Finding Salespeople Abroad
Q I want to sell my company's circuit boards and engineering services in Europe. Do you have advice on finding good salespeople abroad?
We'll get to finding good salespeople in a second. Let's start with avoiding awful, unscrupulous salespeople who will exploit your business for their own ends. Offshore sales agents can be just as leaky with your intellectual property as contract manufacturers. And some will rep for multiple clients in the same industry, purposefully keeping one company's sales down to maintain loyalty with a competitor.
Keith Curtis has seen it all while working for the U.S. Commercial Service, a government agency that helps companies expand overseas. He has encountered fraud at his posting in Sweden and Denmark, where he is senior commercial officer, and at previous posts in Brazil and Japan. His agency may be the best bulwark against such nefarious deeds -- partly because it's cheaper than private-sector consultants. (And, of course, there are many, many consultants who would be only too pleased to help you.) For $550, Commercial Service will survey its list of vetted (that's the key) sales reps and distributors to gauge whether there might be a market for your product. It will then put you in touch with five likely candidates. Throw in another $250 and Commercial Service will set up face-to-face meetings with salespeople, distribution firms, relevant industry associations, and potential customers.
The steps you should take to protect your company are basically the same whether you're selling circuit boards, services, or toys. If you can, make it a short-term contract. If a multiyear contract is necessary, add annual performance requirements, says Leonard Simonian, president of Only Hearts Club, a toy company in Oxnard, California. In 2006, Simonian met a rep who made big promises about getting Only Hearts' dolls into stores in Central and South America. The results weren't even close to the rep's projections, so in 2007 they parted ways. Simonian's new rep has been more successful. "We were thrown off track for a year, but fortunately we kept things short," Simonian says. "With a two- or five-year agreement we would have been held hostage."
You could also take Michael Stajer's approach: Sell global, recruit local. The CEO of WineCommune, a wine retailer in Oakland, California, hires U.S. salespeople with professional experience in Asia to sell his products in China, Taiwan, and Singapore. Many of his customers are distributors that buy in bulk, so he needs a good sales force. The reps have flexible schedules so they can take calls from distant time zones. "Being on the ground isn't necessary for us right now," Stajer says.
Q I own a store that sells motorcycle parts, accessories, and apparel, and I also sell products online. I've always been unsure of our advertising budget. Is there a rule of thumb based on gross sales?
There's rule of thumb, and then there's reality. And the two have drifted so far apart they barely even speak at family dinners. According to conventional wisdom, retailers should allocate 2 percent to 4 percent of sales for advertising, says Eugene Fram, a marketing professor at the Rochester Institute of Technology's E. Philip Saunders College of Business. But that figure will vary depending on the industry, and on your gross margins: Higher margins give you room to spend more. Plus, there's the cost of maintaining a presence on the Web, which is a relatively new budget item that may add to your costs. Companies like yours typically spend 5.85 percent of gross sales for advertising and promotions, according to the Motorcycle Industry Council.
No matter how much you spend, however, you should target your ads to maximize horsepower. Frank Cooper, owner of Adventure Motorcycle Gear in Gilbert, Arizona, found that ads in regional publications, like California-based Friction Zone, were much more effective than those in national magazines, like Rider. He budgets 4 percent to 5 percent of his company's gross sales for print advertising, plus $6,000, about 2 percent of gross sales, for search-engine optimization, to boost traffic on the store's website.
If you buy ads online, make sure they're on the right sites, says Todd Sobel, president of Iron Horse Helmets in Birmingham, Alabama. Your customers will probably look for leather chaps on sites like CycleTrader.com or V-TwinForum.com, not on Shopzilla. And, of course, much of the Web -- like the open road -- is free. It costs nothing to swap links with other sites or to post on motorcycle forums and blogs. By advertising on and linking with other motorcycle-related sites, Sobel expanded his store's Web business to 30 percent of its total sales.
One good thing about bikers: They get out a lot. So consider hosting events, which can bring more bang for their buck than other forms of marketing. Audrey Menarik, owner of gear store Moto Liberty in Dallas, once spent $8,000 for each motorcycle trade show she attended, which was as many as eight per year. Now Menarik reserves half of those dollars for promotional events at her store, including an annual crawfish boil with live music and a Midnight Madness sale. She found that customers bought more at in-store events than at the show booths, so she's downsized her show displays. "Announcing a 10 percent discount isn't so exciting," she says. "But people come for the band in the parking lot and the free food."
For more on finding salespeople abroad, check out U.S. Commercial Service's website, buyusa.gov. The American Marketing Association's website (marketingpower.com ) has more on best practices for small-business marketing.