Chapter 17: SELLING OVERSEAS AND AFTER-SALES

SERVICE
In This Chapter
Establishing a policy to deal with international inquiries
Researching an international company before conducting business
Building and maintaining a working relationship with an overseas
customer
Reviewing options for service delivery to foreign buyers
Many successful exporters first started selling internationally by responding to an inquiry
from a foreign firm. Thousands of U.S. firms receive such requests annually, but most
firms do not become successful exporters. Generally, successful firms make it a priority
to create systems to properly respond to inquiries, conduct research on foreign
customers, differentiate between domestic and international sales, and build positive
relationships with partners.
RESPONDING TO INQUIRIES
Most, but not all, foreign letters, faxes, or e-mails of inquiry are in English. Your firm
may look to certain service providers (such as banks or freight forwarders) for assistance
in translating a letter of inquiry in a foreign language. Colleges and universities are also
excellent sources for translation services. Most large cities have commercial translators
who are hired for a fee.
A foreign firm will typically request product specifications, information, and a price.
Some inquiries will come directly from the end user, whereas other inquiries will come
from distributors and agents who wish to sell the product in their market. A few foreign
firms may already be familiar with your product and may wish to place an order
immediately.
Regardless of the form such inquiries take; your firm should establish a policy to deal
with them. Here are a few suggestions:
Expect some inquiries to have grammatical or typographical errors because
the writer may know English only as a second language.
Reply promptly, completely, and clearly. The correspondent naturally wants to
know something about your firm before a transaction takes place. The reply
should introduce your firm sufficiently and establish it as a reliable supplier.
The reply should provide a short but adequate introduction to the firm,
including bank references and other sources that confirm reliability. Your firms
policy on exports should be stated, including cost, terms, and delivery. Your
firm may wish to respond with a pro forma invoice (see Chapter 13).
Enclose information on your firms goods or services.
If the company needs to meet a deadline, send the information by e-mail or
fax. Unlike telephone communications, these methods may be used effectively
despite differences in time zones and languages.
Keep a record of foreign inquiries. They may turn into definite prospects as
your export business grows. If your firm has an intermediary handling exports,
the intermediary may use the information.
LEARNING ABOUT POTENTIAL CLIENTS
There are many ways for a U.S. firm to research a foreign company before conducting
any formal business. Your company can save time and money by using the following
resources:
Business libraries. Several private-sector publications list and qualify
international firms. There are also many directories devoted to specific regions
and countries.
International banks. Bankers have access to vast amounts of information on
foreign firms and are usually very willing to assist corporate customers.
Foreign embassies. Foreign embassies are located in Washington, D.C., and
some have consulates in other major cities. The commercial (business)
sections of most foreign embassies have directories of firms located in their
countries.
Sources of credit information. Credit reports on foreign companies are
available from many private-sector sources and from the U.S. Commercial
Service. For help in identifying sources of credit reports, contact your nearest
Export Assistance Center.
Commercial Service overseas offices. Commercial Service officers can
prepare International Company Profiles or help with background reports on
foreign firms.
CONDUCTING BUSINESS INTERNATIONALLY
Companies should be aware of basic business practices that are essential to successful
international selling. Because cultures vary, there is no single business code. The
following basic practices transcend culture barriers, though, and will help your company
conduct business overseas.
Keep promises. The biggest complaint from foreign importers about U.S.
suppliers is failure to ship as promised. A first order is particularly important
because it shapes the customers image of a firm as a dependable or an
undependable supplier.
Be polite, courteous, and friendly. It is important to avoid undue familiarity
or slang, which may be misinterpreted. Some overseas firms feel that the
usual brief U.S. business letter is lacking in courtesy.
Personally sign all letters. Form letters are not satisfactory.
BUILDING A WORKING RELATIONSHIP
Once you have established a relationship with an overseas customer, representative, or
distributor, it is important to work on building and maintaining that relationship.
Common courtesy should dictate business activity. By following the points outlined in
this chapter, your firm can present itself well. Beyond these points, you should keep in
mind that a foreign contact should be treated and served as well as a domestic contact.
For example, your company should keep customers and contacts notified of all changes,
including changes in price, personnel, address, and phone numbers.
Because of distance, a contact can age quickly and cease to be useful unless
communication is maintained. If your firm cannot afford frequent travel, you may use
fax, e-mail, and telephone to keep the working relationship active and up to date.
PROVIDING AFTER-SALES SERVICE
Quality, price, and service are three factors critical to the success of any export sales
effort. Quality and price are addressed in earlier chapters. Service, which is addressed
here, should be an integral part of any companys export strategy from the start.
Properly handled, service can be a foundation for growth. Ignored or left to chance, it
can cause an export effort to fail.
Service is the prompt delivery of the product. It is courteous sales personnel. It is a user
or service manual modified to meet your customers needs. It is ready access to a
service facility. It is knowledgeable, cost-effective maintenance, repair, or replacement.
Service is location. Service is dealer support.
Service varies by the product type, the quality of the product, the price of the product,
and the distribution channel used. For certain export productssuch as food products,
some consumer goods, and commercial disposablesservice ends once distribution
channels, quality criteria, and return policies have been identified.
However, the characteristics of consumer durables and some consumables demand that
service be available after the purchase is completed. For such products, service is a
feature expected by the consumer. In fact, foreign buyers of industrial goods typically
place service at the forefront of the criteria they evaluate when making a decision about
a purchase.
All foreign markets are sophisticated, and each has its own expectations of suppliers and
vendors. U.S. manufacturers or distributors must therefore ensure that their service
performance is comparable to that of the predominant competitors in the market. This
level of performance is an important determinant in ensuring a competitive position,
especially if the other factors of product quality, price, promotion, and delivery appeal to
the buyer.
You may decide, as part of your exporting strategy, not to provide after-sales service.
Your company may determine that its export objective is the single or multiple
opportunistic entries into export markets. Although this approach may work in the short
term, your subsequent product offerings will be less successful as buyers recall the
failure to provide expected levels of service. As a result, market development and sales
expenditures may result in one-time sales.
Reviewing Service Delivery Options
Service is an important factor in the initial export sale and ongoing success of products
in foreign markets. Your firm has many options for the delivery of service to foreign
buyers.
REQUIRING THE BUYER TO RETURN THE PRODUCT
A high-cost optionand the most inconvenient for the foreign retail, wholesale,
commercial, or industrial buyeris for the product to be returned to the manufacturing
or distribution facility in the United States for service or repair. The buyer incurs a high
cost and loses the use of the product for an extended period, while you must incur the
export cost of the same product a second time to return it. Fortunately, there are
practical, cost-effective alternatives to this approach.
USING A LOCAL PARTNER
For goods sold at retail outlets, a preferred service option is to identify and use local
service facilities. Although this approach requires upfront expenses to identify and train
the staff for local service outlets, the costs are more than repaid in the long run.
Exporting a product into commercial or industrial markets may dictate a different
approach. For the many U.S. companies that sell through distributors, selection of a
representative to serve a region, a nation, or a market should be based not only on the
distributing companys ability to sell effectively but also on its ability and willingness to
service the product. Assessing that ability to provide service requires that you ask
questions about existing service facilities; about the types, models, and age of existing
service equipment; about training practices for service personnel; and about the firms
experience in servicing similar products.
If the selected export distribution channel is a joint venture or other partnership
arrangement, the overseas partner may have a service or repair capability in the
markets to be penetrated. Your firms negotiations and agreements with its partner
should include explicit provisions for repairs, maintenance, and warranty service. The
cost of providing this service should be negotiated into the agreement.
If the product being exported is to be sold directly to end users, service and timely
performance are critical to success. The nature of the product may require delivery of
on-site service to the buyer within a very specific time period. You must be prepared to
negotiate such issues. On-site service may be available from service organizations in the
buyers country, or your company may have to send personnel to the site to provide
service. The sales contract should anticipate a reasonable level of on-site service and
should include the associated costs. Existing performance and service history can serve
as a guide for estimating service and warranty requirements on export sales. This
practice is accepted by small and large exporters alike.
If your export activity in a particular region grows to a considerable level, it may become
cost-effective for your company to establish its own branch or subsidiary operation in the
foreign market. The branch or subsidiary may be a one-person operation or a more
extensive facility staffed with sales, administrative, service, and other personnel, most of
whom are local nationals. This high-cost option enables you to ensure sales and service
quality, provided that personnel are trained in sales, products, and service on an
ongoing basis. A benefit of this option is the control it gives you and the ability to serve
multiple markets in a single region.
If you have neither partners nor joint venture arrangements in a foreign market, you
must be prepared to accept return of merchandise that the foreign buyer refuses to take.
This situation is not likely to occur in cash-in-advance or confirmed letter of credit
transactions. However, in an open-account or documentary collection transaction, the
buyer is in a position to refuse delivery of the goods and suffer no financial harm. If you
cannot find another buyer in that market or if you elect not to abandon the goods, you
will be faced with the fees and charges associated with returning the goods to the United
States. Your freight forwarder can be of great assistance in this process should the need
arise and can quote you a price to return the goods.
Considering Legal Options
Service is an important part of many types of representative agreements. For better or
worse, the quality of service in a country or region affects your companys reputation
there.
It is imperative that agreements with a representative be specific about the form of the
repair or service facility, the number of people on the staff, inspection provisions,
training programs, and payment of costs associated with maintaining a suitable facility.
The depth or breadth of a warranty in a given country or region should be tied to the
service facility that you have access to in that market. It is important to promise only
what you can deliver.
Another part of the representative agreement may detail the training you will provide to
your foreign representative. Such detail may include how often training will be provided,
who must be trained, where training will be provided, and which party will absorb travel
and per diem costs.
Taking Advantage of New Sales Opportunities and I mproved Customer
Relations
Foreign buyers of U.S.-manufactured products typically have limited contact with the
manufacturer or its personnel. The Foreign Service facility is one of the major contact
points between you and the buyer. To a great extent, your reputation is made by the
overseas service facility.
Each foreign market offers a unique opportunity for your company. Care and attention to
the development of in-country sales and distribution capabilities are paramount. Delivery
of after-sales service is critical to the short- and long-term success of your companys
efforts in any market.
Senior personnel from your company should commit to a program of regular travel to
each foreign market to meet with representatives, clients, and others who are important
to the success of your firm in that market. Among those people would be the commercial
officer at the Commercial Services post and representatives of the American Chamber of
Commerce and the local chamber of commerce or business association.
The benefits of such a program are twofold. First, executive management learns more
about the foreign marketplace and the foreign service facilitys capabilities. Second, your
customer will appreciate the attention and understand the importance of the foreign
market in your companys long-term plans. As a result, such visits will help you build a
continuing productive relationship with your overseas clients.
FACT: Rather than engage in direct marketing, most small exporters simply take orders
from abroad.
INSIGHT: Be prepared. Establish a policy to deal with inquiries from abroad:
Consider the possible need for translation services.
Know how to research a foreign company before conducting any formal
business.
Promptly reply to all inquiries.
Know the basic business practices that are key to successful selling in the
target market.
Create a database of foreign inquiries.
FACT: Properly handled, service can be a foundation for growth. Ignored or left to
chance, it can cause an export to fail.
INSIGHT: You have many options for handling your after-sales service:
Have the product returned to the United States for service or repair.
Identify and use local service facilities.
Provide on-site service.
Create a branch or subsidiary to provide service in the country.
Be prepared to accept return of merchandise if the foreign buyer refuses to
accept it.