The Philippines is still considered an emerging market so please consider reading this article on how to sell in this market. And if you need further help in better understanding the country, please feel free to approach me for any assistance. My specialty is forging cross border investments between Australia and the Philippines, a country with a population of 100 million. Sure, its no China or India, but the country is only a 6 hour flight from Sydney, most locals can either speak or understand English, and abundant with highly skilled and talented labour with a superior customer service attitude. And its also fun being in the Philippines. Let me help you experience this.
From McKinsey & Company
Act like a local: How to sell in emerging markets
Emerging markets can be fertile ground for enormous sales growth, but each market has its own unique hurdles.
This article is excerpted from the book Sales Growth.
According to a possibly apocryphal story, the head of sales of a multinational apparel company dispatched two salespeople to open a new territory in a predominantly rural country. After scouting a few villages, the first salesman rang the head office. “I’m returning on the next flight,” he said. “We can’t sell shoes here. Everybody goes barefoot.” Meanwhile, the second salesman was busy e-mailing the head of sales: “The prospects are unlimited. Nobody wears shoes here!”
Emerging markets can be fertile ground for enormous sales growth but each market has its own unique hurdles. Without a deep understanding of the local customer you are likely to trip over those obstacles—or abandon the market prematurely like our apocryphal salesman above. To break into emerging markets and capture the potential, the best sales leaders have realized they have to think like a local.
Multinational corporations often make the mistake of importing approaches that work at home without making any adjustments. Meanwhile, local players often underestimate both the resources and speed required to match market needs and compete with global players.
To accelerate growth in emerging markets, leading sellers understand three imperatives:
- Get on the ground.
Information on customers and the market is often hard to obtain. Successful companies invest in all the data sources and expert information available, but nothing beats getting a firsthand sense of how the market works by visiting local areas and resellers. This ground-level view also gives sales leaders a clear read of where the market is heading and lets them plan for it.
- Overinvest in the right partners.
In developed markets, a company may have many capable potential partners. In emerging markets, finding a partner is a much more strategic endeavor. With limited choice, partnerships are for the long haul, which means finding the right capabilities and partners that share your values.
- Build talent for the long term.
Annual growth in emerging markets can exceed 10 percent. That pace requires sales leaders to think creatively about how they will attract and retain the talent they will need to keep up.
Get on the ground
Emerging-market infrastructure is often less developed, channels are fragmented, and cultural preferences often more complex and varied. Demand can be unpredictable, making the near-term return on sales investment uncertain, even if the long-term growth is extremely attractive.
Complicating these challenges is a lack of data. Multinationals that enter developing markets often have to do their own research to develop insights—mixing whatever local market data they can buy, in-field experience, and on-the-ground research. This can’t be done back at headquarters.
A global resources company watched sales volumes rise dramatically across Asia on the back of surging economic growth, but was alarmed by its dependence on a single economy. The board demanded a granular perspective based on the microdrivers in the local market and combined locally available statistics with expert interviews and field observations. This allowed sales leaders to model product demand and adjust sales strategies. Ultimately, the analysis supported expansion and helped the business maintain market leadership. Over the subsequent 12 months, the forecasts proved accurate to within 5 percent of actual demand.
There is no substitute for intelligence gained firsthand on the ground. When a wireless-communications provider that was expanding in Africa prepared to launch new mobile-payment services, it assumed it should focus on countries with the highest GDP per capita. However, the company’s senior management team knew that official data would not provide a truly reliable picture of where actual purchasing power resided. So the team spent most of its time in the field to understand the dynamics in several priority markets.
The deeper it dug the less confident it became about its initial assumptions. In one West African country, for example, the company discovered that consumers in larger towns placed a premium on cell-phone use over other discretionary spending categories because they used those phones to stay in touch with friends and family members who had remained behind when they left home to look for work. This suggested that significant consumer spending power existed outside major cities.
The company also discovered that most people supplemented their salaries by bartering goods and services for items they could not afford to buy with cash. The team therefore probed the barter value of prepaid cell-phone minutes. Next came a game-changing insight. The researchers found a strong cultural bias toward cash: people would camp out near ATMs to withdraw their entire paychecks the moment they cleared at midnight. The company postponed launching mobile payments and focused instead on expanding its core wireless services to smaller cities. Other African countries had different dynamics, and the company tailored its strategies accordingly, helping it become one of the largest providers in the region.
In India, product sales involve layers of distributors and resellers, and channel recommendations play a critical role in driving purchasing decisions. This final point of sale is often a local mom-and-pop shop with a very limited inventory covering a range of products and brands. A domestic cement company realized that it was effectively blind to what was happening at this final, critical step so it handed out simple GPS devices to field reps so that they could log individual points of sale for all cement products in the market. Over six months, a database of more than 22,000 outlets came together. Analysts then matched this information with local census data on evolving population and spending patterns to identify areas of growth with low penetration. The fieldwork also provided an initial assessment of which resellers would be their best potential partners.
Overinvest in the right partners
The capabilities and infrastructure of channel partners vary enormously in emerging markets. Choosing channel partners is a make-or-break decision: sales leaders need to have long-term confidence in the partners they pick, and their organizations need the capabilities within their own teams to manage the channel.
Vodafone got creative when it sought channel partners in rural India. There are about 600,000 villages in the country, and 92 percent have fewer than 10,000 residents. It was not cost-effective for Vodafone to establish distributors everywhere, nor feasible to sift through the enormous number of retailers to determine which were most reputable. Instead, the company created a two-tier distribution model, under which some retailers doubled as distributors. The main distributors were responsible for a specific rural area and served shops in a central village directly.
For smaller or more remote villages, distributors selected local retailers to be associate distributors. These second-tier partners managed four to seven cell sites in their designated areas and were responsible for service. These small vendors required only modest markups, so the two-tier model was profitable for Vodafone, the distributor, and the associate distributor. Between 2008 and 2011, the number of associate distributors grew from 1,500 to almost 8,500. As a result, Vodafone has more than 23,000 channel salespeople covering 360,000 villages across India.
Distributors in emerging markets are likely to vary considerably in skill levels, and sellers need to understand those differences. Indeed, taking a segmented approach to channel partners was a recurring theme among the most successful emerging-market sales leaders. A Chinese components manufacturer boosted distributor sales 20 percent by dividing distributors into four groups based on readiness for growth and existing skill levels. The company worked most intensively with distributors that had good skills and were better placed for growth, and provided better point-of-sale support to them. Among low-skill distributors, the company focused on those with the most potential and provided only a simple set of product offerings that required little point-of-sale support or customization.
Build talent for the long term
Sales leaders who are used to focusing on farming a large client base generally strive to capture incremental market share and improve margins. Emerging markets are a jarring change: growth is rapid and unsettled, competitors appear quickly, and consumer classes emerge overnight. Companies that are too timid to make long-term commitments can soon find themselves marginalized.
The rapid growth opportunities in fast-moving emerging markets have been a boon for local workers, who have unprecedented employment choices. But that makes attracting and keeping qualified sales talent increasingly difficult. Educated young people often want opportunities in larger metropolitan cities, but this provides considerable challenges for selling into the vast rural areas that still represent a major source of growth.
Attracting salespeople is only half the battle. As a result of this frenzied hunt for talent, salaries have increased five- to sevenfold in the past decade in some markets. To add to the challenge, companies that offer training have become hunting grounds from which other businesses cherry-pick the best people.
“We’re reluctant to train our sales force because we know they are likely to leave and take that knowledge to a competitor,” admits the head of sales for an automotive supplier in the Asia-Pacific region. In this environment, the best sales organizations keep it simple when it comes to training programs. After a series of acquisitions, China’s state-owned chemicals company needed to build the sales capabilities of more than 500 people, a much larger sales force than it had in place before. Rather than investing heavily to give salespeople a background in sophisticated customer relationship management approaches, the company developed its own content with Chinese examples and pared-down explanations of key sales principles, such as step-by-step instructions for segmenting customers into basic categories.
Training is not always enough. Tailoring the organization to the local situation is often a critical complement to investing in the right sales team. A mining-equipment supplier found its product-oriented organization was not playing to the needs of China’s business environment, which is characterized by strong relationships built on many years of collaboration between sales reps and business leaders at the customer end. Yet the rapid turnover and shortage of key staff at the company meant these relationships were extremely scarce.
The mining-equipment company decided to restructure its China sales team along six subregions rather than adhering to its global product-based structure. It also doubled its sales force over two years. Each subregion was headed by a director covering multiple product lines who also served as the key account manager for the largest accounts in the region. This arrangement allowed the company to build economies of scale across business units and capture the great opportunity for growth. Sales doubled over the next three years.
The dynamic and unpredictable nature of emerging markets that makes employee management such a headache can also be dangerously distracting for sales managers. Yes, consumer sentiment can change quickly, and new competitors can arise overnight, but the best sales leaders don’t get swept up in frantic excitement or false urgency. Instead, they balance aggressiveness and speed with rigor to ensure sales investments will generate a return over time.
In India, there is a dual challenge of succeeding now while setting up for (and shaping) the market of tomorrow. An industrial water-treatment-equipment company was aware of the market potential five to six years down the line and invested in a sales force to help grow the market. However, it first needed to compete effectively in the existing, much smaller market. The company created a cross-functional team drawn from the sales force, marketing, and product development. The team identified short-term ideas to expand margins and maintain sales momentum but also planned long-term success by demonstrating to customers the benefits of its higher-priced products. The company established a growth plan with buy-in across the sales organization to grow threefold over three years. Through these initiatives to deliver both near-term growth and long-term goals through shaping the market, the company achieved its first-year goals and is well on its way to its year three target.
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Emerging markets present an enormous growth opportunity for sales leaders. In many cases, they also present an equally large challenge. Many winning approaches in developed markets are relevant for emerging markets. However, simply copying the playbook is a mistake. The best sales leaders are up to this challenge. Their sales strategy starts with having better insight into the markets than their competitors. Companies must sift through an uneven landscape of channel partners and then invest in finding and retaining the right sales talent to match or exceed the rapid pace of growth.
This article is excerpted from the book Sales Growth with permission from Wiley & Sons.