Your company puts in lots of work to generate sales through FMS – from attending trade conferences, marketing your products, or even modifying your product for the international market. This post discusses how to use Pre-LOR Consultations to secure more international sales and ensure that your customers are happy – helping generate more sales in the future.
What are Pre-LOR Consultations?
Pre-LOR Consultations means working closely with the foreign government and end-users to define a project before they formally request an FMS sale. This is crucial to help secure the sale and to ensure that the end-user is satisfied with the product.
How does it work?
For an overview of the normal FMS process, check out my FMS timeline. Usually, the FMS process begins when the foreign government customer submits a Letter of Request (LOR), their formal request to procure an item through FMS. The U.S. DOD then procures the requested item, choosing a supplier and defining the prices, specifications, and delivery schedule.
In this process, your company has little influence over the procurement process, or over any of the details of the sale. You don’t have the opportunity to work with the end-user to define the specifications of the project.
That’s the textbook version of FMS sales. In reality, there is a prior step, what DSCA calls Pre-LOR Consultations. Pre-LOR Consultations, as the name implies, are communications with the foreign customer prior to their formal LOR. This is your opportunity to work with the foreign government or end-user to define the project and help them select the item that meets their needs.
Pre-LOR Consultations are crucial for defining the parameters of a sale:
- Define appropriate specifications for the product. In a case I’m working on now, a potential client inquired about ordering a product listed on a webpage, copy-and-pasting all the product specifications. However, the webpage specifications don’t really make sense for what they will use the product for. There are parts they don’t really need, and missing parts that they probably want. Pre-LOR Consultations gives you the chance to talk to your customers directly about how they’ll use your product, and to make sure the proper specifications (or accessories, or support packages) are included in the request.
- Ensure that your product can be properly used and maintained. Pre-LOR Consultations also give you the chance to feel out the end-users’ ability to use and maintain your product. Will they need training to deploy your product? To maintain it? You might discover that maintenance is particularly bad (due to tight budgets or lack of training) and decide to simplify your product to create an easier maintenance schedule. Or you might recommend including a training package or maintenance plan as part of the sale.
- Make sure the purchaser and end-user are on the same page. In many countries, the purchaser is not the same as the end-user. The purchaser might be the budget office or the civilian leadership at the Ministry of Defense, while the end-users are the active-duty Armed Forces. Pre-LOR consultations are important to make sure that the purchasing office really understands what the troops want and need.
- “Sole Source Request” and Contingent Fees: As we mentioned at the beginning, your company put a lot of work to generate this opportunity, so now is the time to talk with your customer about submitting a “Sole Source Request” on your behalf. (See here for an update on Sole Source requirements.) Additionally, most purchasers must approve contingent fees (agents’ fees and/or sales commissions to your international reps) in advance for these to be included in the LOA.
Beyond clarifying the technical details of the sale, Pre-LOR Consultations allow you to build a relationship and gain a better understanding of your customer. What budget constraints are they facing? How will they ultimately use the equipment? What other purchases might be coming up? The better you understand the country, the more likely you will be to make the sale, and the more likely that your product will be used successfully. This, in turn, helps position your company to provide long-term support to the customer and to win future sales.
Do you have questions about Pre-LOR Consultations? Have you used Pre-LOR Consultations successfully? Share in the comments!