Most manufacturers have probably heard the statistics that 95 percent of the world’s buyers, and 70 percent of the buying power, are outside the U.S. To unlock this potential, the U.S. Department of Commerce has developed programs and content to help American businesses, including manufacturers, sell more internationally.
However, manufacturers may not realize that not only is “Made in USA” a great global selling point, but that there can be many substantial and wide-ranging benefits from exporting.
Unlike years ago, when a manufacturer might have made substantial speculative investments in a possible export market for years before receiving any return, today the internet makes it easy to attract international buyers without an extensive parallel business development effort. Export sales can unlock many unexpected benefits including:
- Lessons learned abroad that help business at home
- Profitable niche markets
- Workforce benefits
- Resilience and security
Getting started with export sales may be easier than you think. Many companies receive international inquiries and orders through their digital presence. When products exporters were asked why they chose to do business internationally, nearly half (48 percent) said an international customer found their product online, according to the 2017 American Express Grow Global Survey. Some rely on that passive flow to grow exports casually, while others explicitly build on that trend to actively cultivate more global activity.
Those first couple orders turn out to be hugely important. Nearly half (45.8 percent) of product exporters report that within four years more than 50 percent of their total sales are to international buyers; 52 percent sell to at least six markets; and 89 percent of product exporters believe that export sales growth is a “major opportunity.” International inquiries can also provide information on pockets of market opportunity to help companies target later, proactive efforts.
Learn and improve
Exporting leads to experiences, insights and lessons learned that help manufacturers enter new markets and improve their operations at home.
Fully 85 percent of exporters surveyed improved a product or service based on lessons they learned while doing business abroad. Sometimes the lessons go beyond simple improvement and extend to new product development too. There are manufacturers who have sold products for one intended purpose and learned of an entirely different application from their overseas reps. These observations lead to the creation of new product lines without time consuming and expensive research and development efforts.
The survey also discovered that 78 percent of companies who sell their products globally found that their experience selling in international markets led them to make adjustments to the way they market to domestic customers in the U.S. One common example is learning about cultural differences overseas and using that information to develop authentic marketing plans to reach different cultures in the U.S.
Discover profitable buyers
Among the reasons U.S. manufacturers seek international sales is the opportunity to access more buyers with specific characteristics. Every company has ideal buyer profiles – the most accessible and profitable customers. Often there are specific technical capabilities and intellectual property (IP) that make the company particularly competitive with a certain type of buyer.
For instance, Indiana-based Jeco Plastics manufactures technically complex pallets for the auto industry. Jeco Plastic’s CEO Craig Carson began exporting because he recognized a greater opportunity for his product in other countries compared to the U.S., and now extensively sells in Japan and Germany.
This sort of focused approach allows manufacturers to concentrate resources on the types of prospects that are most profitable, and loyal, long-time customers. If production is nearing capacity, trimming less profitable buyers may make room for the larger global pool of desirable buyers.
Attract, hire and retain top employees
Finding and retaining top talent is one of the largest challenges facing most businesses today. What many business owners don’t realize is that exporting can help in the recruitment process. Nearly nine in ten (88 percent) product exporters report that their global business activities help them to attract and retain new talent.
It helps that companies that export tend to pay higher wages, but many employees seek specific kinds of engagement and growth opportunities in addition to competitive pay. Many workers entering the workforce have grown up with international social media connections, semesters abroad, and a global economy. They may view the export activities of a potential employer as a positive differentiator.
Develop businesses that support employees and communities
One certainty in today’s world is uncertainty. Some global markets are strong while others are softer and the state of the global market is ever changing. In fact, 74 percent of products exporters cite changing global economics as a significant challenge. Manufacturers can’t control these changes, but exporting can help diversify a company’s customer base which can mitigate some of the outside instability.
Stable companies have a real impact on employees and communities. For example, communities with a large manufacturing industry are often dependent on reliable, growing businesses with well-paying manufacturing jobs. That being said, reports find that exporting companies pay higher wages, have more employees and have higher productivity than non-exporting companies.
Exporting can help maintain that desired stability and strength.
Export for reasons beyond revenue
Growing sales is an important goal for many manufacturers. But growing at the right pace with the right type of buyers is also important.
While global markets open enormous new growth opportunities, they also provide access to a deeper pool of target customers in addition to supporting talent recruitment and retention, product development, and other general business benefits.
And it’s never been easier for small and mid-sized manufacturers to attract and sell to new global buyers!
Ed Marsh is an Exporting Advisor to American Express.