Entering the European Market Successfully How-To Guide

1. How-To Guide Entering the European Market Successfully Executive Summary You are successful in selling your products or services in the domestic market, with a satisfied client-base that relies on your solution every day. You have proven that you know how to successfully build a profitable business. You are managing a team of professionals that are driving your business and pipeline with qualified opportunities. At the same time, you need to think about the company future, as your goal is to increase revenues and profits to create continuity and growth. One way to accomplish this is to expand your geographical market. Many companies, particularly in North America, turn their eyes toward Europe as an expansion target, because of perceived cultural and economic similarities as well as lower language barriers. Leaving your domestic comfort zone to operate in another country or even continent requires careful planning. Expanding into new geographical markets is very exciting, but also very nerve-wracking. Any firm considering entering into international business transactions must understand that doing business abroad is not a simple task. It is stimulating and potentially profitable in the long-term but requires much preparation and research prior to the first transaction. This How-To Guide will describe the steps required to successfully expand into the European market beginning with understanding market potential, identifying product- market combinations, identifying a local partner and then launching & selling your solutions. Understand market potential Europe is probably the most heterogeneous continent on our globe, making understanding market potential more challenging than in more homogeneous markets. Because of the © 2013 Demand Metric Research Corporation. All Rights Reserved.

2. How-To Guide European Union, it’s tempting to view Europe as a single market. In reality, you must consider each country as a market, because each country has a different mix of history, culture, language and business etiquette. To properly understand the potential of the European market, it’s important to research and focus on the basics: Target market.Don’t make the assumption that the same target market that has produced domestic success exists in the same way in the European market. Existing providers. Very rarely is there a vacuum when it comes to solution providers in the European market, and the cast of players likely looks very different than it does in the market you call home. These existing providers will have better presence, partnerships, relationships and networks than you will, advantages that can easily negate whatever product advantage you can provide. Industry issues. The problems afflicting the industries you target in Europe may differ dramatically from what you see in the domestic market. Just because the industries are the same, it’s foolish to assume the same problems exist and the same solutions apply. Trends. Different markets are affected by different trends, and without researching the trends that influence your target market, your European expansion venture can fail. For example, the European market is far more sensitive to environmental issues than the North American market. Costs and technologies that benefit the environment are often embraced in Europe when they are rejected in other parts of the world. It is possible to obtain European market information in analyst reports or online. While these are valuable, there is no substitute for the expertise of in-market business professionals. As you research your possible entry into the European market, identify local advisors and experts that have hands-on experience in the region. © 2013 Demand Metric Research Corporation. All Rights Reserved.

3. How-To Guide Identify product-market combinations A major trap for companies launching business in Europe is to think that product or service that sells well in the domestic market will have success in the European arena too. However, this is simply not true! To avoid falling into this trap, good market research is not only necessary for success, but for survival. The goal of your research is: To identify markets for your products. Use the same product management and marketing disciplines that lead to domestic success, and these generally are product positioning and market segmentation. Commit to the identified markets. Once your research has identified the highest value market segments and the product positioning for them, commit fully to them. This means staying focused on selling only these offerings into identified profitable markets. Identify a local partner A mistake many companies make when expanding into the European market is believing that a lot of physical infrastructure and personnel are required. You don’t need a fancy office and a full-blown sales team to start your first market activities and prospect visits. For most companies, there are better ways to quickly begin operations and generate a revenue stream without dealing with: Recruiting and hiring staff. Unfamiliar, highly complex employee protective labor laws. Language differences. The many other challenges of gearing up a European business presence. © 2013 Demand Metric Research Corporation. All Rights Reserved.

4. How-To Guide The best thing you can do is partner with an experienced, local business development expert. A trusted local advisor can help you navigate the cultural and regulatory complexities of the European market, saving your venture much time and frustration, particularly in the critical start-up phase of operations. Launch and start selling After spending many hours at the drawing table, your research has identified target countries, potential markets and the perfect offering which has appeal to prospects. You’ve partnered with a local business development expert to have a base of operations and streamline your entry into the market. Now is the time to pick-up the phone, talk to your market and get the sales machine working. Use your initial market contacts as a “soft launch” into the market. While it’s ideal to sell something as a result of these early sales contacts, use the intelligence you gain from these contacts to validate your research about target markets and your value proposition. Don’t be afraid to change your sales pitch, narrow down the target market or change your pricing. Adapt as necessary to succeed. Once you’ve validated that your European business model is working, its time to scale up your sales efforts and market presence. Action Plan: Entering the European market If you’re planning to expand into the European market, take the following steps in order to succeed: 1.Gauge market potential Don’t let your domestic success lead you to assume success in Europe is guaranteed. Use a disciplined approach to study the market. Assume that © 2013 Demand Metric Research Corporation. All Rights Reserved.

5. How-To Guide the European market operates differently than the domestic market, because it does. Your assessment of market potential needs to consider which target market(s) is ideal, who the existing providers are, how industry issues differ and what trends are influencing the market. 2.Identify market-specific offerings The offerings you sell domestically could sell well in Europe – or they could fail completely. Do the research to understand what solutions are needed in the European market, and then determine if you can provide them. Don’t attempt to find a problem your existing solution can solve, because this approach tends to lead to over-optimistic assessments of solution-market fit. Once you’ve identified one or more solution combinations ideal for the European market, commit to them. This means putting the marketing resources behind them to allow them to succeed. It also means ignoring distractions and temptations to pursue sales for your other solutions that have not been vetted for the European market. 3.Identify a local partner This action is perhaps the most critical success factor. An experienced local advisor will understand the need to do all the things referenced in this How- to Guide. Trust is the foundation of your relationship with a local advisor. Take the time to build a relationship. Invite the advisor to meetings at your © 2013 Demand Metric Research Corporation. All Rights Reserved.

6. How-To Guide headquarters. Take the time to travel and meet with the advisor on their home turf. 4.Begin sales operations Begin making sales calls into the target market segments. Use your local advisor to help schedule calls with ideal prospects. Include your local advisor in these initial calls to help navigate the nuances of the local business culture. Use what you learn in your initial calling efforts to validate the positioning of your solutions for the target market. Be agile and willing to change prices, terms, features or whatever is necessary to gain traction quickly in the target market segment. Once it is clear that you have a solution positioned well for the target market, prepare to scale up quickly. Competitors will have almost instant awareness that you are active in the market, and they will not grant you a “grace period” to get established. Bottom Line Approach your international opportunity in the same way you would your domestic operations– using sound business fundamentals. A local advisor can help you develop an international marketing plan, assess your present market situation, business goals and commitment - all of which will increase your opportunity for success in the European market. © 2013 Demand Metric Research Corporation. All Rights Reserved.

7. How-To Guide About the author Han Verbaas is a member of the Demand Metric Senior Analyst Network. Han has over 20 years of experience in corporate marketing, product marketing, go-to-market strategies and sales & sales management for technology companies. He is the co-founder of Emeago, supporting companies in developing their business in the Netherlands and Europe with a focus on profitable product-market combinations. Prior to Emeago, Han served in different international sales & marketing positions successfully launching companies and solutions in Europe, Middle-East and Africa. © 2013 Demand Metric Research Corporation. All Rights Reserved.