By: Dale Rosenberg, Executive Head – Commercial
Structuring and closing deals across African markets often demands more from South African based sales teams. Distance, economic and cultural market realities, regulatory requirements (or the lack thereof) and subtle variations in the way business is done, can all impact significantly on the outcome of a deal in Africa.
Africa – not a ‘copy and paste’ continent
Africa is not a market for ‘cut and paste’ replication of business models or products – an approach taken by many when launching their products and/or services on the continent. It requires adaption of these models, services and products to fit the local market conditions.
For example, where South African consumers are accustomed to monthly subscription models, consumers in many African markets prefer a flexible, no-obligation per-day model, even if this ultimately costs them more monthly. In many cases, this is because people live on less than a dollar-a-day and they simply don’t know if they will have the disposable income to be able to afford the subscription tomorrow. Social realities such as these must be appreciated.
Understanding the market is key
The best way to get to grips with the on-the-ground realities in another African country is to visit the country regularly, experience and discuss the conditions there and listen to what local stakeholders are saying about challenges and opportunities.
It is crucial to understand the client’s operating environment and customise your offering accordingly, to ensure that your solution can genuinely work to help the client address market challenges. This approach requires more thought and research because of these complicated conditions.
Be flexible or you won’t do the deal
Added to the above, in many pan-African regions, potential business partners are loath to make significant upfront investments – particularly when entering relatively unchartered territory such as video on-demand, not only because of potentially high set up costs, but also because the time and demand for market uptake is so indeterminable.
Successful business across African markets depends on networking, relationships and trust. It is this consistent and collaborative dialogue with prospective partners that ensures positive outcomes are achieved. Business models must be flexible and be structured around a model that best suits the local partner without compromising your own business requirements. These could take many forms, either an Opex model, a co-investment or a small-scale proof of concept. This flexibility can often pave the way for bigger things later on and have regularly proven in our business to be the catalyst for closing the deal.
Communication, in general, across Africa’s vast distances can prove challenging. All processes can take a lot longer than we are used to in South Africa and one should also be sensitive to subtle differences in the way in which these sales and communication interactions are handled. Bulldozing your way into the market is not the answer, this will likely bring an abrupt end to talks around opportunities and products even though there was an appetite for both. The keys to successful negotiations and deal closing are mutual trust, collaboration and market knowledge.
Across Africa, possibly more so than in South Africa and more developed markets, business is further built on broader industry networks and relationships. A business seeking expansion into Africa must leverage its existing networks for introductions and can expand these subsequent collective partnerships, where relevant or possible, to drive even greater synergistic objectives and achieve mutually-beneficial outcomes. Once all challenges have been overcome, you should not be afraid to push for the deal.
However, you may have to wait twice as long for an answer in Africa as you do in South Africa. Where a deal might be concluded in six months in South Africa, it could take up to 12 or even 18 months to be finalised in many markets across Africa. Patience, once again, controlled persistence and communication remain crucial throughout the process.