Avoid the Most Common Mistakes that Tech B2B Scale-ups Make When Selling Internationally

Founders and CEOs of tech scaleups often ask me about the common mistakes they should avoid when expanding their sales beyond their domestic market. I will share?six of the most common mistakes?made by tech start-ups when selling overseas and how to avoid them.

Mistake #1: Your product, solution or service (offering) is not ready for the international market

The first question I often ask entrepreneurs and founders is, “Is your product, solution or service (a.k.a. offering) ready for the international market?” In other words, do they meet the following conditions:??

There is a market need for your offering outside of your home country

• You have been successful in your domestic market and have local use cases, reference points, testimonials or some form of customer experience (CX) rating that would be relevant to an early adopter international prospect
• The offering meets all relevant international standards, certification or compliance requirements?
• There is an understanding of how international customers want to be supported pre- and post-sale, including 24/7 and on-site support if needed, and resources in place to localise the process to ensure an appropriate CX experience
• You have a balance sheet and working capital to support international expansion, especially if there unexpected delays, is a need to hold local inventory, provide extended payment terms, make upfront payments etc.??

?Mistake #2: Choosing the wrong country or countries to start with

How should you choose which country to proactively sell into? I believe it needs to meet the following prerequisites:??

• The same customer segment(s) that have been sold to successfully in your home market also exist in the chosen country (even better if you're in the enterprise segment and there are common multinational customers that have been sold to in your domestic market who also have a presence in your chosen country)
• There are local contacts who are prepared to help identify customer prospects and / or sales channels in the first targeted customer segment(s)?
• There is history of early adopter customers in your chosen customer segment?
• The addressable size of the first targeted customer segment(s) is quantified and big enough for an early ROI, and the overall size of the addressable market across all customer segments is known?
• There is competitive differentiation in your product, solution or service locally
• The country is culturally like your domestic market in terms of its business practices, and ideally it has the same language
• Local standards, certification or compliance requirements can be met
• The country is preferably in a similar time zone (this will save a lot of sleepless nights)??

?Mistake #3: Choosing a GTM model that cannot be scaled globally, differentiated from competitors and localised

Choosing the wrong international GTM model can take years to turn around and may be a permanent lost opportunity. I believe the minimum pre-conditions for a successful international GTM model are as follows:

• You have reviewed your home market, your key customer, your sales pipeline, channel and CX metrics and have identified what is working, what is not working and your key findings
• You have developed a cost/benefit analysis and understand the timing of each potential GTM sales coverage option, including direct sales, indirect channel, digital, marketplace, referral, influence, licence, services, JV or hybrid
• You have completed a competitive GTM analysis of the top-priority country in each region (Asia, Americas, Europe/ME/Africa)
• You have a GTM sales model in place for your first country based on your home market findings and it is differentiated from global competitors, your cost/benefit analysis is clearly understood, your timing expectations are aligned, and there is the ability to scale in many countries whilst being localised (i.e. it may be a reseller model but the types of resellers may vary by country)

?Mistake #4: Hiring the wrong people or recruiting the wrong partners

How should you research, identify and hire/recruit the right team members and partners to support your GTM model for overseas success? From my experience, the following actions are a minimum for success:

• As your starting point, document your learnings for your hope market
• Then develop localised country data for recruitment and screening, work with a local advisor who has a strong network, purchase local lists, use industry associations and consolidate it into one list
• Develop a specific screening process for both internal hires and partners based on -

- Connections and credibility to your priority customer segments

- Candidates have a history of executing the roles needed for sales, technical and CX success

- Have the relevant technical and industry background

- Ideally, they have had success at both selling new vendors in their country?and?to early adopter customers

• For internal hires, work with a local advisor (maybe a recruiter or someone in your network) who knows your industry and customer verticals and is well connected in your priority country to help you find candidates who meet your screening process. To get the right people, be aggressive in your search, disciplined in your selections and remain patient throughout the process.
• For recruiting partners, use an active recruitment process (choose those who scored highly in the screening process) for any offerings remotely complex and a combination of an active and passive approach (they come to you) for more pull-based and/or a less complex offering?????

?Mistake #5: Signing a local commercial agreement with a partner/JV that takes years to undo and delivers little to no value

How you structure your partner or JV agreements is critical for successful recruitment, onboarding and generating early and sustained success. Use the following principles to reduce risk and improve the probability of success:??

• All your agreements need to have the right mix of partner benefits?and?requirements properly aligned to the role for both sales and CX success. Requirements should be aligned to your screening process discussed above. Be realistic and, if anything, over generous, but do not go as far as exclusive territory-based agreements.
• If you do feel the need to create territory exclusivity and the partner you have chosen meets all your screening requirements, make sure it has a performance clause that is fully aligned to your internal sales and CX metrics with the option to remove exclusivity for not meeting the performance criteria. Make it time bound.
• Wherever possible, use your own?global?partner agreements (subject to your local country jurisdiction) with a specific addendum per country and /or partner
• Engage local legal counsel to help prepare the local addendum
• As part of your agreement, make sure you get full visibility and access to all customer data in aggregate and individual customer and sales data. Be very specific on this.

Mistake #6: Using the wrong international success metrics, resulting in investor expectations not being properly set

Having the right level of optimism with well-thought-through sales and customer metrics set appropriately to international growth is critical for everyone’s expectations. Consider the following advice when setting your global success metrics:?

• Review your existing domestic sales and CX metrics and consider what is globally applicable and have a clear picture of what is working, what is not working and your key findings
• Conduct local research and discuss with potential partners and local advisors the realistic timing for success of other new-to-market vendors selling to early adopter customers. What can be learned from others who have been down the same path before?
• Spend time understanding the local business sales cycle and culturally specific considerations to understand if there is any seasonality or country-specific nuances in the business cycle?
• Set your global sales success metrics, including revenue (upfront, ARR), GM, customer long term value / cost of acquisition, sales funnel and CX based on home market findings, but localise them to each country based on seasonality, business practises, experience of other market entrants and the localised GTM model
• Priority should be given to new logos and CX (this is the foundation to creating local reference-ability once you move beyond early adopter customers)?
• Agree on pre-launch, post-launch and ongoing success metrics per country

Let me leave you with this thought: for many start-ups, trying to increase revenue by expanding globally can seem like a natural progression. There’s no doubt that?globalisation is a high-risk/high-return business growth strategy, with over 85% of businesses who go global failing whilst the other 15% are often hugely successful. Avoid all six of the above mistakes and you will be well on your way to being one of the 15% who will succeed in your globalisation strategy.

Drop me a DM or email [email protected]?if you would like to discuss it in more detail.