It takes a long time to build meaningful trust between a manufacturer and a distributor. Way back in the early 2000’s the advent of the newly transparent internet made US manufacturers wary of their products being gray marketed in overseas markets. Not having a coherent policy on gray marketing could undermine that trust. It was easier for customers to see multiple distributor contacts on a manufacturers’ web site. The end user could then price play one distributor against another. The distributor doing the missionary sales work could lose out to a second distributor selling over “the web.” The motivation of the local distributor’s sales force was at risk. The manufacturer sales team then gets notified that it needs to referee “a situation between two distributor partners and an end user.” This situation needed to be prevented.
Being the diligent American business partner what does one do to prevent this ugly potential situation? Ahhh!-have the distributors sign a business agreement to put the onus of the sales efforts on local distribution.
Our company had successfully been doing business with Tom Parker, his sons and his company for more than 20 years. We had a great business and relationship. The family was visiting us in the US for some a business review. It was a good time to discuss a business agreement. I worked with our attorney to develop a boiler plate business agreement between the two companies. (Full disclosure-Tom Parker had never violated the implied territory agreement (sales in UK only) between our companies).
Fast forward to our meeting in Minnesota. Tom had decided to attend the Minnesota meeting with his three sons. Tom was a mentor to his sons and the strategic binding force between its suppliers, its customers and the entire Tom Parker Ltd organization.
Tom Parker-“What do you have on the agenda for us today Jim?”
Jim-“We have four issues on the agenda Tom. We need to discuss:
1. Medical customer targets in Ireland,
2. On site sales training in Preston,
3. The proposed business agreement,
4. The upcoming trade show in England.”
Tom-“What topic will be the hardest? Let’s get to that one first.”
Jim-“That would have to be the proposed business agreement”
Tom-“Why do you think the business agreement will be hardest?”
Jim-“Because we have been doing business for over 20 years and have not had0 a written agreement in place up to this point.”
Tom-“Do you have a copy of the business agreement?”
Jim hands it over.
Tom-“Do you have a pen?”
Tom signs the agreement and hands me the pen.
Tom-“now Jim you know this means I trust you will all my heart and all my soul?” Don’t let me down!”
I was never going to let Tom Parker down!
1. Start every overseas relationship with a statement of the primary roles and responsibilities of each partner. Keep it simple. Document it-live it!
2. Never allow a legal remedy to trump a straightforward business solution.
3. Do the hardest things first-You may have to break them down into smaller tasks. The “hard stuff” needs resolution and is usually easier than you imagined. Don’t let procrastination slow down your momentum.
4. Never and I mean never let down Tom Parker!