The potential for exponential growth associated with global expansion is alluring for online businesses — particularly services-based companies. Gaining a first-mover advantage in new markets is often a more cost-effective way to secure market share than penetrating a cluttered and highly competitive marketplace.
Global expansion offers diversification and reduces geographic risks by generating revenue from different regions. These economic benefits can make a business – especially a start-up — more secure, with greater potential for survival.
Based on my experience over the past five years in expanding into multiple diverse global markets, including Japan, Taiwan, Spain and the Middle East and North Africa (MENA) region, I’ve gained these five insights to expand your online business globally successfully.
Related: The Right Way to Grow Your Business Internationally
1. Avoid one-size-fits-all strategies
When rolling out an expansion strategy, consider that the global marketplace is not homogenous. While the internet provides a single platform to scale a business across geographic borders, there is no one-size-fits-all approach that companies can apply.
Every territory has specific characteristics, from the local economic, market and competitor landscape to unique cultural traits, consumption and usage trends, and different mannerisms among local consumers.
Related: One Size Does Not Fit All: Customer Centricity Is The Key
2. Identify market potential upfront
When it comes to market development, it is vital to understand whether a target market holds growth potential. There are two approaches when identifying possible new regions. As a start-up, we tend to focus on the less resource-intensive and time-consuming option by conducting our own analysis.
This starts with desktop research, and we will commission more extensive qualitative and quantitative analyses if the initial research identifies growth potential. When conducting our desktop research, we consider five factors to determine a region’s market potential:
- Macroeconomic statistics: Factors such as population size and demographics.
- Financial statistics: We consider data relating to regional GDP, economic potential and average household income, amongst other statistics.
- Infrastructure: As an online service provider, we analyze regional internet service penetration to ensure broad coverage and suitable speeds.
- Online adoption and usage: Potential target markets must already have scalable online payment capabilities and widespread adoption.
The second approach entails paying an agency to conduct research but the costs and time to completion are generally prohibitive. Furthermore, these involved research projects can take 2-3 months to complete, and the market might change during that time, which is a strategic risk.
Ultimately, both approaches will deliver more or less the same answer: Either a ‘yes’ or a ‘no’ because it is a binary option. We prefer the lower cost and quicker route to understanding the potential market and its net present value (NPV).
Related: How to Succeed in International Markets
3. Test potential expansion markets
After identifying a potential new market, it’s time to test it. It typically takes two weeks to generate and convert leads in regions with similar languages and cultures to existing markets.
For example, when we entered Chile, we mirrored our Spanish Latin page from our Spanish parent area, allocated teachers, some budget and some remote staff from the Spanish sales team to test it. This process meant we had our first customers within two weeks.
In contrast, entering unique regions dissimilar to any other region takes more time as we need to customize and localize elements such as our landing page and basic parenting area. In these instances, it can take up to two months to launch.
A pilot test is always the first step, regardless of the region, as it enables us to identify strategically significant trends and test specific approaches. In this phase, we often fail, but the more we fail, the more we learn and can make the right decisions.
4. Invest in performance marketing tools
In every new region, we allocate a dedicated person to manage marketing. In our experience, investing in performance marketing tools is key to market penetration. You will quickly determine whether the region offers a viable market by tracking the correct metrics.
However, it is important to understand that the important metrics may differ between regions. Common metrics we track include:
- Conversion rate
- Cost per client acquisition
- Customer retention rates
If the data indicates slow uptake or a lack of interest, businesses can adapt their approach or choose to fail fast to reallocate resources to other identified regions.
Related: How Small Thank Yous Can Have a Big Impact on Your Business
5. Ramp up quickly in the new territories
Once we decide that we are ready to invest, we implement multiple initiatives concurrently to launch the business. This includes investing in broader marketing opportunities and the best-performing online channels alongside influencer marketing, public relations in local media and affiliate partnerships.
Partnering with a local marketing agency in regions where you have no experience in launching online ads is often a prudent approach to maximize ROI and achieve critical metrics early on.
Other necessary steps include establishing infrastructure such as telephony and messaging services so customers can engage with the business. We also implement standard workflows to ensure a minimum standard of customer service.
From a human resource perspective, building a local team to support the remote team that implemented the pilot testing phase is important. Key local resources should include salespeople and a client service manager. While the team can remain small initially, their goal should be to work through the sales funnel, process every lead and booking, and identify reasons for poor conversions or customer attrition.
Customer development also becomes critical to success in this phase. The business must talk to customers to monitor satisfaction levels and get feedback that identifies potential technical issues and informs product development and marketing.
In this regard, we conduct a care call procedure to get customers’ feedback after using our service for a set period. For example, in Korea, we identified issues around lag times on online classes due to very high-speed internet speeds there. With this feedback, we escalated the issue to developers, who worked to fix it to meet customer expectations.
This ongoing testing also informs business strategy in the region. For instance, despite generating numerous bookings in India, we could not achieve conversion targets. Research identified pricing as the major barrier – average pricing in other regions was expensive for consumers there.
We determined that success in India would require 2-3 years of continuous investment in marketing and product development to individualize the offering. While the region offers huge growth potential, we ultimately determined that the business could not allocate these resources to the market and exited after six months of testing.
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