Entering US markets as foreign software vendor
Entering US markets as foreign software vendor is something that many foreign organizations have both succeeded but also failed dramatically. In this blog entry I would like to highlight some of the learning’s that I have had since I immigrated to US for more than 17 years ago.
This blog entry might sound a bit harsh, but my objective is to provide real-life experiences that are based on tens of different cases and discussions with other organizations that have been entering the US. I have also written two business books about these topics, unfortunately both in Finnish. I am working on my channel best practices book that can be downloaded initially free from our web-site.
I have my share of mistakes in my career
Let me be very clear. I think I must have done all of the mistakes that a young US-based ISV CEO can do even if I had already been exposed to international business for years as CTO/head of development for two software organizations within the business intelligence/data warehousing/analytics domain. I can’t believe how quickly years have gone by. What still amazes me is that many ISVs learn about the issues that it can face in US markets, but still has to do the same mistakes and even agree in the end that it was a mistake that should not have happened.
US is by far the most lucrative market for ISVs
US is by far the most lucrative market to ISVs coming from Europe, Asia or South-America. All these contents will have their own characteristics and challenges (and opportunities) so I will base this blog entry by looking at the US markets from an European perspective (includes the Nordics, Central-Eastern Europe and Western Europe). I do want to emphasize that my career from sales perspective is based on US approach and standards.
To keep this blog entry to be reasonable in length, I want to list the most common obstacles that I see Europeans struggling with when entering the US. The list is not in any specific order, but gives you and idea where to focus on when doing business in US.
Cultural differences
One would think this is obvious, but it really isn’t. I see tremendous challenges for non-US organisations to understand that the pace of doing business is different. If the prospect has questions, sales needs to get back to the answers as soon as possible. In some cultures things are not communicated until there is a response. In the US, keeping the prospect updated even if there is not an answer is critical. The prospect will test the vendor how they will react to questions and if there is even a slight chance to a situation where the prospect thinks that support will be delayed, there won’t be a deal.
Let me explain what I did as corporate CEO for an European ISV with US HQ in Dallas, Texas. I agreed with my development team in Europe that if there was a critical issue in the sales process or a question I could not respond to, I would and could wake-up a developer in Europe to clarify the question. Yes, it is brutal, but the only way to make sure that I was not put in disadvantage when compared to native US software vendors.
My recommendation to non-US software vendors is as follows: Do not think that what is working in your own country/region, would necessarily work in the US markets. A year ago I wanted to buy a software component from Western European software vendor to my Office 365/Dynamics CRM environment and with continuous delays in support questions, I decided that it was not worth the risk to acquire the solution. As former CEO of an European ISV, I was able to see all of the signs what could go wrong if I put my faith in the product.
Supporting your end user customers and channel
You can kill your business by not providing the needed support. I have seen it and experienced it. The Atlantic is the disadvantage that European ISVs have and ISVs need to make sure that this problem is covered. If the support does not work, it becomes a problem for both end user organizations as well as channel partners.
Supporting your local team in the US
If you have a person or small team in the US and their role is to build a channel or sell to enterprises, remember that this team will not feel and experience the excitement that you build and have in your European HQ. They are challenged by things that you do not have in your native country. They have to convince channel partners and end user customers that your company is something that can be trusted not only in short term, but also in the future. Who wants to buy a solution that might not be around in a couple of years.
Make sure your product works
You really can’t become successful with a product that has lots of issues. It seem obvious, but I have seen too many attempts with solutions that have issues and even if US is a big market, you will probably focus on specific ecosystems and people and channel partner do share experiences and successes (and failures). You do not want to spoil your reputation with a solution that won’t work.
Treat your channel partners well
US culture is to become successful in business. US is really the land of opportunity and people are receptive to consider solutions from outside US if it gives the a competitive edge. But you have to earn your place in the ecosystem and my career in the US the past almost 20 years has been a combination of direct enterprise sales, channel development and support.
If you build a channel and create relationships with channel partners, they need to be seen as part of your team. The most common issue that I see is that channel partners are seen as “vendors” and just as a revenue source. The reality in the US market is that every channel partner has 30 solutions to pick from and you might not be the one that they select especially if you have a reputation in the channel that you do not want to share the success. I have made $300k deals with channel partners that have just passed a lead and relationship and I have had no issues to pay $90k in commission. Those deals would never have come in without the channel partner. This is not rocket science. If you do good for your channel partner, they will do good for you. I do want to emphasize that there is a tremendous competition among ISVs to get their solutions to the channel so your value proposition and channel partner program needs to be solid and lucrative.
Understand your market segment
I was naive when I started selling my BI solution in the US in the 90s. Coming from a small economy with 5.2 million people, we sold to every vertical without any specialization. In the US, this will not work. The market is too big and you won’t probably have the money to execute your marketing campaigns to every vertical. The push back I get from European leadership teams is that their solution can be used by any vertical. Of course it can, but that does not mean that you should not focus and create your value messaging to segments/verticals so you can put your eggs and money in a focused way to see results. I was initially shooting from the hip and only when I started focusing on specific vertical/type of company, my company became successful.
Entering US markets – You can really become successful in the US
US is by far the best market as long as you learn what works and what does not work in US. Do not assume anything, talk to other organizations that have gone through the same thing. That does not demonstrate weakness to admit that one does not know everything. The ones that are open to learn new things and receptive to listen to experiences from others, will have much better opportunity to become successful.
