How To Retain Key Customer Relationships During Global Expansion

June 4, 2020

Global expansion without global issues.

Setting up a business is complex on its own setting up another business outside our own domestic market can be even more challenging.

Imagine having an existing client of yours among you to provide a service to them, not in your usual territory, but on the other side of the world.

You face a challenge of saying no to the client, who then finds another supplier. If that supplier happens to be better than you in certain areas, that is the first stage in your declining relationship with the client.

You would be seen as a business without an ambitious outlook at best.

Let’s say however that you decide to go with the client you decide to set up in a new territory and deliver your services to the client there.

What will be your plans and how will you do this?

You can outsource
You can form a joint venture with a local provider
You can set up your own infrastructure to deliver such services

Let’s go through these and examine the details

Outsource

You search for a supplier
You asses their capability and capacity to deliver to your client
You enter into contractual obligations
They begin serving your client

Where are you in this relationship? Outside, that’s where. You gradually loosen your ties with your client. Meanwhile, your own supplier gradually increases theirs.
Unless you are prepared to constantly intervene in this relationship between your supplier and your customer, it will not end well for you.

Joint Venture

As with outsourcing, you and your supplier, agree to deliver the services jointly.

Your supplier may not want you to edge the out of their own market and as a result may not be as cooperative as you wish.

Your supplier may simply use your relationship and market knowledge to gain traction with your client.

You must have complete trust and confidence in such a relationship or it will go south.

The Stipenda Solution

This is almost a combination of the two alternatives above but critically, you lose no traction with your client.

The advantages:

You source your own staff.
You negotiate your deal with your client.
You instruct your staff in all aspects of delivery and management.
You retain 100% relationship to the client.

Crucially you lower your setup costs substantially by not having to meet these requirements:

You do not need a local entity.
You do not need local banking services.
You do not need local legal advice of infrastructure.
You do not need local advice on employment compliance.
You do not have ongoing infrastructure maintenance cost.
You do not have to manage foreign currencies.

The Stipenda model is visible everywhere. From start-ups to multi-nationals, the need to operate flexibly outside your home territory is critical to fast roll outs and service delivery