The differences between domestic and export sales (from a Spanish perspective).
Some time ago, during an informal talk with a highly-qualified and talented Managing Director, I was surprised with the following statement: “In our company we are doing the same with exports as we are at home, but we still aren’t growing as planned”.
After asking him a few questions, I learnt that his company was fully committed to developing their export sales – he himself was leading the project – but they were unaware of having made any mistakes in implementing their export plan.
That conversation inspired me to put together this post to analyse (from a Spanish standpoint) some key differences between commercial customs in our domestic market and common international practices.
- First of all, if we are going for direct exports, we need an export team that speaks the language (and understands the culture) of our target countries. In some markets we can get away with speaking English, ie. Scandinavian countries, The Netherlands, Gulf countries, some Asian countries, and English speaking countries of course. However, this is not good enough. We need to understand how their decision making works, so we can influence this positively, or ensure it doesn’t work against us.
- We might need to export through agents or distributors, instead of selling to retailers, or we could sell to larger national distributors compared to the regional distributors we are more familiar with. Both international agents and distributors have their own interests and strengths, which we will need to consider, and they will need additional help and support in order to introduce and sell our brand in their markets.
- We will face stronger competition internationally. Let’s imagine that we’ve identified Germany as a target country for our export sales. It is logical to think that, if only for geographical reasons, there will be many companies from neighboring countries trying to sell their products there. This situation might not be the same in Spain due to its geographical location at the edge of Europe.
- In certain industries, the Spanish market can sometimes be “protected” from foreign suppliers without a base in the country. This could be due to logistical constraints, lack of sales people fluent in Spanish, or well-established local competition. The same may not apply to countries which have traditionally been more exposed to trade and have more open attitudes to business (many countries in northern Europe, for instance).
- Our export customers could be facing much tougher competition in their own countries in comparison with our domestic customers. This could be explained by low-cost producers or importers operating in these countries, more efficient operations, and management systems and technology that allow for smaller margins, etc.
- The average size of potential customers is bound to be larger in exports than at home. Therefore, their purchases will be more structured and take a more transactional view, as opposed to the more relational sales approach at home. Does this mean there’s no place for personal relationships in export sales? No, of course not! But, in general, export sales need to manage the commercial relationship first, prove a high level of commitment and professional performance, and then, let the personal relationships build on top of that to create a strong long-term partnership. Spanish people typically place a great deal of importance on personal relationships.
- In our domestic market, consultative sales work well when it comes to building trust and providing value to customers, whereas in exports the collaborative approach tends to work better with buyers, and not only in the industrial sector. The reason is that, in exports, purchasing managers have clear product specifications for their purchases. Therefore, sales are less about product consultation and more about negotiating commercial issues, levels of service, and supply terms and conditions. This principle holds particularly true in Spain, where solution-selling is highly regarded among sales professionals.
- In exports, purchasing managers generally have a less discretionary approach to purchasing. There can be strategic reasons for sourcing products abroad: accessing products or suppliers of superior quality or performance internationally, guaranteeing supplies, reducing the bargaining power of local suppliers, helping cash-flow by avoiding paying VAT taxes when buying from EU countries, etc. However, conventional wisdom has it that buying outside our local market needs to be clearly justified, as this may call for additional organisational resources.
- Global companies tend to assign credibility and authority to company representatives based upon this person’s ability to initially understand the customer’s particular buying journey, and thereafter deal with an issue, and/or deliver on commercial promises. In Spain, people often want to talk with somebody high up in the organization, regardless of whether or not the issue needs senior management consideration.
- Much as cold calling rarely produces measurable results in northern Europe and other task-oriented countries, it seems to deliver some results in Spain. That’s why Spanish sales managers sometimes assume that the same applies elsewhere. Why doesn’t cold calling work in B2B sales at an international level? Well, in some countries (France, Germany, Scandinavian countries, the Benelux, etc.) senior management has clear guidance against this practice. On top of that, purchasing managers in these countries know only too well that an unplanned meeting would take up valuable time they had allocated to other work – if they agreed to meet the cold caller, either this work would be neglected, or they would need to stay longer at the office (just for the sake of the cold caller!). In Spain, “presenteeism” (the cultural need to be seen at work) often allows for unscheduled meetings to be squeezed into our working days.
- Written agreements, and their specific wording, play a major role in international sales. Still, Spaniards base their commercial activities as much on trust as on formal documents, and, at the same time, they tend to be more tolerant with setbacks. Whereas in Germany, for instance, an agreement to deliver goods on week 27 carries substantial weight, and a week’s delay may be tantamount to failing to deliver on time, the same doesn’t necessarily happen in Spain, where people often have small contingency plans.
- Although there is a growing compensation culture in business nowadays, some cultures tend to be more inclined to focus on the long-term relationship and negotiate a fair settlement that allows both parties to be willing to carry on doing business together. Although Spanish SMEs might not favour contracts calling for penalties, it is worth knowing that a fair settlement can often be reached when parties are not straight-jacketed by too many clauses on a contract.
- The way feedback is offered is also different depending on countries; and, as it drives commercial actions, it is critical we interpret it accurately. When it comes to providing feedback, Spanish customers tend to be very transparent and often blunt. Although occasionally we might forget our good manners, this feedback is a blessing, since it helps reposition commercial offers and improve service levels. At an international level, and with the exception of South European countries, feedback is generally provided in a more restrained manner, sometimes giving the false impression that everything is all right. Then, the news of an unhappy customer arrives in the form of an unexpected formal complaint, which shocks the sales team and infuriates senior management. (By the way, my Dutch friends are also good at providing clear and compelling feedback, and I am thankful to them for their help in the last few years).
Different standards, values and attitudes with regards to work, the corporate world, and social relationships will affect how our marketing and sales plan is to be implemented. We need to be aware of how our actions (or lack of them) are perceived by our export customers if we want to be successful in exports.
How can we make sure we align our practices with our export customers’ expectations?
The solution starts with senior management leading the strategic planning and setting clear long-term goals and objectives, then passing the baton to the international sales director for him/her to devise and implement the operational part of the plan.
Common practices in our home market could be perceived and interpreted differently when going international, since our clients’ standards, values and attitudes are different to ours. Understanding these differences is critical for the success of our commercial actions and the achievement of our strategic objectives.