How-To Guide - European Market Entry

1. How-To Guide - European Market Entry How-To Guide© 2013 Demand Metric Research Corporation. All Rights Reserved.Entering the European Market SuccessfullyExecutive SummaryYou are successful in selling your products or services in the domestic market, with asatisfied client-base that relies on your solution every day. You have proven that you knowhow to successfully build a profitable business. You are managing a team of professionalsthat 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 andprofits to create continuity and growth. One way to accomplish this is to expand yourgeographical market. Many companies, particularly in North America, turn their eyestoward Europe as an expansion target, because of perceived cultural and economicsimilarities as well as lower language barriers.Leaving your domestic comfort zone to operate in another country or even continentrequires careful planning. Expanding into new geographical markets is very exciting, butalso very nerve-wracking. Any firm considering entering into international businesstransactions must understand that doing business abroad is not a simple task. It isstimulating and potentially profitable in the long-term but requires much preparation andresearch prior to the first transaction.This How-To Guide will describe the steps required to successfully expand into theEuropean market beginning with understanding market potential, identifying product-market combinations, identifying a local partner and then launching & selling yoursolutions.Understand market potentialEurope is probably the most heterogeneous continent on our globe, making understandingmarket potential more challenging than in more homogeneous markets. Because of the

2. How-To Guide© 2013 Demand Metric Research Corporation. All Rights Reserved.European Union, it’s tempting to view Europe as a single market. In reality, you mustconsider 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 theEuropean market, it’s important to research and focus on the basics: Target market. Don’t make the assumption that the same target market that hasproduced domestic success exists in the same way in the European market. Existing providers. Very rarely is there a vacuum when it comes to solutionproviders in the European market, and the cast of players likely looks very differentthan it does in the market you call home. These existing providers will have betterpresence, partnerships, relationships and networks than you will, advantages that caneasily negate whatever product advantage you can provide. Industry issues. The problems afflicting the industries you target in Europe maydiffer dramatically from what you see in the domestic market. Just because theindustries are the same, it’s foolish to assume the same problems exist and the samesolutions apply. Trends. Different markets are affected by different trends, and without researchingthe trends that influence your target market, your European expansion venture canfail. For example, the European market is far more sensitive to environmental issuesthan the North American market. Costs and technologies that benefit theenvironment are often embraced in Europe when they are rejected in other parts ofthe world.It is possible to obtain European market information in analyst reports or online. Whilethese are valuable, there is no substitute for the expertise of in-market businessprofessionals. As you research your possible entry into the European market, identify localadvisors and experts that have hands-on experience in the region. How-To Guide© 2013 Demand Metric Research Corporation. All Rights Reserved.European Union, it’s tempting to view Europe as a single market. In reality, you mustconsider 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 theEuropean market, it’s important to research and focus on the basics: Target market. Don’t make the assumption that the same target market that hasproduced domestic success exists in the same way in the European market. Existing providers. Very rarely is there a vacuum when it comes to solutionproviders in the European market, and the cast of players likely looks very differentthan it does in the market you call home. These existing providers will have betterpresence, partnerships, relationships and networks than you will, advantages that caneasily negate whatever product advantage you can provide. Industry issues. The problems afflicting the industries you target in Europe maydiffer dramatically from what you see in the domestic market. Just because theindustries are the same, it’s foolish to assume the same problems exist and the samesolutions apply. Trends. Different markets are affected by different trends, and without researchingthe trends that influence your target market, your European expansion venture canfail. For example, the European market is far more sensitive to environmental issuesthan the North American market. Costs and technologies that benefit theenvironment are often embraced in Europe when they are rejected in other parts ofthe world.It is possible to obtain European market information in analyst reports or online. Whilethese are valuable, there is no substitute for the expertise of in-market businessprofessionals. As you research your possible entry into the European market, identify localadvisors and experts that have hands-on experience in the region.

3. How-To Guide© 2013 Demand Metric Research Corporation. All Rights Reserved.Identify product-market combinationsA major trap for companies launching business in Europe is to think that product or servicethat 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 isnot only necessary for success, but for survival. The goal of your research is: To identify markets for your products. Use the same product management andmarketing disciplines that lead to domestic success, and these generally are productpositioning and market segmentation. Commit to the identified markets. Once your research has identified the highestvalue market segments and the product positioning for them, commit fully to them.This means staying focused on selling only these offerings into identified profitablemarkets.Identify a local partnerA mistake many companies make when expanding into the European market is believingthat a lot of physical infrastructure and personnel are required. You don’t need a fancyoffice 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 arevenue 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. How-To Guide© 2013 Demand Metric Research Corporation. All Rights Reserved.Identify product-market combinationsA major trap for companies launching business in Europe is to think that product or servicethat 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 isnot only necessary for success, but for survival. The goal of your research is: To identify markets for your products. Use the same product management andmarketing disciplines that lead to domestic success, and these generally are productpositioning and market segmentation. Commit to the identified markets. Once your research has identified the highestvalue market segments and the product positioning for them, commit fully to them.This means staying focused on selling only these offerings into identified profitablemarkets.Identify a local partnerA mistake many companies make when expanding into the European market is believingthat a lot of physical infrastructure and personnel are required. You don’t need a fancyoffice 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 arevenue 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.

4. How-To Guide© 2013 Demand Metric Research Corporation. All Rights Reserved.The best thing you can do is partner with an experienced, local business developmentexpert. A trusted local advisor can help you navigate the cultural and regulatorycomplexities of the European market, saving your venture much time and frustration,particularly in the critical start-up phase of operations.Launch and start sellingAfter spending many hours at the drawing table, your research has identified targetcountries, 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 operationsand streamline your entry into the market. Now is the time to pick-up the phone, talk toyour market and get the sales machine working.Use your initial market contacts as a “soft launch” into the market. While it’s ideal to sellsomething as a result of these early sales contacts, use the intelligence you gain fromthese 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 yourpricing. Adapt as necessary to succeed.Once you’ve validated that your European business model is working, its time to scale upyour sales efforts and market presence.Action Plan: Entering the European marketIf you’re planning to expand into the European market, take the following steps in order tosucceed:1. Gauge market potential Don’t let your domestic success lead you to assume success in Europe isguaranteed. Use a disciplined approach to study the market. Assume that How-To Guide© 2013 Demand Metric Research Corporation. All Rights Reserved.The best thing you can do is partner with an experienced, local business developmentexpert. A trusted local advisor can help you navigate the cultural and regulatorycomplexities of the European market, saving your venture much time and frustration,particularly in the critical start-up phase of operations.Launch and start sellingAfter spending many hours at the drawing table, your research has identified targetcountries, 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 operationsand streamline your entry into the market. Now is the time to pick-up the phone, talk toyour market and get the sales machine working.Use your initial market contacts as a “soft launch” into the market. While it’s ideal to sellsomething as a result of these early sales contacts, use the intelligence you gain fromthese 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 yourpricing. Adapt as necessary to succeed.Once you’ve validated that your European business model is working, its time to scale upyour sales efforts and market presence.Action Plan: Entering the European marketIf you’re planning to expand into the European market, take the following steps in order tosucceed:1. Gauge market potential Don’t let your domestic success lead you to assume success in Europe isguaranteed. Use a disciplined approach to study the market. Assume that

5. How-To Guide© 2013 Demand Metric Research Corporation. All Rights Reserved.the European market operates differently than the domestic market, becauseit does. Your assessment of market potential needs to consider which targetmarket(s) is ideal, who the existing providers are, how industry issues differand what trends are influencing the market.2. Identify market-specific offerings The offerings you sell domestically could sell well in Europe – or they couldfail completely. Do the research to understand what solutions are needed inthe European market, and then determine if you can provide them. Don’tattempt to find a problem your existing solution can solve, because thisapproach tends to lead to over-optimistic assessments of solution-market fit. Once you’ve identified one or more solution combinations ideal for theEuropean market, commit to them. This means putting the marketingresources behind them to allow them to succeed. It also means ignoringdistractions and temptations to pursue sales for your other solutions thathave not been vetted for the European market.3. Identify a local partner This action is perhaps the most critical success factor. An experienced localadvisor 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 thetime to build a relationship. Invite the advisor to meetings at your How-To Guide© 2013 Demand Metric Research Corporation. All Rights Reserved.the European market operates differently than the domestic market, becauseit does. Your assessment of market potential needs to consider which targetmarket(s) is ideal, who the existing providers are, how industry issues differand what trends are influencing the market.2. Identify market-specific offerings The offerings you sell domestically could sell well in Europe – or they couldfail completely. Do the research to understand what solutions are needed inthe European market, and then determine if you can provide them. Don’tattempt to find a problem your existing solution can solve, because thisapproach tends to lead to over-optimistic assessments of solution-market fit. Once you’ve identified one or more solution combinations ideal for theEuropean market, commit to them. This means putting the marketingresources behind them to allow them to succeed. It also means ignoringdistractions and temptations to pursue sales for your other solutions thathave not been vetted for the European market.3. Identify a local partner This action is perhaps the most critical success factor. An experienced localadvisor 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 thetime to build a relationship. Invite the advisor to meetings at your

6. How-To Guide© 2013 Demand Metric Research Corporation. All Rights Reserved.headquarters. Take the time to travel and meet with the advisor on theirhome turf.4. Begin sales operations Begin making sales calls into the target market segments. Use your localadvisor to help schedule calls with ideal prospects. Include your local advisorin 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 ofyour solutions for the target market. Be agile and willing to change prices,terms, features or whatever is necessary to gain traction quickly in the targetmarket 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 awarenessthat you are active in the market, and they will not grant you a “grace period”to get established.Bottom LineApproach your international opportunity in the same way you would your domesticoperations – using sound business fundamentals. A local advisor can help you develop aninternational marketing plan, assess your present market situation, business goals andcommitment - all of which will increase your opportunity for success in the Europeanmarket. How-To Guide© 2013 Demand Metric Research Corporation. All Rights Reserved.headquarters. Take the time to travel and meet with the advisor on theirhome turf.4. Begin sales operations Begin making sales calls into the target market segments. Use your localadvisor to help schedule calls with ideal prospects. Include your local advisorin 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 ofyour solutions for the target market. Be agile and willing to change prices,terms, features or whatever is necessary to gain traction quickly in the targetmarket 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 awarenessthat you are active in the market, and they will not grant you a “grace period”to get established.Bottom LineApproach your international opportunity in the same way you would your domesticoperations – using sound business fundamentals. A local advisor can help you develop aninternational marketing plan, assess your present market situation, business goals andcommitment - all of which will increase your opportunity for success in the Europeanmarket.

7. How-To Guide© 2013 Demand Metric Research Corporation. All Rights Reserved.About the authorHan Verbaas is a member of the Demand Metric Senior Analyst Network. Han has over20 years of experience in corporate marketing, product marketing, go-to-market strategiesand sales & sales management for technology companies. He is the co-founder ofEmeago, supporting companies in developing their business in the Netherlands andEurope with a focus on profitable product-market combinations. Prior to Emeago, Hanserved in different international sales & marketing positions successfully launchingcompanies and solutions in Europe, Middle-East and Africa. How-To Guide© 2013 Demand Metric Research Corporation. All Rights Reserved.About the authorHan Verbaas is a member of the Demand Metric Senior Analyst Network. Han has over20 years of experience in corporate marketing, product marketing, go-to-market strategiesand sales & sales management for technology companies. He is the co-founder ofEmeago, supporting companies in developing their business in the Netherlands andEurope with a focus on profitable product-market combinations. Prior to Emeago, Hanserved in different international sales & marketing positions successfully launchingcompanies and solutions in Europe, Middle-East and Africa.