Expanding into international markets has become a vital strategy for businesses to increase revenue and profits. Success in international expansion has even led some businesses to receive more income from overseas than domestic markets.
Expanding a business in new markets is no small feat. Whether a company is scoping out its first international business case or adding a new market to its existing portfolio, the process of breaking into new territories can be can fraught with uncertainties, risks and other obstacles.
But what are some of the key factors international businesses should consider in order to excel in new markets?
Build the right relationships
A successful business owner knows the importance of building and maintaining third-party relationships. Choosing the right international partners is one of the cornerstones of a successful expansion strategy – especially if it wishes to steal market share from local competitors.
This includes mastering the art of commercial negotiating in different markets where countries such as China tend to favor local companies. Regardless of the size of the operation or budget for international expansion, partnering with a local firm is a good way to gain a foothold in foreign markets.
Google has recently partnered with Tencent by signing a patent sharing agreement in order to collaborate in developing new technologies. By partnering with the China-based tech giant, Google is now in a better position to expand into the market where many of its products are currently blocked by China’s great firewall and government intervention.
Similarly, Apple’s partnership with China Mobile, the largest wireless network in the world, enabled the US-based tech company to supersede local competitors to become the number one smartphone manufacturer in the country.
Put customers first
Customers are in control more than ever before. For growing international companies, it’s imperative for business owners to understand the local needs of their customer base in order to meet expectations and ensure the product or service provided is of the highest quality.
Take online payment methods for example. While a debit or credit card is the most common form of payment in the West, eWallet payments are more popular in China and cash on delivery is predicted to be the top online payment method in India well into 2020.
Providing customer support to your international customers in their native language is vital if you wish to increase lifetime customer value. Whether it’s a multilingual live-chat feature, email support or even providing terms of service and answers to FAQs, in multiple languages, on your website. Support features like this will not only allow you provide excellent customer service but can even reduce the costs of operating in global markets.
Millennial consumers are increasingly communicating with brands through channels they’re more comfortable with – airing grievances directly with companies on social networks is commonplace.
Spanish airline Iberia uses its social media platforms as a strategic means to optimize customer retention as well as humanize the airline’s brand. In fact, it updates more than 20 social channels a day, on 11 different networks, with 1.7 million multilingual followers.
As a result, the Spanish airline places local social media management at the core of its customer service strategy. With an estimated 25,000 – 30,000 inquiries, incident reports and complaints every month, Iberia employ native digital teams, ensuring customers receive human-to-human interactions when engaging with the brand on its social platforms – 24 hours a day, 7 days a week.
Invest in the web
It goes without saying that if you don’t have an online presence, there’s a very high chance your business won’t be seen by potential international clients. Companies that provide web-based products and services, such as eCommerce and SaaS, have historically experienced unprecedented international growth online simply by localizing their platforms and offering their software globally.
For example, both Microsoft and Adobe historically produced their products in physical format. However, advancements in broadband speeds and the decline of the optical drive in most lightweight laptops, products such as Microsoft Office and Adobe Photoshop are usually purchased and downloaded on the web.
Shipping, production and logistics costs are significantly reduced, leaving both companies to focus on their customer’s local product needs and development roadmaps.
Companies in industry sectors that pre-date the web, such as the pharmaceutical and banking sectors, have seen faster growth rates when they invest heavily in digital – whether it be online or software-based models – in key areas of the business.
In the automotive industry, online platforms can connect supply and demand globally to increase the efficiency of all players across the supply chain within the business.
Pharmaceutical companies commonly use multilingual social media monitoring in order to keep up to date with what people are saying about their brand or products in local markets. This enables them to better serve their customers and optimize their approaches accordingly.
Localize your content
Research conducted by the Common Sense Advisory found that 75% of online customers prefer to purchase goods or services in their native language. In addition, the survey, which consisted of consumers from 10 countries in Europe, Asia, and South America, found that 60% rarely or never buy from English-only websites.
It’s clear that the absence of a thorough global marketing and localisation strategy creates a barrier for potential customers to truly understand your content and your brand.
It’s essential that business identify the linguistic and cultural nuances of each market they wish to expand in and adjust their brand positioning and marketing communications accordingly.
As a result, business owners can speak directly to their customers in their own language and position their brand among local competitors within their industry. In addition, brands that solely trade online and localize their content benefit from improved search rankings, higher levels of engagement and a better user experiences.
Double down on market research
Some of the biggest brands in the world have made blunders when venturing into multiple markets by either failing to conduct extensive research on a new target market or misunderstanding cultural differences.
In 2000, Starbucks opened its first store in Australia which quickly grew to 84 stores across the country. Unfortunately, with losses over of over $140 million, the US coffeehouse chain had to close 60 stores.
The terrible outcome was due to the company’s inability to conduct detailed competitor analysis – McDonald’s (McCafe) and Gloria Jeans were already well-established and compared better to Starbucks in terms of price and ability to adapted to consumer’s coffee preferences.
A more prudent and proactive approach would have been to first research local competitors and measure the local appetite for a premium coffee shop by opening a single franchise and conduct regular reviews of its progress.
This could have allowed Starbucks to identify and adapt the franchise to the needs of the customer, reduce costs and enable the brand to learn more about the market in order to achieve the best brand positioning.
Although some obstacles can be overcome during international growth, others could have detrimental, permanent consequences to a business and its future expansion goals.
International markets can offer numerous opportunities but it’s essential that business owners form a meticulous international growth strategy as well as employ a localized, culture-first strategy in order to excel locally and globally.