By Pooja Bedi
We know how critical it is for a business to effectively reach its customers. As vital as choosing what to sell, is deciding how to sell it. Most companies spend a huge amount of time and resources identifying the most appropriate route-to-market (“RTM”) or go-to-market strategy. In the end, an effective strategy is one that puts the product/service in front of the customer incurring the lowest possible costs and in the lowest possible time. However, the cracks only show when the route-to-market strategy is executed and its implementation complicates the pre-supposed simple model. Involving a lawyer at a nascent stage while designing such a strategy can mean the difference between success and failure.
The worst case scenario is when legal/compliance weaknesses are discovered (to add to the horror, often by a regulator) in an established route-to-market model which is already making serious money for the business. Not a great place to be, right?
Despite the aim to simplify and make life easier, the truth is that markets are only getting more difficult to penetrate and are becoming ever more highly differentiated in demands on a business. For example in India, the growth of a burgeoning middle class is both a boon for helping brands pre-immunise sales efforts yet a bane with multiple choices that restrict a business’s ability to connect. The ever changing regulatory landscape does not help either, and globally companies are getting restricted in the ways they can accelerate sales and reaching out to their customers in certain markets.
If a business is serious about a first-to-market or quick-to-market approach and are investing significant amounts in securing the right channels, right partners and models from the start, why overlook the incredibly important process check or value additions that their legal teams can easily cover?
It’s great to get a lawyer to vet your RTM strategy, even better to get them to write contracts for you, but it’s a trap to restrict looking beyond the regulatory hurdles or contractual problems especially while designing the RTM model which is going to be your engine for driving sales.
For businesses, not inviting a lawyer to be a part of the team that designs the RTM model in the company is a lost opportunity and potentially a future risk. How?
For many businesses I know it’s a difficult concept to understand what value a lawyer can bring to a sales and marketing strategy of a company, but if I produce a laundry list of value adds and a business case for hedging future risks, such businesses might re-consider. Here’s a teaser:
1. Is the direct sales model that you are opting for slowing you down while adding significant risks?
2. How many government/regulatory touchpoints exist in your RTM and can they be reduced?
3. Is the retailer/distributor securing a powerful position to beat you down on price, and are you likely to have to operate on a small profit margin in future?
4. Do you have little control over how your products are described or explained in your strategy, which leaves you relatively powerless when it comes to the portrayal of your brand in the market?
5. Is there a better way to run the procurement process to cover future risks?
6. What product recall mechanism can be put in place for minimum backlash and proactive strategies to save brand image?
7. Is your distributor someone you can trust? Is your brand image dependent on their actions? Can your reputation take the hit even if you played no part in the mistake?
8. Are you relying on one or two customers for most of your business putting the business in a vulnerable position? Is an omni-channel approach more appropriate to hedge future regulatory risks?
9. How will the existence of parallel market or imports take away from your pie and what to do about it?
10. How will copycats or counterfeiters spoil your party and how would you stop them?
It is short-sighted to squeeze the role of your legal and compliance team members as a check-and-balance function or to under-utilise them solely as conduits for dispute resolution or for policing other commercial functions. Good business lawyers can often help you by probing and questioning operating assumptions or financial projections and help you find the answers, building trust along the way.
But who are the lawyers that can make the cut? The list below does not necessarily match a typical legal job description, but are essential traits of a good commercially-minded lawyer on your team:
1. Knows how the business makes money – exact steps and precise numbers.
2. Studies your product/service well and how it works or why people will buy.
3. Knows your regulators (and knows them well).
4. Recognizes the market size and the opportunity (needless to mention track your threats).
5. Understands the B2C and B2B models as geography continues to be a declining obstacle.
6. Knows your third parties with an understanding that they have their eyes set on immediate sales rather than establishing long-standing relationships with customers.
7. Anticipates your direct risks and indirect risks, which will pop-out as your business grows.
8. Knows your competitors and what they do better than you and why.
9. Understands your products/service tax framework and keeps looking for opportunities to negotiate or re-balance.
10. Prepares for your crises – by precedence, by anticipation, by imagination or by intuition.
You can have an amazing product or a service that is technically superior but without having the right access to the market you will lose out on sales. To win the market, invest in having the right distribution system but more importantly have good commercially minded lawyers who can defend your RTM better than anyone else, because they helped you design it!
Pooja is an In-house Counsel for over 20 years and provides broad range of corporate legal services across varied business legal matters and is a subject matter expert on market entry / route to market strategy who has led large legal & compliance teams and worked on international transactional, regulatory, and compliance issues.