Building Remote Partnerships

Lothar Stadler

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

Check your business strategy before starting to search for partners

In the current global situation companies suffer from uncertainties and some may suffer from lower customer demand. Business leaders have basically two possibilities: downsizing or finding new markets. This is the main reason why many companies look outside their home country’s markets for growth opportunities. Entering new markets bring a lot of opportunities, but also a lot of challenges. Many obstacles must be overcome to achieve success in a new market environment. Before starting your partner search, always check your general business strategy. Does your products and services fit the new market? What competitive settings do you find there? What value can you add to your new customers? Define your go-to-market strategy and set up a time frame for your new venture. Focus on your company first. Before companies set out to find partners in distant countries, they should take the time to solidify their business fundamentals such as strategy, offerings and resources. This will help build the business case and platform they need to monetize effectively in new markets. Currently we see that data and analytics affect business practices most in sales and marketing functions. The energy, high-tech and healthcare industries are particularly concerned. Involving data and analytics before entering new markets may also lead to reconfiguration of operating models or even core business functions - from product development to marketing (Gottlieb, 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 define the priorities 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 essential for our partnerships.” says Edwin Kleiber, Managing Direcor at Amex, a distributor of medical and laboratory equipment, who currently responds

to the needs of international developing agencies and humanitarian aid organizations. When a team is truly native to a region, you gain invaluable insights into local markets and customs. Check your possibilities of human resources and see in which fields 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 question of how value is created for customers and which components and characteristics of value are important. Three main concepts of customer value can be found: while economic and early marketing literature mainly focused on value-in-exchange, more recent developments focused on relationship value and value-in-use (Kleinaltenkamp, 2015). This brings up the real situation in which a customer uses a product. Marketing and sales arguments become more relevant when they refer to specific customer situations. Adding value for customers with products and services through appropriate value creation concepts becomes even more important in remote times. Your efforts can multiply when you meet the needs of your customers with the right arguments, whether it is a physical product, a software as a service, or a pure service. Some recent approaches have turned towards a more customer focused view of value creation processes and try to motivate customers to participate in joint value creation processes. This also needs partners, especially in distant markets, to interact with future customers.

Defining 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 offer and whether you serve a market directly or indirectly, these factors define the roles of a future partner. Figure 1 shows a selection 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 offices or marketing 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 innovation – shows a representative picture of the current situation (figure 2). More than 60% of business leaders and innovators are currently looking for marketing-, e-commerce- and agent-partners. Those are partner roles which do not need big investments, but create big opportunities and facilitate progress even with fewer resources. As remote work is currently on our agenda, marketing partners can help in distant markets before, during and after the sales process. Finding marketing partners is probably easier than finding suitable dealers or service locations. Choosing a marketing partner can also be possible remotely, and you might see the results immediately. When it comes to industrial products, many companies still rely on traditional channels for commercializing. For many of those businesses, personal customer interaction 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 respective 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 confirms: “Agent activities have increased over the last year - also due to travel restrictions - because more local expertise is needed”. From a commercial perspective, the Internet has significantly 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 dramatically 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 addition to their existing channels. The high degree of shift to e-commerce led a large number of businesses to interact with their customers via different channels. Multi-channel commercializing aims to create additional customer convenience with multiple touchpoints such as online and brick-and-mortar stores. Companies may sell their products via e-commerce, look for an agent in a specific country and have a marketing partner for a region at the same time. Managing multiple channels is becoming increasingly complex, but customer demand is driving multi-channel strategies. Today, multi-channel commercializing is moving towards an omni-channel model in which the integration of various platforms shapes the service interface and creates a seamless experience for consumers (Thaichon, Phau, Weaven, 2020). The way companies are using the multi-channel trend is one of the hottest business topics these days. The choice of product and service offerings per channel, new strategies in pricing, how to measure sales performance, and even the effect of spillovers from online platforms are questions that go hand in hand with the multi-channel trend. The use of multiple channels can also change a structure of a company, including the role of the sales force, and may also lead to risk of cannibalization and potential conflicts in resource allocation (Yingchen Yan, Ruiqing Zhao, Zhibing Liu, 2018). Coordination and control of multi-channel roles is essential for business success in the future. With the appearance of new channels, companies often need to consider how to introduce a new channel with which partner. Defining the right channel role is crucial before starting to search for a new partner. Classical personal selling is still the most used channel today. Millions of companies have their own sales staff who try to convince customers to buy their products or services. Particularly in the B2B market, personal selling is still the most important channel role. Take the example of industrial goods, which often require a high level of explanation. 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 quarantine 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 situation as proximity to customers is an important asset. Personal conversation is still the most effective 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 restrictions are in place. Trading companies and marketing partners can also help in such situations. Depending on the targeted market, it makes sense to look for a partner that fits into local business practices. For Europe and its regional differences it might be useful to have a marketing, agent or distribution partner in each country. In the Middle East, where business has strong ties to ruling families, it can be helpful to have someone, who has long-term business connections and even political contacts. In South East Asia, even among ASEAN countries, it is still difficult 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 find them. Classic matchmaking organizations are chambers of commerce, commercial department of embassies, national representations, industrial, business and trade associations. Try to find influencers in a new market. Participate at conferences to meet potential 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 recommendations 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 corporations. Finding the right partner requires experience, contacts and knowledge for cultural differences.

Building partner networks virtually

Today’s search for business partners is different – no traveling, no physical meetings, 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 foundation for establishing new relations. Keep in mind that everybody is in the same situation in this pandemic and that customers find it just as difficult to get to know new suppliers. Nevertheless, a good synergy of advertising initiatives, social media appearances and sales efforts also helps in virtual acquisitions. Michael Kreilmeier, Managing Director of Mission Embedded, a system integrator for safety-critical applications 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 times of completely remote work, local contacts help. Established agents and local representatives report that their network of contacts is especially helpful now and that they benefit from their long-standing relationships. Not only businesses rely on close and long-standing relationships but also universities. Partnerships between universities have had a high priority for decades. They shape entire generations, make a valuable contribution to research and promote cultural exchange. Universities 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 practices in partner networks. "Virtually you often get quite far nowadays, sometimes the last steps require a physical meeting. Real personal time is better used today, because it is no longer taken for granted", says Barbara Stöttinger, Dean of the Executive Academy at the Vienna University of Economics and Business Administration. 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. Remuneration framework

Once you have found the right partner, the next step is to discuss remuneration for the rendered services. A clear definition of a remuneration framework and the incentive system is essential for the success of a partnership. Finding an appropriate solution for individual situations makes the difference. Figure 3 shows six core elements of a well-functioning remuneration framework. Every company has different types of partners - from small businesses up to big businesses. Each partner may have a different relevance to the company. Partners can be classified by status, and represent certain importance to the company, certain rights and obligations, and organizational hierarchy. Partners may also have different roles or development stages in a business network. Typical status are silver, gold and platinum partnership. Certain rights, incentives, discounts and community advantages can be linked to a status.

For any partnership it is necessary to set the rates of remuneration. If you are looking for an agent, it is essential to set commission rates, if you have a distributor, it is important to consider discounts, and if you are looking for marketing partners, they will probably receive a fixed amount per month, quarter or year, or you can find a formula that depends on business success. Price levels often are essential 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. Incentives of course are very important and give the possibility to actively manage your partners. Incentives can vary from typical discounts for bigger orders, offerings for additional services, additional gifts 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 respective 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 time and get plants running again. Today there are travel restrictions, quarantine regulations of 10 days on arrival and 10 days on return. This drives up service response times, repair times and associated costs. Local partners, who can communicate with specialists from manufacturers remotely or via VR- or AR-applications, are valuable today and new technologies for servicing are becoming reality. And finally, 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, additional training, and greater attention to technical service. “Each partner may not be able to support as much as needed, due to budget or time constraints. Laying out your concerns before working together helps”, means Natchaya Sukkaew from Yara International 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 define a certain duration of an agreement. Open-ends in agreements can lead to difficulties in termination, for example if partners invest for the longer term and then demand compensation. In partner agreements one of the main points to clarify are the duties of both sides. This is the time to precisely specify what you expect from a partner and define who does what. Almost ridiculously seeming questions such as ‘who is responsible for which marketing activities’ and ‘who pays for them’, or ‘who bears the translation costs’, make sense to be clarified before the signing of a partner agreement. Rates of commission and discounts, a fixed fee or a performance bonus are typical elements of such agreements. They all need a calculation basis. Is it the contract value or is it the value without taxes, and which currency is used for calculation? These are sensitive issues, as the nature of the base can cause high variations 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 until 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 characteristics and this is the time to talk about specialties. We recommend formulating a standard agreement suitable for general purposes and to deal with the specialties 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. Terminating a partnership is not easy, sometimes painful, but sometimes 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 first project together. You will see how well the relationship works as soon as the first difficulty comes up. Even though we are talking about agreements here, lawyers can help with compliance to regulations and laws. Nevertheless, it is the business people, who should define the principles of the partner relationship. Finding an equilibrium between partners

might be a secret to establish longtime partnerships. The big aim should always be to find the right balance, on the one hand by letting the partner work independently and on the other hand by monitoring their activities.

Managing new partners

The right managing of new partners could be the final touch to a successful partnership. In any organization, a good onboarding program helps with all other subsequent steps. In times of remote work, digital tools, hands-on practices, fast action, professional organization and good communication is also needed for managing partners. Today’s popular digital tools all work on cloud based systems and they are available anywhere and anytime, which highly facilitates relationship management of partners. By using communication tools like Slack, Google Chat, Microsoft 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 communication channels can make work faster, collaboration more efficient and bridge global distances. “As software plays a more and more critical role in the performance of every organization, we share a vision of reduced complexity, increased power and flexibility, and ultimately a greater degree of alignment and organizational agility.“, said Stewart Butterfield, Slack CEO and Co-Founder, when announcing an agreement on 1 December 2020, under which Salesforce will acquire Slack. Online collaboration tools for managing projects and personal tasks help in times of remote work. By also integrating partners, teams can work more efficiently. Popular collaboration tools like Trello, Monday, Basecamp, Gira, Miro, Freehand, Confluence 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 prioritize projects in a flexible, effective and creative way, from anywhere in the world, irrespective of whether you commute on a bus or spend your work day at the beach. Customer relationship management tools are powerful platform tools to help marketing, sales, e-commerce, customer service and IT teams to keep the customer in focus. Managing partners with a CRM software can help a lot to better 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 information 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 software you can easily monitor and control target achievement. When you search for partners, you can ask for a certain number of leads and opportunities 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 shift 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 offer a holistic platform for data management and enable the development of automated and personalized solutions.”, says Christina Neumüller, Salesforce Consultant at Salesfive in Munich. With all the sophisticated software solutions and futuristic tools, the people who make the projects work must not be forget. As new partners arrive in organizations, the need for training in operational processes and digital tools also increases. Be aware that not all people are familiar with digitals tools or sophisticated 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 flexibility in serving new partners. Motivate people to share information 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 innovation for technology-driven customers. He is a former sales executive from the machinery and transport industry, mentor for start-ups and lecturer.

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

CONCLUSION

This article is supposed to give you an idea on how to find multipliers for your commercializing efforts. The search for the right partner is characterized by choosing the right channel roles and an optimal incentive system. The current pandemic has made it even more important to add value for customers with the right partners. B2B business is still 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 shifting to e-commerce makes a good coordination of multi-channel commercializing essential in the future. We defined some of the core elements of a remuneration framework and typical agreement principles, which should be brought into balance for a successful partnership. Virtual formats have also changed working practices in partner networks. By using communication and collaboration tools, work can be done more efficiently. Customer relationship data management will enable automatization 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 foundation for future success.

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