ne the priori es for new partners. "For all the markets we are entering or where we already serve customers, we have employees from these regions inside the company, with local knowledge and language. This is essen al for our partnerships.” says Edwin Kleiber, Managing Direcor at Amex, a distributor of medical and laboratory equipment, who currently responds

to the needs of interna onal developing agencies and humanitarian aid organiza ons. When a team is truly na ve to a region, you gain invaluable insights into local markets and customs. Check your possibili es of human resources and see in which fi elds local partners can add value. Before entering a market and long before searching for a partner, it is important to analyze the value that you want to bring to your customers in the new markets. In literature, an array of concepts has been developed addressing the ques on of how value is created for customers and which components and characteris cs of value are important. Three main concepts of customer value can be found: while economic and early marke ng literature mainly focused on value-in-exchange, more recent developments focused on rela onship value and value-in-use (Kleinaltenkamp, 2015). This brings up the real situation in which a customer uses a product. Marke ng and sales arguments become more relevant when they refer to specifi c customer situa ons. Adding value for customers with products and services through appropriate value crea on concepts becomes even more important in remote mes. Your eff orts can mul ply when you meet the needs of your customers with the right arguments, whether it is a physical product, a so ware as a service, or a pure service. Some recent approaches have turned towards a more customer focused view of value crea on processes and try to mo vate customers to par cipate in joint value crea on processes. This also needs partners, especially in distant markets, to interact with future customers.

Defi ning partner roles

It is important to have a clear understanding of the business strategy before starting to define partner roles. This makes it possible to derive the right roles for any new partners. Depending on what type of product or service you off er and whether you serve a market directly or indirectly, these factors define the roles of a future partner. Figure 1 shows a selec on of the most common channel partners. Companies may want to sell products directly to customers. In this case they may work with channels like personal selling, agents, retail offi ces or marke ng partners. Typical indirect commercializing works with dealers, licensing and service partners. E-commerce has a rising importance and can be organized through direct or indirect channel roles. A survey among workshop participants at CIS2020 – Asia’s largest experiential conference in corporate innova on – shows a representa ve picture of the current situa on (figure 2). More than 60% of business leaders and innovators are currently looking for marke ng-, e-commerce- and agent-partners. Those are partner roles which do not need big investments, but create big opportuni es and facilitate progress even with fewer resources. As remote work is currently on our agenda, marke ng partners can help in distant markets before, during and a er the sales process. Finding marke ng partners is probably easier than finding suitable dealers or service loca ons. Choosing a marke ng partner can also be possible remotely, and you might see the results immediately. When it comes to industrial products, many companies still rely on tradi onal channels for commercializing. For many of those businesses, personal customer interac on is a high priority, even with customers in distant countries. Many companies therefore rely on local partners like agents or representatives, who on the one hand inform about news and on the other hand represent the respec ve company’s interests in that market. "The current pandemic has made local partners in distant countries more important for manufacturers" , means Wolfgang Willig, Managing Partner of Al Mazroui Infra from the United Arab Emirates. AM Infra serves wellknown companies from the Western hemisphere with its trade services and local support in the infrastructure and transport sector in the Gulf region. He confi rms: “Agent ac vi es have increased over the last year - also due to travel restric ons - because more local exper se is needed” . From a commercial perspec ve, the Internet has signifi cantly transformed the retailing landscape. Demand for new technologies led to a shift to e-commerce channels in many sectors. The increasing prevalence of e-commerce has also given rise to a novel e-commerce channel - the marketplace - in which manufacturers sell their products directly to consumers. Globally, more than 50% of e-commerce sales were made through online marketplaces in 2019 (Merton, 2020). It is forecasted to grow drama cally over the next 5 years, as more companies adopt marketplaces

as the best platform to promote online sales. With the rise of the world’s marketplace top league like Amazon (global), PayPay Mall (Japan), eBay (global), Mercado Libre (South America), AliExpress (global), Rakuten (global) or Taobao (China), manufacturers, retailers and online traders need to decide whether to introduce the marketplace channel in addi on to their exis ng channels. The high degree of shi to e-commerce led a large number of businesses to interact with their customers via different channels. Mul -channel commercializing aims to create additional customer convenience with mul ple touchpoints such as online and brick-and-mortar stores. Companies may sell their products via e-commerce, look for an agent in a specifi c country and have a marke ng partner for a region at the same me. Managing mul ple channels is becoming increasingly complex, but customer demand is driving mul -channel strategies. Today, multi-channel commercializing is moving towards an omni-channel model in which the integration of various pla orms shapes the service interface and creates a seamless experience for consumers (Thaichon, Phau, Weaven, 2020). The way companies are using the mul -channel trend is one of the hottest business topics these days. The choice of product and service off erings per channel, new strategies in pricing, how to measure sales performance, and even the eff ect of spillovers from online pla orms are ques ons that go hand in hand with the mul -channel trend. The use of mul ple channels can also change a structure of a company, including the role of the sales force, and may also lead to risk of cannibaliza on and potential conflicts in resource allocation (Yingchen Yan, Ruiqing Zhao, Zhibing Liu, 2018). Coordina on and control of mul -channel roles is essen al for business success in the future. With the appearance of new channels, companies o en need to consider how to introduce a new channel with which partner. Defi ning the right channel role is crucial before star ng to search for a new partner. Classical personal selling is s ll the most used channel today. Millions of companies have their own sales staff who try to convince customers to buy their products or services. Par cularly in the B2B market, personal selling is s ll the most important channel role. Take the example of industrial goods, which often require a high level of explana on. Here, sales can hardly be realized without specialists travelling to customers. Many countries have been keeping tourists out during the pandemic, and travel for business people has become extremely complicated due to permits and enforced quaran ne days when entering a country. Entry into China is currently practically impossible for regular business trips (Brown Forrest, 2020). Agents typically can help in this situa on as proximity to customers is an important asset. Personal conversa on is s ll the most eff ec ve tool to convince people of one’s ideas. Long-standing contact networks of local agents are of course helpful and even more so, when travel restric ons are in place. Trading companies and marke ng partners can also help in such situa ons. Depending on the targeted market, it makes sense to look for a partner that fi ts into local business prac ces. For Europe and its regional diff erences it might be useful to have a marke ng, agent or distribu on partner in each country. In the Middle East, where business has strong es to ruling families, it can be helpful to have someone, who has long-term business connec ons and even poli cal contacts. In South East Asia, even among ASEAN countries, it is s ll diffi cult to ship products to another country for repair and return it repaired. In such a case you probably have to look for a local service partner. In Japan and Singapore traditional trading firms dominate the market. These can help foreign manufacturers to access the market. If we know who we need, we can talk about how we fi nd them. Classic matchmaking organizations are chambers of commerce, commercial department of embassies, national representa ons, industrial, business and trade associations. Try to find infl uencers in a new market. Par cipate at conferences to meet poten al partners. If you want to sell an elevator, for example, speak to architects, property managers or construction companies. Even ask future customers for help with searching for local partners and check how other companies and competitors work in that market. Probably you can get recommenda ons from your personal network, like business partners or social media

contacts, when you speak about your projects and future markets. Accelerators can help start-ups in matchmaking and business expansion in new regions. For example: RISE with its accelerator program works alongside startups and helps navigate a Southeast Asian expansion. Hong Kong's largest start-up community WHub can serve as a gateway to China, and PlugandPlay connects the best technology start-ups with the world’s largest corpora ons. Finding the right partner requires experience, contacts and knowledge for cultural diff erences.

Building partner networks virtually

Today’s search for business partners is diff erent – no traveling, no physical mee ngs, no personal checks - but the tasks stay the same. We recommend to speak to people, who know the market or know someone, who can help you on-site in the market. Personal recommendations offer a solid founda on for establishing new rela ons. Keep in mind that everybody is in the same situa on in this pandemic and that customers fi nd it just as diffi cult to get to know new suppliers. Nevertheless, a good synergy of adver sing ini a ves, social media appearances and sales eff orts also helps in virtual acquisi ons. Michael Kreilmeier, Managing Director of Mission Embedded, a system integrator for safety-cri cal applica ons in the transport and medical sector, states that "the more complex a product is, the newer a product is and the further away the customer is, the more trust needs to be built up. A personal touch always helps. If this is missing, the hurdles for new business are very high, but not impossible". In mes of completely remote work, local contacts help. Established agents and local representa ves report that their network of contacts is especially helpful now and that they benefit from their long-standing rela onships. Not only businesses rely on close and long-standing rela onships but also universities. Partnerships between universi es have had a high priority for decades. They shape en re genera ons, make a valuable contribu on to research and promote cultural exchange. Universi es have always been at the forefront of technological or social progress, and they switched to virtual formats very early in the pandemic. Virtual formats have also changed working prac ces in partner networks. "Virtually you o en get quite far nowadays, some mes the last steps require a physical meeting. Real personal me is be er used today, because it is no longer taken for granted", says Barbara Stö nger, Dean of the Executive Academy at the Vienna University of Economics and Business Administra on. In the past you might have travelled for three days, today you might only have one hour for the same topic in a single video call. Human factors in partnerships cannot be replaced, but a lot of preparatory work in projects is possible with virtual tools. Therefore, we will look more closely at how digital tools can help in partner networks later. Remunera on framework

Once you have found the right partner, the next step is to discuss remunera on for the rendered services. A clear defi ni on of a remunera on framework and the incen ve system is essen al for the success of a partnership. Finding an appropriate solu on for individual situa ons makes the difference. Figure 3 shows six core elements of a well-func oning remunera on framework. Every company has diff erent types of partners - from small businesses up to big businesses. Each partner may have a diff erent relevance to the company. Partners can be classified by status, and represent certain importance to the company, certain rights and obliga ons, and organiza onal hierarchy. Partners may also have different roles or development stages in a business network. Typical status are silver, gold and pla num partnership. Certain rights, incen ves, discounts and community advantages can be linked to a status.

For any partnership it is necessary to set the rates of remunera on. If you are looking for an agent, it is essen al to set commission rates, if you have a distributor, it is important to consider discounts, and if you are looking for marke ng partners, they will probably receive a fi xed amount per month, quarter or year, or you can fi nd a formula that depends on business success. Price levels o en are essen al for company strategies. Depending on the market and regulation, you can introduce recommended guiding prices. Keep compensation formulas simple, because payment procedures might get quite complex when it comes to invoicing, partial payments and credit notes. Incen ves of course are very important and give the possibility to ac vely manage your partners. Incen ves can vary from typical discounts for bigger orders, off erings for addi onal services, addi onal gi s or a higher status, if certain targets are reached. Nowadays, customer service is a must for every product or service. Companies may offer special customer services to their partners. They may also seek partners who multiply services to their customers and offer train-the-trainer programs. Local service partners that understand local customs and speak the respec ve needed language become increasingly popular. During the pandemic, both capital goods manufacturers and manufacturers of complex plants became aware of the importance of local service partners. In the past, technicians could simply get on a plane and solve problems on site within a very short me and get plants running again. Today there are travel restric ons, quaran ne regula ons of 10 days on arrival and 10 days on return. This drives up service response mes, repair mes and associated costs. Local partners, who can communicate with specialists from manufacturers remotely or via VR- or AR-applica ons, are valuable today and new technologies for servicing are becoming reality. And fi nally, new partners need help in their startup-phase. This can be simple things like free samples or starter kits and may lead to increased support of new partners with favorable payment arrangements, addi onal training, and greater a en on to technical service. “Each partner may not be able to support as much as needed, due to budget or me constraints. Laying out your concerns before working together helps”, means Natchaya Sukkaew from Yara Interna onal in Thailand.

Agreement principles

Figure 4 shows the typical agreement principles that need to be brought into balance. Any partnership must have a defined starting point. It is also recommended to defi ne a certain dura on of an agreement. Openends in agreements can lead to diffi cul es in termina on, for example if partners invest for the longer term and then demand compensa on. In partner agreements one of the main points to clarify are the du es of both sides. This is the time to precisely specify what you expect from a partner and defi ne who does what. Almost ridiculously seeming ques ons such as ‘who is responsible for which marke ng ac vi es’ and ‘who pays for them’, or ‘who bears the transla on costs’, make sense to be clarifi ed before the signing of a partner agreement. Rates of commission and discounts, a fi xed fee or a performance bonus are typical elements of such agreements. They all need a calcula on basis. Is it the contract value or is it the value without taxes, and which currency is used for calcula on? These are sensi ve issues, as the nature of the base can cause high varia ons in money. When it comes to payment, an important issue is to specify the time of the payment. For example, an agent's commission usually arises, when a customer contract is signed, but the commission cannot be due un l the contract is in force and the full commission should only be paid, when a customer has paid their bills. Each market has its own characteris cs and this is the me to talk about special es. We recommend formula ng a standard agreement suitable for general purposes and to deal with the special es at the end, as they can vary from country to country. Businesses can evolve and an agreement should also provide room for future developments. It may be that you wish to change partners or that you will have other sales challenges in the future, so it is a good idea to facilitate such developments. A partner, who is no longer performing, can severely block your business development. Termina ng a partnership is not easy, some mes painful, but some mes also necessary. Find out, whether a new partner is right for you and simply try it out. We do not recommend signing large agreements at the very beginning of a partnership. Try to start a fi rst project together. You will see how well the rela onship works as soon as the fi rst diffi culty comes up. Even though we are talking about agreements here, lawyers can help with compliance to regula ons and laws. Nevertheless, it is the business people, who should defi ne the principles of the partner rela onship. Finding an equilibrium between partners

might be a secret to establish long me partnerships. The big aim should always be to fi nd the right balance, on the one hand by le ng the partner work independently and on the other hand by monitoring their ac vi es.

Managing new partners

The right managing of new partners could be the fi nal touch to a successful partnership. In any organiza on, a good onboarding program helps with all other subsequent steps. In mes of remote work, digital tools, hands-on prac ces, fast ac on, professional organiza on and good communica on is also needed for managing partners. Today’s popular digital tools all work on cloud based systems and they are available anywhere and any me, which highly facilitates rela onship management of partners. By using communication tools like Slack, Google Chat, Microso teams, etc., teams are brought together in communication channels related to projects, topics or teams. Everyone in a channel sees the same messages and stays on the same page. Bringing even external partners into such communica on channels can make work faster, collabora on more effi cient and bridge global distances. “As so ware plays a more and more cri cal role in the performance of every organiza on, we share a vision of reduced complexity, increased power and flexibility, and ultimately a greater degree of alignment and organizational agility.“, said Stewart Butterfi eld, Slack CEO and Co-Founder, when announcing an agreement on 1 December 2020, under which Salesforce will acquire Slack. Online collabora on tools for managing projects and personal tasks help in mes of remote work. By also integra ng partners, teams can work more effi ciently. Popular collabora on tools like Trello, Monday, Basecamp, Gira, Miro, Freehand, Confl uence or Jamboard all have their own specialty and strengths. One aspect that they all have in common: they intend to enable teams to organize and priori ze projects in a fl exible, eff ec ve and crea ve way, from anywhere in the world, irrespec ve of whether you commute on a bus or spend your work day at the beach. Customer rela onship management tools are powerful pla orm tools to help marke ng, sales, e-commerce, customer service and IT teams to keep the customer in focus. Managing partners with a CRM so ware can help a lot to be er work together with a view on your customers. We even recommend opening a corporate CRM account for external partners. In this way, partners can report directly into your CRM system and you do not receive single Excel- sheets or E-mails with sales or customer informa on anymore. The data will be directly fed into your system from your local partner and you can immediately see the results. Set targets with your partners that appear challenging. With the use of CRM so ware you can easily monitor and control target achievement. When you search for partners, you can ask for a certain number of leads and opportuni es per week or month. If you formulate targets and prepare your people well for achieving them, they will do it and be happy with new modes of working. “B2B commerce of the future will shi very strongly to online channels - not least because of Covid-19. Partner models are moving further from isolated channels towards a 360° view of the customer. Modern CRM systems off er a holis c pla orm for data management and enable the development of automated and personalized solutions.”, says Christina Neumüller, Salesforce Consultant at Salesfi ve in Munich. With all the sophis cated so ware solutions and futuristic tools, the people who make the projects work must not be forget. As new partners arrive in organiza ons, the need for training in opera onal processes and digital tools also increases. Be aware that not all people are familiar with digitals tools or sophis cated applications. Frequent training sessions also help to include those, who need more time to learn working with these new tools. Powerful partnerships can grow, when you show fl exibility in serving new partners. Mo vate people to share informa on to build up trust and enable deliberate learning with channel partners (Keeling, Cos, Ruyter, 2020; Lostakova, Pecinova, 2014).

AUTHOR Dr. Lothar Stadler, 44, is an entrepreneur from Austria and provides services in global sales and business innova on for technology-driven customers. He is a former sales execu ve from the machinery and transport industry, mentor for start-ups and lecturer.

Lothar.stadler@explorvent.com www.explorvent.com

CONCLUSION

This ar cle is supposed to give you an idea on how to find multipliers for your commercializing eff orts. The search for the right partner is characterized by choosing the right channel roles and an op mal incen ve system. The current pandemic has made it even more important to add value for customers with the right partners. B2B business is s ll strongly dominated by the role of personal selling. Local agents with a well-established network of contacts can help even more nowadays. The high degree of shi ing to e-commerce makes a good coordina on of mul -channel commercializing essen al in the future. We defined some of the core elements of a remunera on framework and typical agreement principles, which should be brought into balance for a successful partnership. Virtual formats have also changed working prac ces in partner networks. By using communica on and collabora on tools, work can be done more efficiently. Customer relationship data management will enable automa za on and will become a key success factor in the future to keep the customer in focus. Powerful partnerships rely on mutual trust. Remember, most great things in history happened in cooperation - the right partnerships can be a great founda on for future success.

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