Breaking Out

In my most recent article about the Online Brand Protection market, I identified that there are a number of vendors that have originated in one region and whose revenues are capped by the opportunity in that geography. Similarly, there are some who could be gated by the segment they have chosen to address (eg digital piracy, channel control, search monitoring) or undue concentration on the high or low end of the market.

This is also true for Corporate Domain Management where there are actually only two players with that have managed to get above $50m in revenue from the sector, while there are several in the $5-$15m range that have existed for some time but struggled to get beyond that.

Following the article, I received a number of questions that suggested it is worthwhile outlining, at a high level, what the key principles are in terms of breaking out of a region or segment and opening the door to higher growth.

My qualification for answering this question is quite simply that I spent the last twenty years of my career doing exactly this - taking technology solutions from one region to market across both EMEA and the globe. Details of that can be found in my LinkedIn profile.

Here are what I consider the core principles:?

Make a plan that fits your means and ambitions

Expansion of any sort is costly and, in today’s capital markets, cash is tight.

This means that it is vital to make the right choices – “going global” from a European, Asian or US base is a non-trivial exercise and so should be dealt with piece by piece unless there is a bottomless pit of funding. Which are the most easily accessed adjacent markets, what language skills do they require, how receptive to non-local sales and support teams are they?

At the most simplistic level, this might suggest that for a US based organisation, the UK or Nordic countries might be an easier place to start with than France or Germany, for example.

What the plan consists of will be very individual to each situation and needs to balance opportunity with difficulty (for example the opportunity in the USA is great, but the cost of covering it is high for a European vendor). What is key is that the plan be agreed by all of executives, investors and operational management, as any gap in expectations will lead to trouble down the road.?

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Marketing is key

Wherever or whatever is determined to be the target, getting a strong marketing mix in place is vital – entering either a new geography, product sector or market segment (eg SME or Enterprise) cold as a sales team is challenging, so having outreach, webinars, in-language website pages, etc is an essential precursor to putting salespeople in place.

In my experience, this is often skimped upon but, in my opinion, throwing sales dollars at a new market without a level of “aircover” is foolish in the extreme and reduces the chances of success dramatically - just look at the OBP market and how Red Points have built a market leading position in exactly this manner.

Recognising that, however, is only half the battle. Deploying effective marketing with thought leadership right through to lead generation into new markets is a non-trivial exercise that requires the best people, executive involvement and appropriate budgets.

All of these are hard to find, in my experience, but two companies I worked for that really succeeded in "breaking out" were Plumtree Software and MarkMonitor and both had truly exceptional marketing.

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Sales Mix

In terms of actually driving sales in a new market, I can state unequivocally that neither OBP and CDM works particularly well as a partner led sale, unless they are the exclusive representative in a geography or sector and, even then, they have to be highly committed and well trained.

I have seen great success with exclusive representation in hard to service locations but attempts at co-selling with digital marketing agencies, law firms and such like across Europe were unsuccessful due to the sheer focus and sales energy that is required to win business in the OBP and CDM sectors. People who do not live or die from the success of your solution just don’t stick with it in my experience.

That is not to say that referral partners cannot be helpful, but the driving of the sales campaign with a predictable close process needs to remain within the organisation.

Although it is largely a direct sell, we have seen relatively low cost inside sales staff generate very good returns, especially at the lower end of the market but winning the largest accounts requires the most capable and qualified salespeople.

Interestingly, provided that the first level management layer has good experience in the process of sales, subject matter experts who have come up the customer service route can be extremely successful, as the space benefits from the deep knowledge and credibility that they often display better than a long term tech salesperson.

What is undoubtedly true, as is the case with most technology solutions, is that the quality of the sales team will directly impact results beyond almost anything else.?

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Lighthouse Customers

A key step to achieving a bridgehead into a new region or sector is at least one “lighthouse customer” that needs to be both local and well known – for example, having Google as a domain management client is obviously a global asset, but having Natwest is more relevant when you are pitching to HSBC.

I would therefore go as far as to draw up a list of potentially notable accounts within the new geo or sector and very actively target them - every attempt then needs to be made to secure at least one early on, and marketing, sales and senior management effort should all go into that.

I would also advocate using any pricing concessions that are required in the closing process as levers for publicity in return. There is little point in having lighthouse customers if you cannot talk about them !

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?Customer Success

Closely associated with this is ensuring that the client services team have the resources, skills and local language to make new accounts successful and referenceable as well as a source of up and cross-sell.

That may be challenging, if entering a new geography with specific language requirements, as staff need to be found, hired and trained ahead of client wins making the upfront investment even greater. Depending on the region, these staff may be located with the rest of the CS team or even have to be closer to the customer, if major time differences exist.

There are strong arguments for having the entire CS team in one or two locations (to cover time zones) as there is so much benefit in terms of ease of training and managing best practice and consistency of process.

The other side of the coin is that proximity to the customer and local salespeople also has benefits and, in some geographies, (eg Asia) those may outweigh the advantages of centralisation.

One of the biggest challenges in the CDM space is balancing upsell with service – CSC, notably, has gained a reputation for it’s “Account Management” team really being a sales driven organisation rather than being focused on customer care, while MarkMonitor, at the other end of the spectrum, has always focused on quality of service but possibly not maximised the revenue generation opportunities that products such as SSL’s, blocking, enterprise DNS, etc offer.

The solution here is really around training and mindset of that team - “best advice” has to be the watchword eg where security features are of value they should be proposed but not a long list of defensive registrations in new gTLD spaces that are simply designed to make money. Generally, clients appreciate positive proposals that are in their interests and constitute good advice.

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M&A

Of course, a shortcut to global and revenue expansion is to buy or merge with a competitor or provider of an adjacent solution who has coverage in the territories you are seeking to reach.

This can be a great accelerator but is completely dependent on finding the right business with appropriate coverage and a complementary set of offerings – if they are a direct competitor, you are essentially buying clients and geographic cover, and you may have some cost saving synergies (tech, engineering resource, admin, etc) but if they are in a related space but less solution overlap then there is a strong possibility for cross-sell into both sets of customers.

This is always worthy of research, because the ideal fit is a terrific win if it can be achieved without breaking the bank, but even then it is not without risk – integration of both technology and cultures is a non-trivial exercise and can be a major distraction from the process of running a successful company.

Given the number of small players there are in both these markets right now, it seems inevitable that some consolidation will occur over the next couple of years.

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People

Without doubt, in the sort of smaller organisations we are talking about, the quality of people at all levels and the culture that supports them are vital. ?The contribution of each person is way more critical than in a business with thousands of employees

All the successful companies I have been fortunate to work within have been populated with exceptional individuals but also a team ethic and culture which makes the whole so much more than the sum of the parts. Therefore, staff selection, on-boarding, training and the quality of company communications, internal as well as external will be vital in making a leap from a regional player to something larger scale - this is the sort of intangible that the best senior executives bring to an organisation.

Finding the right people can take time, but it is definitely worth waiting for the best candidate rather than compromising simply to fill a role. This inevitably results in the person leaving months later and the process being repeated only having lost vital time and impetus.

I have seen, first hand, how positively the right people, processes and development can impact results and, on the other side of the coin, how damaging anything that erodes that culture of success can be.

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Summary

Breaking out of geographic or segment boundaries is a big step, but an essential one if you are to be anything but a minor player and there are many vendors in both the OBP and CDM sectors that are positioned for this right now.

Above all, getting a plan in place that is agreed at all levels of the business, including investors, is a prerequisite. Then, building a go to market that leads with marketing, balances sales model to the target client set and includes customer success for long term growth and retention.

Above all, finding training and keeping the right people is essential to any growth business in this sector.

If you would like more detailed advice, or specific help, feel free to reach out.

Charlie Abrahams

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