Growth in foreign markets takes time, patience, and help from the locals
Foreign and developing markets provide one of the greatest opportunities for revenue growth. Entire categories of products may not yet be available. In other cases, such as communication, the market may be more advanced and ready for mass adoption of leading-edge products.
Though there are ample data available on growth rates, market sizes, and the social, political, and economic stability in the region, desktop research cannot replace an on-location evaluation. Unless you plan to license your product or service to a local company, success abroad requires an intimate understanding of individual country markets. If you already have a presence in a region, bring your on-location staff to headquarters regularly and send executives to their region to develop firsthand understanding.
If you do not yet have a presence in a specific country, gather insights from both locals and foreigners already conducting business in that country. Investigate the unique challenges that local customers and foreign companies encounter in the market, and be prepared to address them. Evaluate whether the cultural norms of doing business there align with your company’s values. Business success in some markets may involve bribery, disregard for environmental protections, or labor practices you would never contemplate in the home office. Decide how flexible you’re willing to be, and determine how holding to your company’s values will affect your ability to succeed in these markets.
Look first at the low-hanging fruit. Countries with a common language and no requirement to localize products and documentation require smaller initial investment. International accounts are also a good launching point. Use these references in other parts of the world where your existing customers have a strong presence. You can also leverage the added credibility of internal references within an international account to sell into these customers’ foreign divisions.
Growth in foreign markets takes time, patience, and help from the locals. Before entering a new market, amass the right resources and internal support required for a long-term commitment. Pulling out of a market because early results don’t meet expectations damages credibility immensely. Potential customers lose trust in your commitment to the area, and partners view any investment in an alliance as fraught with risk. To reenter the same country later will be even more complicated than the first time, as you fight to overcome distrust.
Many companies that expand globally are public and therefore driven by quarterly results. Despite the best intentions, board or investor pressure can override early good intentions to give the new country time to succeed. In overseas markets, you’ll need to foster relationships and cultivate business networks. These take time and patience. Salesforce. com, which revolutionized enterprise software with its software as a service model, understands patience. The company now has a highly successful and lucrative business in Japan, but it took five years after entering that market to see the large return on investment. “If you’re harvesting revenue in a tactical or opportunistic way, the success tends to be short-lived,” commented Jeremy Cooper, former vice president of corporate marketing at Salesforce.com who helped Siebel, Oracle, and, more recently, Salesforce.com strengthen their presence in Asia.
Be prepared to make broad investments well ahead of measurable impact on revenue. By demonstrating patience early, you can create a foundation for long-term growth abroad.