Written by Dillon Stanger, B.Eng. CEO and Cofounder of Pillar Sales & Antonio Galan, Ph. D. Director of R&D and Procurement of Pillar Sales.
US market; foreign market penetration; foreign sales organisations; outsourced sales; international trade; international business; international business law; culture in enterprise sales
Cultural considerations for selling into a new market:
Be fluent in the local language and customize your messaging according to the market.
When penetrating a foreign market, it is paramount that you communicate effectively with the decision makers in their mother tongue. It is worth paying for a translator who can effectively convert your sales copy, white papers, and other marketing collateral into the business-speak of your prospect. Prioritize the simplest product offering to experiment in the new market and translate collateral necessary to complete the buyer's journey there.
Adjust to local etiquette, Don’t confuse politeness with a genuine interest in your product
Business etiquette and cultural differences in communication affect the success of any foreign sales efforts. Our agency has encountered numerous anecdotes of foreign sellers who shared stories of failure selling into the US. An example of this because, as the seller, the buyer seemed to be interested in the seller’s product but was just feigning interest in the product to be polite which was not registered by the seller since they had different cultural backgrounds. This resulted in pipeline stuffing and unmet revenue targets. This seems to be an issue with Israeli founders selling into the US market.
Do your research
In their series of reports known as "Doing business," The World Bank identifies certain categories that have to be taken into account before engaging in a business venture in different countries. The assessment describes how easy it is to enter a market, either by opening an office, a company, or joint-venturing with a local partner.
From a commercial perspective, different aspects of doing business can be taken from the report and translated into actionable strategy when targeting a specific country/culture. For example, if the report is used to choose an economy only from the easiness of starting a business, New Zealand might be the choice for any company, as they stand as number one in the world rank. However, the ranking alone is not enough to understand or make an educated decision, and as an example, one interesting case of nearby economies, Mainland China is ranked 73rd in the world whereas Hong Kong SAR, (also China) is ranked 4th in the same list.
When considering operative elements, such as tax filings and percentages, economies like, Hong Kong SAR, China; Saudi Arabia; Singapore; and Canada stand to lead the rankings, whereas when taking the complexity for trade across borders into consideration, other countries stand to lead the world's ranking in export performance (e.g., Canada; Poland; Spain; Hungary; Luxembourg; Norway; France; and Belgium for trade across borders) while others (e.g., Iceland, Latvia, UK, Belgium, Denmark) can be far better as target for products.
Needless to say, the report offers a solid foundation to any company looking to enter an international market but fails to present a more across-the-board representation of cultural differences. More than operational, cultural issues tend to exert a strong influence on the easiness to do business, and small nuisances can add up to either make or break relationships. Irreconcilable differences born in the lack of understanding of counterparts' cultural idiosyncrasies, can turn an otherwise easy contract or sale into a nightmare that would close doors for an organization without further explanation.
Similarly, a deep knowledge of the "way to do business" of a specific economy, can be the difference between a tortuous seemingly endless back and forth series of contacts with a counterpart that leads to nowhere and a streamlined "easy deal" that pushes the bottom line to newer heights. As an example, some Asian economies have a strong "relationship-based" referral approach to doing business, and a powerful value proposition might not be as important as a well-connected acquaintance opening a door with a recommendation, even with a seemingly not so strong value proposition. On the other hand, even though a good connection might open the door to a series of conversations with a company in other economies, if the value proposition is weak or not as strong as that of the competition, no matter how strong the recommendation, the customer might not agree to grant your product an opportunity, and both the recommendation and the business are lost.
The sobering reality about culture:
Due to immigration patterns and certain cultural and business associations made with different ethnicities, selling through certain marketing personas might affect your sales and marketing efficacy. Prejudice is real and must be considered.
Logistics of creating a local entity
Selling product in a foreign country requires more due diligence than finding a decision maker to sign a check. Depending on the local laws and regulations, foreign corporations have to consider incorporation costs, acquiring a local bank account, local taxation regulations, etc. There are local government agencies which can help foreign companies navigate the bureaucracy. In the US, those include US Customs, USEAC (United States Export Assistance Center), local Chamber of Commerce Branch, and other agencies. There are also consulting firms that can assist in incorporating in foreign countries, setting up bank accounts, payment systems, taxation accounting resources. Note that intangibles such as service and software is still considered product and is subject to local laws and regulations.
About the Authors:
Dillon Stanger, B.Eng., is CEO and Cofounder of Pillar Sales which is a full-cycle sales outsourcing company which assists startups penetrating US and other foreign markets. Pillar leverages a data-driven sales methodology with an international channel partner network to generate quick wins and close large deals. The Pillar Process is designed for startups needing a scalable sales solution and Pillar's turn-key delivery is engineered for technical clients maximizing attention on building product not selling it.
Antonio Galan, Ph. D., is the Director of R&D and Procurement of Pillar Sales. Antonio has over 15 years experience in fundraising, R&D, and procurement. Antonio had raised +$10mm USD for various projects through federal and nonprofit sources, has managed multi-million dollar R&D budgets, and has saved organizations millions of dollars in procurement costs especially through LCCS (low-cost-country sourcing). Antonio has a keen ability to identify gaps in product development and ways to patch and polish incomplete R&D projects.
Selling internationally is a very complex and economy-specific process that requires an understanding of international and local business laws. The authors of this article, Pillar Sales LLC, Pillar Sales LLC’s employees, VCforU, VCforU’s employees take no responsibility for any actions taken based on recommendations or the content of this article. Recommendations in this article do not constitute a legal advice nor legal counsel. Consult legal professionals for all of your related business needs.