How to Expand and Effectively Sell in International Markets
Zach Selch is CEO of Global Sales Mentor, and has decades of experience selling medical products in over 135 countries. He has authored books on international sales and has some great free resources that you can access from his website. In this episode he shares why you should consider international sales, whether direct or a distributor model is preferred, key buying influences in different countries, setting up a distributor for success, contract considerations, and managing a distributor sales process.
Links from this episode:
Zach Selch LinkedIn https://www.linkedin.com/in/international-sales-growth/
Global Sales Mentor https://www.globalsalesmentor.com/
Connect with Mastering Medical Device:
LinkedIn: https://www.linkedin.com/company/mastering-medical-device
Patrick Kothe LinkedIn: https://www.linkedin.com/in/patrick-kothe
Patrick Kothe Twitter: https://twitter.com/patrickkothe
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Episode Transcript
This transcript was generated using an automated transcription service and is minimally edited. Please forgive the mistakes contained within it.
Patrick Kothe 00:31
Welcome! Understanding and selling in your home market is one thing. But selling in other countries is something completely different. Whether you're a US company and considering sales in Germany, or you're a German company considering sales in the US, there are major differences in sales processes, and even customers that you need to clearly understand in order to successfully enter another market. Our guest today is Zack Selch from Global Sales Mentor, who has decades of experience selling medical products in over 135 countries. He's authored books on international sales, and also has some great free resources that you can access from his website, you'll find a link to his website in the show notes. In this episode, we discuss why you should consider international sales, whether direct or a distributor model is preferred. And that's going to depend on the size of your company and the size of the opportunity. Key buying influences in different countries, setting up a distributor for success, contract considerations, and managing a distributor sales process. Here's our conversation. Zack, welcome to the podcast. So excited to have a conversation about international sales.
Zach Selch 02:12
Thank you very much for having me. I'm very excited to be here.
Patrick Kothe 02:17
I don't want to start with international sales. Yet. There's something I picked up in some of your background stuff that I'd like to ask you about. You had breakfast with the Dalai Lama. How did that happen?
Zach Selch 02:31
So you know, unfortunately, it is sort of tied to international sales. So I lived in India for three years, and I get to India on a relatively regular basis for sales. And I happen to stay I didn't know this at the time I happen to stay at a hotel in Delhi, where the Dalai Lama stays. And a couple of years ago, I landed about midnight, I get the hotel about 2am. And I have about a new meeting. So I say I asked for a 10am Wake up call. Go upstairs to bed fall asleep. And I get a call at about 830. And I'm a little annoyed. And I said why are you waking me up? And the voice said, We thought you'd like to have breakfast now. And I was like well, no, I don't want that breakfast. Now I asked for a wake up call. I wanted to have breakfast when I got my wake up call. But at this point I I was awake. So I went down to the lounge. And it turns out it was just me and the Dalai Lama and his security people in the lounge. And somebody in the hotel, you know, because I stay at that hotel on a fairly regular basis. Somebody at that hotel decided to give me a little surprise and and send me down to have breakfast with the Dalai Lama. So it was that it was actually pretty cool.
Patrick Kothe 03:55
So what was that conversation? Like?
Zach Selch 03:58
Um, I would like to say, you know, he, we had a very deep conversation about travel. And I like to joke that, you know, he asked me to, he asked me for some recommendations for music and Africa. But But honestly, you know, he it's sort of like meeting the Pope, I guess he really was sort of, he asked me where I was from and he asked me, you know, why wasn't in the sort of blessed me and he blessed me. He basically blessed me a couple of times, and and we did not really have a backward back and forth conversation. To be really frank, you know, I think he's much more used to people just sort of saying hello to him and him blessing them and just talking, you know, wishing me a great day and all that kind of stuff. So it really wasn't, I would have liked to be able to say that we have this deep philosophical conversation, but that that really wouldn't be be true, right?
Patrick Kothe 04:56
You had total consciousness, which is nice.
Zach Selch 04:58
Yes, exactly. You made me one with everything, right?
Patrick Kothe 05:03
So, so tell me, you've been in international sales for a long time, how did you get involved in international sales?
Zach Selch 05:11
When I was a kid, I was really dirt poor. And I have this fantasy of traveling around if you remember, you know, there were a couple of cartoons when we were when we were kids of, of people who did travel around them see the world that seemed exciting. And I thought of what I could do that would allow me to travel internationally. And I realized, you know, at one point, it sort of clicked in my head, and I said, Well, if I can sell, you know, a truck in Pennsylvania, I can sell a truck, maybe in Africa, right? And, and I looked into that, and somebody just offered me a job, I knew this guy who happened to have a whole pile of military surplus hospital equipment, like field hospital stuff. And he was trying to sell it in Eastern Europe and Africa. And I got a job with him because nobody else was willing to do it. So I did that for a couple of years. And that worked pretty well. And then I got a job for a manufacturer and I just sort of leveraged job after job to do the things that I wanted to do. And do, you know, I spent 25 years as an expatriate living abroad, traveled all around the world. And, you know, that sort of led into a VP of global sales job. And so that's basically what I've been doing my whole life.
Patrick Kothe 06:29
So right now, what you're what you're doing, he's got a company called Global Sales mentor, what what exactly do you do with global sales mentor, so I do sort
Zach Selch 06:38
of two things on a curve. And one is I do fractional sales management for small, small to medium sized medical equipment companies, you know, very often, if you are, even say, a $200 million manufacturer, and you might not be able to afford a really solid experienced head of international sales, if that's just a small part of what you want to do. And you need somebody to build up your sales organization and get it running. So I do that on a fractional or an interim basis, I can build up a sales organization for somebody and run it for a period of time and then hire somebody to replace me or I can help them take somebody internally and move that into the job him into the job him or her. And the other thing is I coach VPs of international sales. So if you think about a lot of people who are promoted into these jobs, you might be a very, very good sales manager for for the US Midwest. And somebody says, Great, we're going to make you the VP of international sales, or the director of international sales. And that's a very common pathway. So you know, the product, you know how to sell, but suddenly, you're, you don't really know how to sell internationally, and you need somebody to help you and I coach, people like that. And typically what that does is it just cuts down the ramp up time by maybe a year, year and a half and gets them where they should be.
Patrick Kothe 08:13
It's kind of like the old commercial, I stayed at a holiday Express, you know, I know, I know, international seals, they once they visited Paris,
Zach Selch 08:24
right? You know what that said, a lot of people, you know, I talked, you know, and I'll tell you what, it's sort of funny, but I had a guy, a friend of mine, who was a VP of domestic sales to previous company. And when he worked for a large company, years ago, you know, they took him for several presentations around the world, right? Because it was a product specialist. So he would go in, you know, they'd pick them up the airport in Saudi Arabia, take him in he do a presentation, take it back to the airport. And people like that can say, Yes, I have some international experience. But if you asked him, he would say no, I'm not I don't do this, right. So there's a huge difference between managing markets and building up markets and building up distributors and all of that, that, you know, once or twice being in France for a trade show and doing a presentation or something like that. And the bottom line, I know a lot of people in international sales. So the bottom line is, everybody starts someplace and a lot of the people who are in charge of international sales don't have a good solid background and they'll learn how to do it but it might take them years and years and millions of dollars of lost sales to get there. And and I can help them get there faster without losing so many sales. That's that's the bottom line.
Patrick Kothe 09:45
So second, at this point, you've got experience in sales in how many countries?
Zach Selch 09:51
Well, I've gotten purchase orders. I've sold in 135 countries around the world. And I like to say I like to say per Just orders because again, a lot of people can say, well, you know, I went to this country and I did a presentation or I went to a country and I talked to somebody. And that's something entirely different from actually closing a deal and getting a purchase order, right?
Patrick Kothe 10:12
Absolutely. So when we talk about international sales, international means, depending on where you are, and being something different, so us as an international market, if you're not based here, but let's just talk about in general, what are some of the main differences relative to medical device in the different markets that we go to, and we could talk about regional or we could talk country and say, you know, what are the main the main characteristics that people need to be aware of when, when when people are acquiring medical devices?
Zach Selch 10:49
Well, there are, are a few big differences. And for instance, in the United States, the United States have a very, very different market from everyplace else, but I'm guessing most of our listeners are used to the US market. The US market is mostly it's sort of a weird market, because it's mostly private enterprises. That bill in a lot of ways, either insurance companies or the government, right, whereas most countries, most health care is delivered by the government, the government is actually probably your biggest purchaser. And then typically, what you're gonna find in a lot of markets, there'll be hospital groups so that there will be private enterprise. In some markets, there's medical tourism, and what that means is, you might have a market like Colombia, where they have very, very high end doctors and nurses, and they've built really good hospitals, to service people from other parts of the world because they can provide cheaper, high quality health care. So Americans might fly into Colombia, to get a knee replacement, or to get a nose job or something like that. And there are markets like that around the world. And then there are markets like say, Ethiopia, where a lot of what's purchased not only isn't purchased by the government, you know, it's purchased by nongovernmental organizations that are from outside of Ethiopia, because there just isn't enough money to provide health care for Ethiopia. So if you're selling critical care, medical equipment, to a lot of sub Saharan African countries, or some Middle Eastern countries, or some South Asian countries, you might be dealing with a buyer in Seattle, or a buyer in Washington, DC, who works for a non governmental agency and is running, you know, is putting together the money to buy it, right. So there are different ways things are bought in different places. The United States also typically, you know, we think of these distribution companies like McKesson, for instance, that are big companies that are to handle 1000s of products and have a big catalog. Typically, when we're selling internationally, we're going to work with what we'd call a distributor. And those distributors are typically much smaller they and they have a large sales force. And they cover everything, they'd be basically our entire sales and marketing arm in that country. Sort of an outsourced resource, we would work with a distributor in pretty much any country. And that distributor would be running our sales and marketing in those countries. So So those are some very high level differences that you're going to see. You know on that said, they're also all the different cultural differences, right? You know, every different market has a different business culture. And we're going to act differently in the different markets with the different business cultures,
Patrick Kothe 14:01
the healthcare systems, government buying centralized purchasing, whether its sole source or not sole source, physician preference, these are all things that are differences in different in different, different markets. So how does somebody go about learning that
Zach Selch 14:24
the federal government, the US Federal Government has an agency that helps support exporters, and they can help you have some of it? Some states like Illinois, Florida, California, and Michigan, Pennsylvania, have agencies that help support exporters? To be very frank and I have a lot of friends who work within these government agencies. Very, very few of the people who work for these government agencies have ever actually sold anything. They're typically people with, you know, an MBA or a degree in economics, start working for the government and they learn all about this and then they'll teach You. But you know, I would always say reach out to me the Freon. I'll talk to anybody. And I'll answer questions typically without sending you a bill to begin with. And then we can figure stuff out. But and I have a huge amount of material I have on my website, which is global sales mentor.com. I have market briefing reports about 118 markets, and they're perfectly free, you can just go and get those. And that'll give you a pretty good start to any market you want to get into.
Patrick Kothe 15:33
We're not going to talk about the $5 billion company who's got sales in his direct direct presence and established presence all over, let's talk about the smaller companies who may be in one market starting off in one market, and they want to expand into other markets. So it could be let's say, it's a US company, and I've got FDA clearance for a product. And now they're thinking about going outside of the US. What are some of the considerations that people have? What's their motivation? And what considerations should they have as they start to think about making that decision to do expand?
Zach Selch 16:14
Well, well, first of all, I'd like to say, you know, you want to follow the money, right? There is a lot of money out there, you know, the United States represents about 6% of the world's economy. So there's a lot of money out there, if you expand globally correctly. But people make a lot of mistakes, when they're deciding how to extend globally, they usually do, you know, follow their motion a little bit. They don't do enough research. But what I like to say is, you know, think about what you do, who buys your product, why they buy your product when they buy it, and then try and figure out where there are a lot of people like that, right? And what do I mean by that, you know, you might have a product that deals with, say, diabetes? Well, there are countries that have very high incidences of diabetes, right. So that might be a consideration. You have a product that's typically bought by governments and used to provide health care for less affluent people, well, there are markets that fit that or you have a product, it's used for very high end plastic surgery. So maybe think about those markets, right? And and what you want to do is you want to try and figure out where the good markets are, you want to try and identify if there are any barriers to entry, regulatory barriers, there are a few few cases where competitors will put up barriers that are just they really have no basis in reality, but there's no sense in fighting them. Because you know, there might be a competitor who has done a really good job of specking you out of the market. And it might be just too hard to fight that. So you just want to look for someplace else, you might find, you know, if you have a product that's very software heavy and only works in English, then you might have a problem, you might have to make adjustments to your product. That said, what I'm going to tell you right now is everybody you talk to will always tell you that you have to change your product to sell internationally. And I typically tell people, the amount you have to change your product to sell internationally, is never as much as you think it is.
Patrick Kothe 18:35
When you start talking about follow the money. And you also discussed clinical need. So there's there's two things and sales, one's units and the others dollars or or currency. Those are those are different depending on where you are, you could have a very large market, but the sales prices are very low and your profitability is going to take a hit. And there's others that may have a lower volume but a higher margin. So understanding that is is one of the key drivers in where you're going to invest some time to expand into a market to
Zach Selch 19:15
That's exactly right. And there are even markets where you can sell, but you just can't get the currency out. Right, like right now it is very difficult to get money out of Egypt, it's, you know, usually very difficult to get money out of Argentine out of Russia. And actually speaking about like Russia, that that brings up a whole different issue where there are markets like Russia, Syria, Iran, where there might be a legal limitation on selling to those markets, right. So you might be at a trade show and somebody comes up to you and says hey, I'd love to buy a container full of your stuff. And it seems like a great idea, but you might be confused. anything a felony? Right? So you do want to check with the Commerce Department, especially these countries, that might seem a little suspicious to you, although the list is usually pretty short. You know, so those are considerations too, in terms of of money. I'll tell you sort of my take on this, let's say even you go to a place like Nigeria, the vast majority of people aren't going to be able to buy your product. But is there one hospital for the very rich, that can buy your products there might be, right, so you have to, you have to keep an open mind where that money might be available, right, there's a lot of money out there. And you just have to sort of follow it and figure out how you can get it. And you have to remember, always, I mean, unless you're a tourist, like unless you really can afford to spend money to travel around for fun. The whole objective here is to make money. So you have to be trying to figure out where you can actually sell and get paid for your product. And not just where you know, it might be fun to travel to and go to a trade show.
Patrick Kothe 21:14
Yeah, when I when I'm evaluating markets, I'm always looking at the the addressable market. So the total market is, is one thing, but what can you actually get to? And even though there there may be a large patient need the reimbursed patient need? Is some something different? And then what you know, at what price? You know, that's kind of the first thing your what is the market size that I can actually address? And then the second thing is, what are the costs in getting into that market? And you talked about regulatory? Well, regulatory isn't free to get registered in a country is not free? There's there's costs associated with with that there's time associated with getting into into that marketplace? And who's who's going to spend that time? And how are you going to? How are you going to do that, then there's also IP patent considerations and, and whether you have protection in that country, whether it's going to potentially be an issue for you there as well. So you decide that there's a there's a market there, you decide that you've done some some research on on the costs, regulatory what the pathway looks like, what the timeframe is going to be, and you say, Well, this looks like a decent market for me to get into. What's the next step there.
Zach Selch 22:40
I'm a big proponent of distributors, right distribution. I also feel that if you're not about, in very with very, very few exceptions, if you've got about a $500 million company, you shouldn't be selling direct. And there are a few exceptions, depending on your sales process, and so on. But you need boots on the grounds, people sort of do this backwards. So the first step really is figuring out what the markets are you want to go into, right? So you figure out 1012 markets that are good markets. And I also also, you know, people will say, well choose one. And I'll tell you what happens if you get into one market, and there is a political problem or weather problem or something else. You might decide, Okay, that didn't work, I'm not selling internationally. So I like to spread the risk, I really don't like to go into less than five to seven markets to begin with, just because I think that is not a diverse enough risk. So you pick out the markets you want to go into, and then you you build up an ideal partner profile, sort of like an ideal customer profile, but who will be selling my product? And what do I mean by that? So let's say I am selling something that is used by radiologists, but it is a consumable with a you know, $100 to a $500 price point. Okay, so what I want to do is figure out well, who is selling to radiologists in these markets today? Something with is a consumable at a similar price point. can I figure out that kind of thing? And why do I say a similar price point and so on? Well, let's say my product is $500 and requires the salesperson to go back to the hospital every month. And that salesperson is really comfortable selling x ray machines that are a million dollars and don't require him to go back to the hospital once the sale has been made. Right. So if I don't pick somebody who's a pretty good fit, so I spent a lot of time working on exactly how do I build up that profile and then I go looking for them and it's sort of a little sound simple but But that's sort of what I do. And that's a little bit of a trickier is how do I find, you know, 10 1215 potential distributors in these markets, there are a lot of different tricks in the same way that a recruiter would go looking to recruit somebody. And I like to say it's very much like that you, you people very often will work with distributors have approached them at a trade show. And I'll say, well, that's sort of like putting your strategy in the hands of a random person who just sort of walked in off into your booth and says, Hey, I want to be your distributor and France, you wouldn't do that with any other job in the company. Right. And here, we're putting what might be the most important job in the company in the hands of people just because they asked for it, right. So first, you know, first, I'm gonna choose the market, then I'm going to go looking for the distributors. And what I'm going to do is I'm going to pitch to the distributors. And it's different from making a sale to an end user, because what I'm going to do is basically say, Well, this is how you're going to make money. This is It's, let me prove to you, it's gonna be easy to work with me. And that's really all it's important to the distributors, that they can trust me that they can make money, and that I'm going to be easy to work with. So that's sort of my pitch. Once I have distributors that want to work with me, I choose which one I really want to work with, I choose the best. So hopefully, I'm gonna get two or three in every market that I'm targeting, I'll choose the best one. And then I'll onboard them in the same way that you might onboard a sales manager for your company, right? So I'm gonna plan training for them, I'm gonna get them sales enablement tools. I have typically an online coaching program, right? So all these things to make sure that they have all the tools that they need to sell my product in their market, right, just signing them up and waiting for purchase orders to come in. doesn't do anybody any good.
Patrick Kothe 27:07
Yeah, when you were describing, vetting your distributors, it's it's always the call point is an extremely important thing. Yes, I've got, as I said, I got radiology product, do they call in radiology? Or is their primary call point, the OLR. And sometimes they go to radiology. So understanding where their call point is, is, is really important. The second thing is, as you said, does your product fit within their portfolio, and are they going to be able to give it the amount of time because distributors aren't, you know, they're mercenaries, they're gonna go with with what's going to make them the most money. And you have to understand what your product is, and what it isn't. If you know that it has the opportunity to make somebody a lot of money, great, make sure that you do that. But if you if you also know that yours is not the largest amount of money that they're going to make, out of all the products are doing, you have to you have to craft a strategy to get them to break sales time apart as well.
Zach Selch 28:14
That's exactly it. And when I say it's, like, every sales guy for every distributor wakes up every morning and decides what he wants to sell. And he has to decide if he's selling your product or selling something else. And you are very limited. This is this sort of the exciting part of my job a I love this intellectual challenge, but you're limited, you can't bribe him, you can't fire him, right, all you can do is try and make it easy and comfortable for him to to make a lot of money selling your product. And if if selling your product is going to get him a $50 commission, and selling somebody else's product is gonna get a $500 commission, well, you have to make it 10 times easier to sell your product. You know, everybody you talk to they say Oh, I have this fantastic online sales enablement system. And then we'll go into it. And all the files in the system, the first 12 letters of their name will be random numbers that are used for internal file management system of the of the manufacturer, right? And I'll laugh I'll say, Okay, so some sales guy in Nigeria is looking at his phone, and he's trying to find the document that he needs. And you've made it virtually impossible for him. But you're really proud because you have the system, right? Let's think of it as what we really, let's think about what we really need, right? We need to put these tools in these people's hands, the better, the easier it is for them to get these tools, the more they're going to sell your product, right think about it from that perspective. And, and very often, you know, you revamp these little things things, and then you suddenly see just bursts of sales, all I'm really interested in in is getting engaged, competent sales hours in the right target market. Alright. And anything I can do to improve that is going to get more sales. And that's sort of the whole paradigm that I work on.
Patrick Kothe 30:22
There's other things, other reasons why people, distributors, want to work with different companies, one of them is reputation, that they're going to still be a distributor, once once the distributor establishes a market. So this, this is, you know, historically, you know, companies have gone in and they've used distributors for the market penetration, once it's penetrated, then they might bring their own people in, because it's more profitable to do that. And that's one of the things that distributors are constantly doing, they go to trade shows, because they're, they're fishing for new products, because they know some of our some of them are going to be leaving them at some point in time. So that whole churn issue is something that that you consider to as you're establishing what's your strategy is to get to people, if you don't intend to do that, that's something that you can you can do to help bring people into your into your team as well.
Zach Selch 31:22
And I'll tell you what, like, I've never, I've never done that literally 35 years, I've never done that, if I work with a distributor for five years, and he builds up the market for me, and he gets me from zero to $7 million. And then I say, hey, you know what I can do, I can make a slightly higher margin by hiring somebody local on my own dime. And I'm going to cut the distributor out, then, honestly, I just don't think that's the right thing to do. And, you know, people will hear about it, the market will hear about it, people will remember that you did it. And all these distributors know each other and talk to each other. Right. So I'm a big believer that this is not the way to go.
Patrick Kothe 32:08
On the other hand, when you look at what goals and objectives are, it's extremely important, I want to get into contracting in a second. But what I'm what I mean by that is that if you know that you're going to get a portion of sales time of your distributor, and the sales coming out of that region, even though you know, they're they've penetrated, they haven't penetrated to the amount that you would like to have them there. So they're not hitting the objectives at that point in time. You know, there may be somebody who's upset with you, because you let them go because they weren't hitting objectives.
Zach Selch 32:43
That's a totally different animal. And look what I like to do. First of all, let's talk about that, like objectives. And in the medical business, this is relative I, I'd love this because it's a lot easier than, say, selling consumer goods. But let's say I'm going into a market. And I know that there are 400 hospitals in that market. And I'll tell you what, if you are a sales manager of a medical device market, a medical device company, you should know, every target market you're going into, you should know how many hospitals there are, how many doctors are, et cetera? All that material is very easy to find? Well,
Patrick Kothe 33:25
let me ask you about that. Because when you're looking at, let's say, your orthopedic company, and you want to know how many procedures are done, in in different areas, it's very easy to get that for us data, it's a little a little a little less easy to get into Europe and other markets. It's hard to get to. So
Zach Selch 33:46
that's true. It's it's but so you're right, it's very hard to say okay, how many knee replacement surgeries are there every year in such in such a country? On the other hand, what you can do is, you can pretty much figure out how many hospitals in virtually any country have an orthopedic surgery department, right? You can figure out how many orthopedic surgeons there are in countries with fair accuracy. Again, I'll tell you this, if you can't find it yourself, come to my website, and you can download it from my website, but I found it so you should be able to find it right. But essentially, you can't maybe say Okay, so I know that there are 2000 knee replacement surgeries, but if you can say well, there are four surgeons who do knee replacement in this country, you can probably make some estimates about that.
Patrick Kothe 34:46
It's making making assumptions. It's making the assumptions
Zach Selch 34:49
and let's say I say okay, so there are 400 hospitals that might be customers for my product in this in this territory. Okay, which basically means that if you're assuming 200 working days out of the year, that's 400 400 hospitals 200 days, can I hit two hospitals a day? Let's say that is one full time salesperson just hit every hospital once a year. All right. And then I do some math in my head, I say, Okay, so let's say that of the of those 400 hospitals, 50 of them might be a solid customer for me this year, it typically takes four meetings, and I'm just doing simple math here to get a sale. So I still want about 200 or so meetings, though, in a year. Plus, I want to visit the others that maybe aren't necessarily potential clients, I put together a number and I say, Okay, this is what I need, which basically means if you want to be my exclusive distributor for this territory, you have to promise me two full time people working in this market. Now that might be eight people working in quarter time, it might be two full time, people, it might be four half times, but that's what I'm expecting from you. And then I'm going to put that in my contract with my, in my agreement with you. And I'm going to follow up and keep track that your people are actually going out and doing the number of sales calls that they promised me.
Patrick Kothe 36:26
How do you do that? How do you follow up? What What kind of systems do you use to assure that that's happening?
Zach Selch 36:32
I always talked about a system of accountability with your distributors. And what that means is just you know, very, very broadly, let's say the regional sales manager is going to call the distributor salespeople once a week and just say, Okay, we talked about these projects, did anything move forward, we talked about these prospects is anything move forward and the regional managers weekly gonna talk to the salespeople, then maybe monthly, the regional sales manager is going to talk to the distributor owner, and and basically say, okay, you know, this many, we have this many projects in the funnel, this many fell out this many have moved forward, you're not sure this is a reasonable conversion rate, what can we do to improve this? You know, this guy doesn't seem to be doing very good presentations, this guy doesn't seem to be doing very good demos, what do we do to improve this? Then quarterly, you know, I would say the VP or the director, or whoever's one step above, the regional sales manager is then going to have a meeting with the distributor and the sales people. And again, to go through the funnel, right. So at this point, everybody is used to the idea that you as the, as the manufacturer, the principal, are going to be looking into what they're doing, you're going to be following up, you're going to be on top of things,
Patrick Kothe 37:59
as you're describing it, as you think about managing people. And the magic numbers, you know, always comes down to seven or you can you can effectively manage seven people. When you're a VP of international sales, and you have 200 distributors. That's hard to manage. You can't do that.
Zach Selch 38:23
Oh, yeah. Well, that's thing like and like I said, you have you have regional sales managers. And here's the thing, think about a lot of the stuff you're managing with a direct hire, right? You're managing all those HR things, you're managing his vacation, you know, what's going on with his wife and his kids or, you know, their spouse, etc. All this type of stuff with distributor sales people 80% of that's off the table right now. You might know their spouse, you might know something about their kids, you might know a little bit about their hobbies. But you're focused on did you go and do this presentation today? Right? How did that go? What's your conversion rate from this, this stage of the funnel to that stage of the funnel? Those type of things. And again, it's a lot of work. But that's where the results come in. I guess
Patrick Kothe 39:10
the comment is, if you say that you're you're committed to international sales, and you've got one VP of international sales, who's managing all of that, that's probably not not going to happen. You're gonna you're going to need other people, either regional people that work for the company that can manage different different countries. That's exactly
Zach Selch 39:29
it. And I think, again, you're going to end up let's say, you get, you know, seven or eight distributors up and running with one guy, right? And then at that point, you say, Okay, so now I need a couple of regional sales managers and then you get some more going. Most of the time I hired regional sales managers. I did not hire an American person, put them on a plane and ship them over there. I hired somebody local and the overall cost was a great deal less than it would have been hire somebody you know, In America,
Patrick Kothe 40:01
and they're native, and they will be much better prepared to handle, as you said, the cultural issues and local issues, language issues, etc, I want to go back to contract for a little bit, because what you're going to ask that a distributed to do can be much different. So typically, you know, a distributor can be responsible for regulatory regulatory clearance within that country clearance or approval within that country, they can, they can be a stocking distributor, or they can be a selling distributor more more like a sales agent. So let's talk a little bit about regulatory first,
Zach Selch 40:39
one of the things you want to do is you want to break down all the different parts of that sales process and figure out what you're going to do and what you want the distributor to do. And that's a big thing. Very often people will will hire distributors for the wrong, say, for the wrong reasons. They'll say, Well, we have a very, very highly technical product. So I need somebody who can do the installation. Well, great. But you can hire somebody for 12 bucks an hour to do the installation. You need somebody who can sell if they can't sell and you're losing sales, right? So we want to think about those things. Now when we're, again, when we're a smaller company, and we're expanding. The question is do we hold the regulatory approval or does the distributor and very often if you say, well, we want to go into 20 markets, and each market, the regulatory approval is going to cost us 20 or $25,000, we that we might not be able to afford that right, we might have to say let's put it on the distributor. And then the distributor owns that which gives them more leverage over us. But very frankly, in virtually any market, the distributor has a lot more leverage over us than we have over him. And we have to accept that. I'm going to talk a little bit about agreements. I find this just hilarious because I deal with a lot of distributor agreements. And usually they're about 30 pages of the agreement is completely worthless. But we pad it with so many pages and pages and pages of unnecessary stuff. And then typically, what we don't put in that agreement is how they're going to sell. Right, so we go over and over again about how we want our logo to be displayed on their brochures. But we don't say, and we need you to put out, you know, 200 days of sales activity a year, in the first three years or something like that, right. So what I like to do is I want to keep the distributor agreement as neat and clean as possible. And I put a product, the pricing the territory and the activities into annexes that are external to the core agreements, they're external, but part of the core agreement and then in the those annexes, I put down what the activities are that I want from them. And the activity to me the activities are the really the important thing, because what I want to do is say to the distributor, this is what I'm expecting you to do. And if you don't, if you do this, I'm going to keep you as my only distributor in this territory. If you don't do this, then we're going to have to appoint additional distributors, which I don't want to do. I use that as a threat because my assumption is that if I say to him, Hey, I'm appointing two more distributors, he'll resign the line. And that's something
Patrick Kothe 43:45
something within that contract too. Are we talking about exclusivity in that market or non exclusivity in that market?
Zach Selch 43:52
What I want is basically I just want one distributor, I want an exclusive distributor. But I want the ability to basically say to him, If you don't do what you're supposed to do, then I'm going to choke you out of this.
Patrick Kothe 44:03
Zach, you talked about resources on your website, and you've got several books on there. You've got all kinds of different different workbooks and things like that on on it. Describe a little bit about where somebody would start in terms of getting great content, free content, as well as books that they could purchase from your website.
Zach Selch 44:29
Oh, great. Yes. So first of all, I have 118 market briefing documents, which basically each talk about so if you're going to Azerbaijan and you want to know stuff about the market and the demographics and the business culture and so on, I have material on that. I also I wrote a book last year the year before, which is go digs into 120 Medical markets around the world and it's designed so that if you have a product and you're trying to figure out where to identify the right markets to go into, it's a really good resource for that. I also wrote a book on global sales, which is a textbook they use in colleges and universities around the country. And I've written unofficial guides to medica hospital are fine and Arab health, because I've been going to those shows I've been go there to medica for 35 years. So basically, I have a guide to what you need to know to get the best results out of those trade shows and all that material you can find on my website. If you go there, you can, you can pull it down for free. And while you're on my website, if you want to, you can set up a call with me, I'm always happy to talk to people, and just sort of chat about what you're trying to achieve and see if there's a way that I can help.
Patrick Kothe 45:49
We could go on and on with a lot of different topics here international sales is a fascinating topic, I'd like to wrap it up and ask you about people who are considering expanding into into other markets, and we've touched on some of the things but if if someone is considering expanding into another market, what are the first few steps that they should be taking?
Zach Selch 46:16
If you're manufacturing and you're selling well, in your home market, and you have a good product? You should expand internationally. Right? I believe that's the case, I think it gives you a huge value in terms of driving up the value of your company, and it gives you you know, potentially good revenue, if you're not going to put effort into it and do it with intent, don't bother. But if you put a little bit of intent and what do I mean by intent, well figure out what the right markets are figure out what the right distributor looks like, maybe you can't find him, okay, maybe you don't know how to go out look for that distributor, but have a picture in your mind or the equivalent of a job description, where you say what I'm looking for is I want a guy who fits this description in Italy, right? That's the target market or Germany or Uganda or wherever you know, you find that market, that seems to be the good market for you. So that if some random guy walks up to you at a trade show and asked to be your distributor, you're not going to jump on the first couple of people and sign it away. Decide what you want them to do, right? You'll make a calculation where you can say, Okay, here's the thing, if there are 50 hospitals in this country, then I for every 50 hospitals in this country, I need half a full time employee equivalent working for my distributor, right? Something like that. And then you basically say, Okay, now I'm going to do the math, I'm going to figure this out. And, but just have those numbers have those thoughts in mind what you want do it with intent, and purpose, a lot of money.
Patrick Kothe 48:01
As you just heard, there's more to international sales than just repeating what you did in your own home market. It's really a specialized field that needs careful considerations before you enter it. A few of my takeaways, first, do your homework. And that includes not only the size of the market, but also the cost to access and support the market once once you make that decision, you need to consider regulatory IP product labeling, travel salaries. And then there's the other important thing management time, just the time to be able to devote to doing it. The second thing is identifying the right distribution partner, and Zack spoke about identifying different different options for sales within that, and then includes people that are touching the same call point that you are, but also somebody that has similar products or products that are consistent with the sales of your product. And the final thing is selling time, do they have enough selling time? Or will they devote enough selling time to sell your product alongside what they already have in their bag? The final thing that I thought was really interesting was setting yourself up for success with the distributor by setting expectations up front. And in order to do that, you need to know what you need first, what exactly are you trying to do in that in that market? What are you going to do what is the distributor going to be doing there? And then it's putting into into the contract and not just a contract that covers you know, a you know, as he said, you know, 30 pages worth of worth of things that you may or may not ever get to, but more space specifically, what are the sales items that need to go in there? What are the specifics in terms of the activities that you're going to need to do or that they're going to need to do in order to support growth of sales within that market? And then finally, managing to those expectations and setting that upfront, as well as how are you going to manage to hit those expectations that are in that car? Thank you for listening. Make sure you get episodes downloaded your device automatically by liking or subscribing to the mastering medical device podcast wherever you get your podcasts. Also, please spread the word and tell a friend or two to listen to the mastering medical device podcast as interviews like today's can help you become a more effective medical device leader. Work hard. Be kind
