CHAPTER
1
UNDERSTAND MARKET INTENSIFICATION
Back in the old days of international expansion, it was common business parlance to talk about “entering” a new market. This is because companies often had minimal if any customers in a market before setting up a physical presence there. They had to send someone in person in order to go to a country, create a legal entity, set up an office, and start the process of hiring a local team.
Things have changed, on several fronts, but the one common thread is this: international expansion today is much more continuous in nature. Let’s look at some of the key aspects of international expansion, and what they looked like under the old rules versus the new rules.
Essentially, many services exist today that enable companies to take their business global with far greater ease, and without the need to physically set up operations in each country. For any company with a digital business model, it’s possible to “go global” seemingly overnight, as soon as you launch a website that enables someone to make a purchase or offer your company’s products through a global online marketplace.
With more marketing, selling, and purchasing happening online than ever before, growing across borders is no longer a matter of a business “entering” a new international market. You can enter dozens of markets simultaneously if you’re able to launch a website for multiple countries and access many of the services listed in the “New Rules” column of Table 1.1.
TABLE 1.1. Aspects of International Expansion under Old versus New Rules
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Aspect of International Expansion
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Old Rules
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New Rules
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Marketing
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Required marketers to be located in-country; leaned heavily on local advertising and branding campaigns
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Can be done from anywhere in the world; leans heavily on digital marketing and ecommerce
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Sales
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Sales reps were on the ground in-country and needed to be physically present to meet customers in person
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Leans heavily on a remote selling model, online and product-led growth models
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Customer support
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Required language-skilled staff in-country or at least in time zone, often based in a call center
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Highly automated via self-service and with online help content, online chat, and chatbots, e-learning and community forums
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Hiring
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Necessitated a company to create a legal entity, find local counsel, draft employment contracts and engage a local benefits and payroll provider for each market
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Can be outsourced to “employer-of-record” firms that do the set-up work to allow companies to employ and pay people in each market
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Product distribution
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Was mostly done through local channels on the ground in each country
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Marketplaces, mobile apps, web-based, and software as a service (SaaS) distribution models prevail
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Finance
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Required local bank accounts, local tax specialists and accountants in each country as well as the ability to accept local currency and payments
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More countries are instantly accessible via global payment solutions, currency gateways, global accounting platforms, and international tax firms
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Growing your business globally is increasingly a matter of making choices about which local markets matter most early on, and then intensifying your company’s efforts there later, but also being willing to pivot and iterate on your strategy more frequently than you might have had to do in the past.
“Market intensification” is a conscious choice your business makes to go deeper into a market, targeting more local customers, selling more effectively and at a bigger scale, finding the right channels, and further adapting your company’s offerings to truly map to local market needs. More and more companies are finding ways to meet customers from many countries where they can all be found initially—online—addressing customers in many markets from the beginning stages of their business.
One major benefit of market intensification is that because it’s more continuous, you can more easily adapt and adjust as you need to. You can throttle your speed and invest more or fewer resources in each local market based on factors such as performance, funding availability, and changing economic situations. Overall, under the new rules, you can adjust your international expansion strategy in a much more continuous way, one that is more in keeping with today’s ever-changing environments.
Underpinning this transformation of how companies go global today is the fact that the leading technologies today that are modernizing the world tend to be delivered in more continuous ways than in the past. Newer digital offerings that achieve success in today’s reality tend to use what is known as a continuous integration / continuous deployment (CI/CD) model.
This fundamental change in how products get delivered in a digital-centric world is not something we can describe as merely “agile.” While notions of agility are still important, many people working in software bemoan how far this concept has wandered from its basic roots. One of the core tenets of the Agile Manifesto highlighted the importance of continuously iterating in response to change versus sticking to a plan.
That principle, which highlights the importance of being adaptable and responsive, is the one I’d like to highlight when it comes to taking your company global. When you build things in a continuous way, responding to inputs and customer needs, you need to operate differently. And when you’re doing this in multiple markets at once, the need to adjust and pivot in many directions at the same time can feel overwhelming.
For this reason, it’s impossible for me to overstate the importance of making sure you truly listen to local customers, create channels to truly hear their feedback in each local market, so that you’ll know precisely where you need to flex, in order to make these local market adjustments as continuously as you can.
Talk to your customers in local markets continually. This will help you learn what you need to adapt in order to succeed locally. Use their input to guide where, how, and when to intensify your presence.
Digital Business Models Enable Faster Access to Local Customers
A digital business operating in the current era no longer must make a decision to “enter” a market, as such. Having an online business model means you can open access to many markets at once. Instead, your company will have to make a conscious decision about how to intensify your efforts in markets where you’re already seeing early interest from customers.
Companies that have a digital business model have more and more access to the world than ever. However, that comes with less and less control over the exact whereabouts of the customers they initially attract. It’s not uncommon for companies to create a website and within a very short timeframe, to have at least 20 percent of their traffic immediately come from outside their home country. This is especially true for companies operating in markets with high levels of demand and strong search volumes for their product category.
Create a website or a blog in a major world language like English, and within a year of steady content creation, you’re likely to have visitors from 50-plus countries. As a consultant and advisor, this is what I’ve witnessed with many companies of various sizes (and even with my own blog).
If what you’re selling is in high demand, either because you’re in an underlying industry that is growing quickly, or because your product is simply trendy and people love it, you’ll be benefiting from viral networks and word of mouth. The world tends to be more interconnected than we think. When people have a great experience with a product, word of mouth can quickly travel across borders.
You’ll naturally be pulled toward global markets faster if you have a digital business model, but faster doesn’t mean that it will be easier. While you can set up the basic operational mechanics in order to be a global company more quickly than ever before, achieving efficient and scalable international growth has become more complex.
Earlier Global Access Means Introducing Complexity Sooner
While going global sooner is an exciting prospect for many businesses, it’s important to recognize the increased level of complexity this can introduce. Many companies haven’t yet mastered operations in their domestic country at the point when international business starts to “distract” them. In some ways, strong demand from international customers can be viewed as a “good” distraction, and a sign that a company has a strong chance at global success later. But timing is everything and going into too many markets too deeply before you’re ready can do more harm than good. Finding the right balance is critical.
While all the services, platforms, and vendors available can make it seem easy to go global, even if you take advantage of all they have to offer you, here are some of the areas of increased complexity to watch out for anyway in the early days of your expansion:
• Recruiting. If you plan to intensify within a market at a large scale, the first hire you’ll likely need to make is a local recruiter. You simply can’t hire local marketing and sales talent easily otherwise. You might choose to use a local recruiting firm, but then you’ll be competing with other clients, agencies may not be able to sell your employer brand to candidates as easily as you can, and it can be difficult to hire at scale without local recruiting. In many markets, candidates also don’t want to work for an unproven brand. This is where companies get into a chicken-and-egg situation. They must establish their brand locally before they can attract the best talent, but they can’t build their brand until they can hire enough people to market and sell locally.
• Marketing. Obtaining more of the desired type of traffic from the right countries, converting it into qualified leads, and ensuring that the pipeline into sales is high quality is a tall order, and can be incredibly hard to scale across languages and countries. The degree to which you depend on digital marketing and a digital business model is the degree to which you are likely to be global without really intending to be. Digital marketing, while the primary strategy for many digital-native or digital-savvy companies, is rarely ever the only one when it comes to demand generation. Often, international marketers end up leaning on more locally differentiated strategies and tactics in order to better reach local markets. Unless you have local marketers for each country or region you’re targeting, it can be incredibly complex to manage marketing across several geos at once, until your company is larger in size and has more resources to do so.
• Sales. Figuring out how to staff your team, in which time zones and supporting which countries, can be very tricky. Figuring out what their quota should be relative to each market is even trickier until you know for sure what people are willing to pay. And guaranteeing salespeople can meet that quota without having a guaranteed number of leads from marketing in each geo is perhaps the hardest part. A big hurdle for sales teams in local markets in the early stages of market intensification is the lack of local pricing and packaging. Many companies go into these markets without a clear strategy for pricing or even discounting their product. This can make or break a sales team’s success in a local market. For this reason, feedback from your salespeople back to product marketing is vital in the early days of building a presence in a new market.
• Operations and data. Having a bunch of international traffic on your website before you truly have an international strategy can be confusing. It can put companies in a situation where they either tend to focus on their home country and ignore the rest, or at the other end of the spectrum, get overly excited about too many countries hitting their website and marketing funnel at once. For companies that are eager to grow globally, it can be easy to misinterpret local market signals. Sometimes, metrics may indicate strong “market pull” from a given country that is hungry for what you are selling but might not be a perfect fit for you today due to your lack of a customized local offering.
Depending on your business and which types of outsourced services you choose to use, additional areas of increased complexity that are likely to affect your business early on as you intensify in new markets include: accounting, taxes, billing and renewals, collections, human resources (HR) and benefits, compensation, employment law, mobility, legal and compliance, and more. You don’t need to know all the details up front—your company and employees can learn as they go. But it’s important for you to know that these are areas where you’ll need to give people the necessary time to learn about local nuances and adjust.
Inform Your Strategy with Local Insights and Data
Under the old rules of international market entry, a company had to make a strong financial commitment to a market to even start capturing any data, usually putting employees on the ground to obtain local customer insights, then iterating and learning from there. This process would often take years.
Fortunately, digital companies today that go global sooner than their nondigital counterparts of the past also have a distinct advantage: earlier access to local data and local customer insights. Because they’re already in more markets earlier in their history, digital companies can make use of company-specific data and insights to determine exactly where to intensify their growth efforts.
Under the new rules of international expansion, you can analyze performance across several areas to make more strategic decisions about where to intensify. Business leaders can look at key performance indicators in various areas. Looking at data this way requires country-specific reporting, which often requires a certain level of operational and analytical sophistication that many companies don’t have until later in their evolution as a business.
Here’s the bottom line: If you’re at a digital business going global quickly, and you need to figure out where to intensify your efforts, make sure to invest in data analysis and local insights by country as early as you can. Only then can you truly paint a quantitative and qualitative picture of each local market and the opportunity it represents for your business. Otherwise, you’ll run a major risk of going into too many markets all at once, spreading your resources far too thin to make any real impact in any one market.
In the chapters that follow, we’ll look at how you can mitigate those risks, make clear decisions about which local markets deserve to be part of your growth plans, and understand how to avoid common pitfalls on your journey to becoming a global company.
But before we do that, let’s look at one example of a company that embraced going global from its earliest days, not only because its founder wanted to, but because he looked at the data, which made it clear that he would need to go global from the very beginning, in order to achieve his company’s business goals.
LOTTIE CASE STUDY
Global from Day One
When Ian Harkin founded Lottie, a toy company based in Donegal, Ireland, he began with international markets in mind from the very beginning. Today, Harkin’s business is as global as it gets, with nearly 100 percent of the company’s revenue hailing from outside of Ireland. The business reports 60 percent of revenue from the United States, 25 percent from the United Kingdom, and the rest across markets like Canada, Germany, France, and others.
“In the toy industry, with very high up-front development costs, it’s difficult to justify that expense to launch in just one country, so we looked at international markets from the very start,” explains Harkin, the company’s CEO. Launching in many markets at once meant added complexity, but Harkin narrowed the scope to the degree possible: “The path of least resistance for us was choosing multiple markets that speak the same languages. While there will be cultural differences by country, and you still need to work with people in each location, the marketing assets we developed could work across all markets that speak English.”
The company had to overcome various hurdles in order to launch across many markets at once. They had to first find a brand name that wasn’t already found in the brand trademark registry in each country, in order to protect their intellectual property. They also needed to comply with consumer testing legislation in each country, which meant paying a premium to go through one of the top international compliance testing houses. “If you were to take a more gradual approach and launch one country at a time, you’d need to pay for testing separately for each country, which would make the cost of testing more than double,” Harkin points out.
Because the product was conceptualized for global markets from the start, Harkin and team minimized content on the product packaging, opting for visual imagery instead. “The idea was that if we later wanted to go into countries that spoke languages other than English, we wanted to leverage our packaging while avoiding the costs of translation and packaging redesign work,” he explains. The only exceptions were the mandatory safety warnings, required in eight languages, which they added to the packaging globally.
Using a global marketplace was also key to Lottie’s ability to quickly build a brand presence and distribution path in many countries at once. “We integrated our store into Amazon, which allowed us to scale operations while outsourcing logistics and customer service,” says Harkin. Today, Amazon gives Lottie reach into the United States, Canada, Mexico, Germany, France, Italy, Spain, Holland, Sweden, and Poland. “Using Amazon as a platform enabled us to compete globally from an early stage in the company, so we could focus our efforts on product development and marketing.”
Another key factor in deciding whether to launch in many countries at once is knowing your total addressable market (TAM). Harkin knew that the market for toys is notoriously crowded and competitive, with very few segments that grow faster than others. “Focusing on just one country, not even one the size of the United States, would not enable us to achieve our financial goals in the timeframe we wanted,” he explains. “For us, going global early helped our product and brand reach more potential customers, much faster than if we would have expanded one country at a time.”
1
Key Takeaways
• Companies today are less likely to enter just one market at a time. Instead, they often enter multiple markets, and then intensify their presence in specific markets later.
• More services and tools exist today to make it easier to go global than ever before.
• However, going global earlier also can add complexity into a business that you’ll still need to be prepared to handle.
• Data and insights will be of vital importance to inform your decisions on which markets warrant further investment.
• Using a marketplace to launch a company in multiple markets globally from the earliest stage of a business, as Lottie did with Amazon, is a growing trend, and a viable path to creating a “born global” company.
