4 Critical Steps Required To Expand Your Products and Services Globally

Over the past few years the pace of globalization has increased pressure on companies to contemplate “when” and “how” they should expand internationally. A frequent question that many business executives are asking themselves are, “I want to target a new geographical area for selling my products/services. What are the necessary steps I need to take before/when targeting these areas?”

These four critical steps are highly dependent on what you are selling and your distribution strategy (i.e. direct or channel). In no particular order:

1. Legal Analysis

Analyze the legalities of what and how you will penetrate the market. If you are a U.S. company, legally you may not be able to “do in Rome as the Romans do” (particularly in Asian or Middle Eastern countries). I highly recommend you research and find a local partner/agent/consultant for the geography you are contemplating.

2. Market Analysis

Conduct a detailed market analysis to include size, maturity, competitors, political and legal environment, pricing expectations, etc.

3. Time to X Analysis

Determine your time to market, time to revenue, etc. Some markets may require a long time to penetrate due to having to build relationships, hire partners, establish a local legal presence, etc. Most markets outside of the U.S. do not work at our same breakneck pace. They believe in building and investing in personal relationships prior to entering into a contractual arrangement. Ultimately, you need to decide how long and how much you can invest in opening up a new geographical market.

4. Strategy Analysis

Many companies want to expand, but then they don’t make the strategic commitment at the senior level to follow through. You will need to incorporate and institutionalize the expansion strategy at the corporate level and then build the respective operating plan to manage the expansion.

 

Take the Sales Executives “IQ Focus Test”

 Note, before you read any further, cover up your screen below the asterisks. One of the most outstanding business executives that I know and admire uses the following question for every person he interviews. At first I thought it was a silly question. But after years of working together and discussing what it takes to be effective in today’s complex business environment, I realize that his question can be very revealing as to how a knowledge worker processes information.

Please be honest and don’t read ahead (i.e. cover up the bottom of the screen below the asterisks).

In fifteen seconds or less, decide which of the following statements is the most grammatically correct? 

1. “The sum of seven and five IS eleven” or
2. “The sum of seven and five ARE eleven”

*******************************************************************************************************

Now that you have your answer, let’s analyze the possibilities.

1. “The sum of seven and five IS eleven.” Wrong
2. “The sum of seven and five ARE eleven.” Really Wrong.

The correct answer is neither. The sum of seven and five is “twelve”. If your answer was wrong, you are not alone as we have found that approximately 90% of interviewees answer this problem incorrectly. The primary reason is that the interviewees accept and do not challenge the premise that is presented to them. The goal for a sales executive is to avoid being an “order taker” and be more of a “solutions discoverer”.

So what is the relevancy? The relevancy is that every day sales executives (and knowledge workers) labor away on the wrong issues, problems, and opportunities due to focusing on pre-conditioned premises. It is all too easy to fall into the trap of focusing on the “reality you are given” versus “defining a reality for yourself”.

Some examples of the realities sales executives are given:

(a)   Your price is too high.

(b)   We only buy from our current supplier.

(c)   We need to check out your competitors.

So how do you define your “reality”? The answer lies in sharpening ones focus. I define focus as the process of identifying what one “is not” doing, versus what one “is” doing. Thus, if you are winding down the quarter and you need to close the deal, it is beneficial to write down all of the activities that you are going to “avoid”. Your list could address the above examples as follows:

(a)   I will avoid lowering my price by consistently communicating how my product/service increases value to the customer.

(b)   I will avoid letting my customer being comfortable with their current supplier by highlighting the current supplier’s inefficiencies.

(c)   I will avoid allowing the customer to have time to check out my competitors by giving them a reason to purchase now.

From my experience, successful sales executives consistently focus on the “right” things to do and “avoid” the premises that tend to box them into a pre-defined situation.

Thus, the moral to this story is to make your own reality by challenging the premises you are presented and operate as a solutions discoverer.

 

Effective Selling: How do you dig holes to draw water?

If a geologist told you that in order to draw water from a parcel of land, you would have to dig down 10 feet. The obvious best course of action is to dig one, 10 foot hole. The task would not be difficult and once you dug the hole, you would draw water. This is not a trick question and it certainly does not require a complex answer.

But too often, the ineffective sales executive over complicates their situation and strays from the salesmanship basics: building relationships, exploring customer needs, overcoming rejections, etc. The ineffective sales executive loses focus on the corporate strategy. They keep reinventing new things to do versus executing the tasks at hand. To the dismay of the geologist, the ineffective sales executive digs ten, 1 foot holes. Hence, they never draw water!

In our current internet age business environment, it is easy to become distracted. You are juggling an overflowing e-mail inbox, your customers are demanding more and more for less, and you may be experiencing sales management pressure to just “do something”. It is easy to fall prey to the sales management fallacy of believing that hyper-activity will lead to immediate results. Unfortunately “busyness” does not close deals, persistent execution does.

As a sales manager, it is easy for me to spot out the “hole diggers”. They are ones that show up every week on the sales call with some new close strategy or master plan to make a quick sale. This in itself is not the problem. The problem is that they are not persistent in executing all of the other strategies they were pursuing from the previous weeks, i.e. they did not finish digging their holes. This is one recipe for lack of sales execution.

The winning sales executive stays focused. They dig one stroke at a time without looking for a “new” sales tactic to divert their efforts. Thus, on the next occasion when you ponder a change in your selling approach, ask yourself, “Am I starting to dig a new hole?”

Copyright© Rob Day 2008 

 

Business Case: An “Extreme Opening” in Singapore

This is a fictional case study that will test your creativity and wits in negotiatiing and closing business in the global market place.  Copyright© Rob Day 2008 

Dr. Ling, SingCast Cable’s V.P. of Products, was in full control of the meeting. He sensed it was time to push for more concessions from CyberWave’s negotiating team. CyberWave, the four year incumbent e-mail platform provider, had been very uncooperative in renegotiating the current contract. But now with eWeb’s, a Singapore start-up company, competitive offer on the table, Dr. Ling had a real opportunity to significantly cut his growing e-mail operational costs.

Dr. Ling looked directly at Mr. Hua, CyberWave’s Sales Director, and stated in a quiet, gentle tone “Mr. Hua, we cannot afford any longer to supplement CyberWave’s licensing fees for subscribers who sign up for free accounts. As you will see in the counter-proposal in front of you, we expect your company to charge nothing for these subscribers going forward, but of course we will pay for those subscribers who opt for a “for fee” package.”

Mr. Hua , trying to mask his displeasure, interjected “Dr. Ling, this is most difficult to comprehend.”

Barely pausing, Dr. Ling did not respond and continued, “We are also leaning towards outsourcing the entire e-mail hosting operations to the selected vendor. We expect ‘all’ operational and technical costs to be included: hardware and software, telecommunications bandwidth, and any direct or indirect costs associated with the migration of the subscribers to the selected vendor’s facility.”

Dr. Ling glanced at the only American in the room. He was surprised that Mr. Hua’s manager had not reacted. He knew he was asking for a lot, but it was his job to ask for as much as possible. For all he knew, CyberWave might just be desperate enough to agree.

Dr. Ling continued, “Mr. Hua, I am sure you are aware that a new vendor has emerged — eWeb. They have crafted a very creative business proposition that many within our company view as a long-term business commitment. Obviously I am not at liberty to provide you with the details of their proposal, but I would encourage you to be very creative and aggressive with your business model. We are looking to award this contract for a three year term. SingCast and CyberWave have had a good business relationship over the last four years, but as I mentioned in our last meeting, SingCast feels that your company has not been proactive enough in finding a business model to lower our total cost of ownership. If you value our business, now is the time to demonstrate your commitment.”

Patrick Wilson, the only American in the room and Mr. Hua’s manager, could not believe what he was hearing. Patrick could not remember the last time he heard such an “extreme” opening position for a contract re-negotiation with a customer. It took all of his mental strength to refrain from interrupting, but today he was going to take his cues from Mr. Hua. Since Mr. Hua remained stone faced, he did the same. This was Patrick’s second trip to Singapore. After twelve years of selling globally, he knew better than to let his “American emotion” take control of his mouth. Instead of talking, he decided to write Dr. Ling’s points down on his note pad. He wrote:

 SingCast Counter:

1. Charge nothing for any new subscriber that does not sign up for a “for fee” account

• Reaction – Ridiculous! We have no control of “how” SingCast charges for their packages. Whether they charge or not, a subscriber is using our software, we need to get paid.

2. Outsource entire e-mail operations

• Reaction – Could be a great opportunity to generate new fees and leverage services from a 3^rd party outsourced sub-contractor

3. Outsourcing costs would have to include: hardware and software costs, monthly telecommunications bandwidth costs, and all costs associated with the migration of the consumer accounts

• Reaction – Need more fact finding. A model like this has revenue potential, but many risks (we could financially lose our shirts). Not sure how we would account for and control bandwidth costs

4. eWeb is the competitive vendor – Is Dr. Ling threatening us?

• Reaction – Very scary! The CEO, James Li, is an ex-CyberWave VP of Engineering. James was with the company for three years and was responsible for the e-mail solution product development. He took three of the best developers with him to start the company in Singapore.
• James knows our product inside and out and if he has built a new product – it is probably very good.

5. Three year term for the contract. Looking for a new business model that lowers total cost of ownership

• Reaction – Since he said new, probably safe to assume that we have to change all of our pricing terms and the model.

SingCast was Singapore’s number two market share broadband vendor. After only two years from receiving its government license to offer consumer services, SingCast was on pace to surpass MediaOne, the market share leader for broadband connectivity and consumer e-mail subscribers. SingCast’s multi-million dollar bet of wiring fiber-optic cable directly to consumers’ homes was paying off. Consumers in masse were cutting the cord with MediaOne, primarily due to its poor customer service, high prices, and aging technology infrastructure. SingCast’s stock was hot, up 42% in 9 months. The shareholders were pleased with SingCast’s new strategic emphasis on consumers versus its previous strategy of primarily targeting enterprises.

Dr. Ling was uncomfortable with all of the praise and attention he was receiving. He was the visionary leader who convinced SingCast’s CEO and board to bet big on wiring the fiber-optic cable directly to consumers’ homes. But with the corporate success, two significant challenges were emerging. First, SingCast’s server farm was not keeping pace with subscriber growth as SingCast underestimated just how popular their solution would be with the Singapore consumers. Second, the initial contract pricing model with CyberWave was netting CyberWave millions of dollars of licensing fees for “new” subscribers who could sign up for the SingCast service for free.

Dr. Ling knew early in the project that the licensing fees paid to CyberWave could become a financial issue, but he lost the argument with the marketing department. They were adamant that the only way to get MediaOne subscribers to change vendors was to offer “free” accounts. Hence, hundreds of thousands of subscribers had converted their basic personal email account, but less than the predicted amount opted for the “for fee” packages. To the financial markets and shareholders, the appearance of all these new subscribers was a positive, but in reality SingCast profit margins on these subscribers was very small and the cost of acquisition very high.

Case Questions:

1. Construct two possible reactions to Dr. Ling’s opening offer and support each with pro’s and con’s of each reaction.

i. List new possible pricing models.

ii. List ideas to control costs.

iii. Suggest new ideas for Dr. Ling to propose to the marketing department regarding SingCast product packages.

2. List two possible approaches in dealing with eWeb Wizard and support each with pro’s and con’s.

3. List any relevant issues that may pertain to this customer being in Singapore.

For more information about this fictional case or some suggestions on how to approach it, go to http://www.streetsmartsglobal.com/.

Copyright© Rob Day 2008