This article is a follow-up on the topic we kicked off in the episode ‘locality and niche business in outbound’.

Assessing your “localness” and niche presence in a new market.

Try to recall a scenario where you received an email prompting you to engage in a business conversation with a company headquartered abroad, and it’s not a global corporation. Based on your own experiences, I can assume that when responding to such emails, you pay attention to a few fundamental factors:

1. Can you consider what’s being offered to you in terms of innovation?
2. Is the value proposition brought by the product or service innovative or valuable enough that you can’t ignore it?
3. If the product or service is new in the market, is the uniqueness of the solution so significant and valuable that the names and quantity of customers using it are irrelevant?
4. If you know of other similar services or products, does the value proposition speak to you?
5. Are there other companies with a similar business profile to yours that have benefited from this solution?
6. Is the company contacting you from the same country as yours, and if not, does it serve companies in your region?

Setting aside the scenario where you know or recognize the entity reaching out to you and the effort the sender has put into personalizing their message. Your decision to potentially schedule a meeting with this company will likely be based on the following assumptions:

1. I’m familiar with the companies you work with, and you’re from my country, so I have an idea of how potential collaboration with you could work.
2. I don’t know the companies you work with, but I know they’re from my country. I see that you also have a base here. So, I have an idea of the principles on which you might have gained their trust.
3. I don’t know the companies you work with or the exact rules that govern business in your country, but it seems to me that what you’re doing is unique, and investing in innovation early on is worthwhile because using them at an early stage guarantees that I’ll outpace the competition before what you offer becomes popular.

We’ll focus here on cases 1 and 2. It’s much easier for us to decide to schedule a business meeting when we’re talking to companies that operate in the same environment as our business. This is related to factors like not worrying about language barriers, reducing the stress associated with uncertainty about the rules of cooperation with a company that operates under a different legal system, thus potential collaboration would be loaded with a lot of unknowns. Business, on the other hand, loves predictability. So, are we doomed to incurring huge investment costs every time we want to enter a new market (most often foreign, but in the same way, we can also think about expanding into a new industry in the local market)?

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Locality and Niche, What If We Aren’t Niche Enough?

Anywhere on this planet, entrepreneurs are seeking competitive advantages derived from applying innovative technologies and methods compared to market standards. The novelty and uniqueness of a specific product or service mean that customers who take advantage of the offer first will be one step ahead of the competition.

However, not every business, even if it operates in the realm of new technologies, can count on its solutions being unique on every market it aims to operate in. My former boss, a co-founder of Better Software Group, once told me this: “If you’re selling cars and a thousand other companies are selling them nationwide, it doesn’t mean you should stop selling cars.” This thought perfectly captures the situation in which most companies find themselves, having both domestic and foreign competitors, when trying to sell their products and services to new customers.

What conclusions should we draw from this message?

Get to Know Your Competition.

It’s not enough to just ask Google or ChatGPT about your competition in a given market. Competitor research should be conducted in the same way you prospect potential leads in a specific area. If you don’t plan on spending thousands or millions of dollars on market research, use any database creation tool, such as LinkedIn’s Sales Navigator, and define parameters that determine a competitive company by assigning it to the researched market:

• Country
• Industry
• Revenue size
• Number of employees
• Keywords describing your services and products

For example, if you’re considering entering the German market, these would be:

• Germany, Poland (because other IT companies from Poland may also sell services to Germany)
• Information Technologies and Services
• $5M – $50M annually
• 200 employees
• Keywords: Custom Software Development, Outsourcing, Team Extension

This way, you’ll learn about the level of competition you’re facing locally. Also, consider that your domestic competition will be operating in the same market. Determining its size will help you understand how much effort it will take to stand out among all the entities competing for the customer.

Gaining an Edge Over the Competition Through Locality

When you’re striving to build strong sales in a particular country and you know you’re competing both locally and internationally with a company that has the same target audience as yours, your first task should be to gain an advantage over that first group. It’s simply much easier and less costly than setting up a company in the target market and competing with a competitor who understands local realities much better than you do.

Even if you don’t have any clients in a given market, you can give the impression of a locally operating company by taking the following actions:

• Establishing a virtual address for your company (costs as low as 50 euros per month depending on location)
• Purchasing a local phone number. Not all countries will make it equally easy; for example, in Norway, regulations governing the domestic market won’t allow you to purchase directly.
• Buying a local domain name
• Creating a company profile on influential websites, such as clutch.co, g2.com, techcrunch.com, and ensuring that your virtual address is included in the company profile—this way, it will be listed along with local companies.

Of course, this won’t magically make all your potential customers suddenly consider you their own. However, you’ll essentially increase your chances of having your message read and achieving the desired meeting. If you can accomplish this crucial first step, bringing about the first sale is just a matter of your patience in continuing your efforts in that market.

How Long Will It Take to Acquire the First 3 Clients?

Initiating sales activities in a market where you haven’t been present before is reminiscent of building a company from scratch. First and foremost, we should activate all possible contacts we have to acquire first references or at least good reviews we could rely on in discussions with potential clients.

If we can’t do this, the next step is what’s known as cold outreach.

Assuming your sales cycle lasts an average of three months, you can assume that generating a client in a market local to you would take you from four to six months from the first conversation about your Lead’s needs.

Based on our experiences and those of our clients, acquiring the first client in a country where we have no portfolio and we don’t have access to people who could recommend us to someone will take from two to six quarters.

It should be assumed that within the first year of activity in a new location, relying solely on cold outreach, we’ll gather from several to several dozen leads, mainly to determine whether it’s worth investing in sales development specifically in that location, rather than acquiring more than one client.

To increase the number of meetings, regular and planned contact with leads already acquired will be crucial. From our observations, many companies practically do not use any form of lead nurturing or do not have any scenario according to which they would engage acquired leads in further communication.

Meanwhile, creating such a plan is not a complicated task. It’s enough to start by informing about what’s new in our company from the perspective of our current clients (new projects, new competencies, successes of our clients achieved with our modest contribution). However, this contact should take the form of a personal message, which we can send both by email and through social media IT CAN’T BE a newsletter in any case. People who subscribe to the newsletter are aware that they will receive the newsletter. A regularly sent private message, on the other hand, may have side effects in the form of relationship building with the lead.

Is It Worth It for Me?

 It all depends on the average Lifetime Value (LTV) of your customer. Assuming that the minimum transaction, which the first contract will concern, will not be less than $6,000, and in the perspective of sales, it’s possible to achieve additional revenue of no less than $100,000.00 , within less than 6 months from the completion of the first project, then the expected minimum revenue from so-called “cold” activities will be $106,000, while their cost will depend directly on the service you engage on your side and external resources:

• in the case of external lead generation companies, the annual cost will be from $10,000.00 net depending on the type of ordered activities (pricing for CEE based companies)
• in the case of hiring a dedicated person for prospecting and campaign creation, the annual cost of employing a student full-time and a minimum wage is at least $15,000.00 + tools for sending and prospecting + recruitment, onboarding, and training costs
• in the case of hiring a specialist with experience in lead generation, annual costs start from $25,000.00 net + tools for sending and prospecting + recruitment and onboarding costs
• in the case of independent action, the cost will be your hourly rate * the number of hours devoted to prospecting, campaign creation, results monitoring and sending, learning outbound techniques and tool operation + the cost of not handling tasks during this time, thus the cost of lost revenue.

 

In the Next Episode of Outbound Explained: How to Test the Value Proposition by Focusing on the Niche Solution

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