David Liu
As sales increase, most founders tend to double down on what already works to keep growing. But few consider expanding laterally — taking a business model or product that already works and bringing it to a new geographical market. After all, it can seem like a risky move at first, as customers often differ drastically culturally and socioeconomically across borders.
Despite their core differences, people around the world inevitably share many of the same pain points in their daily lives and while doing business. Sure, you might not be able to tap into your domestic relationships, keep your existing go-to-market strategy or even reuse your messaging while entering a new market. But that’s why expanding internationally is hard and something few founders can do well.
When I first started Deltapath, we focused primarily on the U.S. market. But since 2001, we’re now serving customers in 94 countries.
Each time my team expands to a new market, we consider four primary factors before we launch. These considerations will help you avoid costly hurdles and allow you to achieve the best results possible without having to reinvent the wheel with every new launch.
How do culture and market viability differ?
In assessing the market you want to move into, there is often an opportunity to rebrand or shift your product’s focus. Intuitively, having no brand presence in a new market should be a disadvantage.
But we see time and time again that, done right, your brand’s namelessness can be a significant advantage depending on how you’re presenting your offering differently from how you do so domestically.
For instance, when I first brought Deltapath’s VoIP product to Asia, my team and I learned that people tended to value tangibility over utility. By bundling computer server appliances with our software, customers were more likely to purchase because receiving a physical item appealed to their sense of value. And that nuance made all the difference for us.
That’s why success abroad isn’t just about repeating what already works domestically; it can be about innovating on how you sell.
Regulatory barriers can impact your launch
Because each country has its own set of laws and regulations, it is crucial to understand how that country’s tax, labor, intellectual property and advertising laws differ from your home country. Some regulations may seem unreasonable, but they are firm prerequisites to even considering doing business in those regions.
A friend of mine operated a job-seeking website in China, but keeping the website’s Internet Content Provider (ICP) license required constant interactions with Chinese authorities. Their reasoning? The website ran ads (from Google AdSense) and China deemed them inappropriate. In comparison, AdSense is perhaps the most common source of digital advertising in the States.
Aside from having unique concerns over censorship and government interaction, it may also be productive to make sure that your intellectual property is protected. In Deltapath’s case, we make sure to secure all of our company’s trademarks and products in whatever countries we are looking to move into long before we make our first sales there.
We think of Apple’s 2012 IP debacle — which cost the company more than $60 million in settlement fees — as a motivating cautionary tale.
Back then, Shenzhen Proview Technologies owned the iPad name in the Chinese market. To get back their rights to the name (something Apple would never have to do in the United States), it had to pay this hefty sum.
You might be tempted to save money on hiring a lawyer to help you navigate these concerns, but trust me, it could be well worth the investment to know these regulations ahead of time to avoid any unpleasant surprises.
Can you get your partners’ customers to request features?
In most cases, building customer relationships from scratch in new markets is neither fiscally or temporally efficient. So considering partnerships with companies that already have market share and valuable infrastructure could be incredibly beneficial, particularly at the time of your launch.
A recurring trend that I’ve seen from most of our successful partners has been that they pay a lot of attention to what their customers are telling them. If customers are voicing a need for a particular product feature or supplementary service, then you’re a lot more likely to get that partnership if you fit that mold.
That’s why your brand awareness efforts shouldn’t just encompass your typical customer — it should also encompass your prospective partners’ customers. By convincing them that what you offer is something that they need (even before your first direct point of contact with that partner), you’ll have a much more organic conversation around why it makes sense to work together.
And if you’ve already secured a partnership, now’s your chance to go the extra mile. At Deltapath, we’ve seen that when we visit the end customers together with our partners, help conduct product demos and collaboratively assist with pricing explanations, we optimize not only for our partner relationships but also our customers’ experience.
Choose one major distribution partner, or multiple smaller ones?
Especially in markets with larger populations, your product is likely to be sold to a wide audience. In Deltapath’s case, our products were generally sold to enterprises, government, hospitals, retailers, banks and universities. This might not necessarily be a problem if you already have a brand presence in a market.
But in a new market, working with just one distribution partner (even if they’re “big” and well-known) might mean that they own one segment really well and others not so well, which can adversely impact your conversion.
What we’ve found is that it’s absolutely fine to not work with the biggest distribution partner in your market. In fact, smaller, more focused distribution partners could both cost less to work with and yield greater conversion in specific customer segments.
Plus, segmenting out the way we reach specific customer demographics allows us to avoid paying multiples to reach the same customer.
There’s nothing wrong with reaching the same customers multiple times if you’re retargeting. But reaching them multiple times on a first interaction through different channels might permanently annoy customers who may initially be on the fence.
And last, but not least, keep in mind that your distribution partners need to have an incentive to keep selling your product too.
Too often, I see companies sign up tons of distribution partners with the philosophy that the more partners they have, the more potential there is to acquire customers. Though the point about potential is true, when all of your partners compete for the same end customer, the margins begin to slim.
Eventually, the margins may be so small that it no longer makes sense for partners to continue selling your products. Sure, partners can help you navigate the nuances of highly crowded international markets, but think critically about what new value you’re receiving from working with each of them.
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