3 steps to building better market expansion strategies

Nowadays, companies can expand overseas faster than ever before. But many companies underestimate how hard it is to break into a new market. There’s quite a lot that goes into getting it right, as each country has its own unique set of quirks and challenges. 

Here’s everything you need to know to develop better market expansion strategies, broken into a few key phases. 

What is market expansion and why do companies expand into new markets?

Market expansion is a growth strategy which involves offering your existing product/service to a new market. This “new market” is generally outside of the current geographic regions in which you currently operate. 

Depending on your business, you might have multiple goals to accomplish with your market expansion plan. Many people think that the only reason companies expand into new markets is to capture more market share and grow revenue. While that’s often true, there are a whole host of benefits beyond growth:

  • Capture market share 
  • Expand sales presence 
  • Diversifying investments 
  • Ability to acquire top talent 
  • Reduction of costs 
  • Mergers and acquisitions
  • Add an employee in-country near a customer or client 

Research from Globalization partners and CFO Research shows that the reasons for international expansion vary. While the top-cited reason amongst 166 senior executives was capturing market share, the desire to expand sales, diversify investments, and acquire top talent were also cited. 

 

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Considerations for international business expansion

LanguageDoes your company already speak the language of the target market? How much of the product do you have to adapt to make it ready for the market?
CurrencyAre you expanding into a region that uses the same currency? Unless you’re expanding within a specific region that already uses the same currency, you’ll have to navigate fluctuating exchange rates and different payment preferences. 
PaymentsWhat are the most common forms of payment? Support those payment types within your product to grow in the market. Stripe has a great guide to choosing the right payment methods.
PricingDo you have a pricing strategy for the market? Think about packaging and locking in currency rates for deals. 
Presence Is your brand known in the market, and do people trust you? ​​As you enter new markets, you’ll likely have to adapt your brand personality. 
Ease of doing businessIs this a country where you can easily operate? Use the ease of doing business rankings created by the World Bank to get a general sense of each country.  

Expanding into international markets takes deliberate planning. As you’re revving up for market expansion, follow these steps to create a roadmap.

Phase 1: Prioritize and select markets

1. Use real-time analytics

The obvious place to start your market selection process is your existing data. What are the early signals of interest you’re seeing from different markets? Look at the country level data to answer: 

  • Where are you seeing traction? 
  • Where are people signing up? 
  • Where are they trialing but maybe not converting? 
  • What is your average order value in those countries? 
  • Do customers in some countries have a higher lifetime value? 

Use these key performance indicators (KPIs) to get a general sense of where you should be taking a deeper dive and measuring the broader opportunity.

Pro tip: When looking at these KPIs, pay less attention to top of funnel metrics like traffic volume, and look more closely at metrics that directly impact revenue such as closed-won leads. 

2. Measure the opportunity

To plan your international growth strategy, estimate how many customers could buy your product in each country.

According to Nataly Kelly, the golden rule of creating successful international expansion strategies is: one market = one country. Here’s a handy exercise borrowed from Nataly to calculate the opportunity:

As a simple example, let’s assume you’re selling a software product that costs $1000 for an annual subscription. Now, let’s assume 1,000,000 potential customers could buy your product in your chosen markets. 

A simplified way to calculate the opportunity would be to multiply $1000 by your potential customers. You’d have a market size of $1 billion, but it wouldn’t account for economic differences. 

Now, let’s assume that 30% of these customers are in a developed country and 70% are in a developing market. And let’s assume you’ll have to sell your product at a 50% discount. 

Market Developed countryDeveloping country
Number of customers300,000700,000
Average price$1000$500
Estimated market size$300 million$350 million

This gives you a more accurate market size of $650 million. But bigger doesn’t always equal better – you need to factor in difficulty as well. 

3. Asses the difficulty

In the chart above, we broke down the top considerations for market expansion. Here they are, grouped into four areas that will give you a better grasp of how difficult it will be to enter the markets in question.

Go-to-market path. Launching in a new market and attracting customers needs a go-to-market strategy. What channels are available to you? Think of how you can leverage partners, direct sales reps, search, and PR activities for awareness. 

Ease of business. How easy will it be for your company to actually do business in other markets? Definitely use the ease of doing business scores above to get the broader picture of each country. Also take into account local regulations, data privacy issues, and cybersecurity. 

Economy. Do some homework on markets you’re considering. This includes payments but it also extends to the broader economy. Is it stable? Is there solid growth? What about currency fluctuation? 

Localization & Internationalization. While language is a core component of localization, you’ll have to take into consideration the degree of localization that is needed. Will you need straight translation or transcreation? You may have to invest in local content that accounts for cultural differences and other requirements. And if you’re building digital products, you’ll need to ensure your products are internationalized to easily localize them without writing additional code. 

Pro tip: Train your developers on internationalization best practices to avoid hard-coded strings so that you have global ready code from the get-go. 

Phase 2: Craft your market entry strategy

Now that you understand the opportunity and you have an idea of which target countries will be the easiest to enter, it’s time to formulate a market entry strategy. It usually involves: determining primary focus markets, target customer and channel strategy, resource allocation, product offerings, brand positioning, and readying operations.

As you keep in mind the outputs from your market research, here are the two essential elements to consider to put yourself on the path to clarity.  

What is the company goal?

All international expansion goals must tie back to your company’s objectives and key results (OKRs). What is your ultimate goal in expanding into this market?

Examples of goals include: 

  • To accelerate the company’s growth rate 
  • To prevent competitors capturing market share 
  • To capitalize on existing market demand signals 
  • To reduce costs by setting up in cheaper markets

While your goal will likely fall into one of those buckets, it needs to be more specific for you to be able to form a strategy and tactics around it. 

For each of your high-level goals, you need measurable success criteria. For example, your company plans to add $2 million in revenue next year and $1m in new pipeline should be attributed to international. 

It’s clear, but it’s not enough to answer how you’re going to generate that pipeline. That’s where it comes down to strategy:

 Goalsstrategyplan + tactics.  

What is the strategy?

To create a strategy, start by looking at what other companies have attempted with their market expansion strategies. There’s a reason Harvard teaches business students with real-world case studies – the best way to learn is from people who have been there before. 

Note: Take a look at The International Expansion Podcast by Ramsey Pryor, which includes actionable insights from people who have led international growth at companies like Notion, Canva, Zoom, and more. Note the lessons learned, especially failures and best practices. 

Next, think about the best way for your company to enter the market. This is your go-to-market strategy. Will it be product-led, heavily sales-assisted, self-service, or any of the other paths you have available to you? 

There are plenty of other considerations specific to your business model and market, but the key is to keep it simple. 

Phase 3: Build your plan

Now that you have done market research and developed a market entry strategy, you’re ready to create a plan for entering the market. Your plan should include the following:

Who will run the overall process and where will the function sit within your organization? 

Depending on the scope of your launch, this will ideally be someone in a cross-functional role who has strong relationships with leaders, and who is familiar enough with all parts of your business.

When Squarespace chose to enter Germany, they appointed Sofia Guzman as the International Lead to run strategic initiatives. Her function sat in operations and a large part of the role involved getting buy-in from the executive team to then sell the idea throughout the company. 

Once bought in and approved, it’s time to set up a cross-functional team. 

How should you build your international team? 

Even at a much smaller organization, successfully executing your market expansion strategy will require support from all your teams. 

At Squarespace, every team had a representative for international that led the initiatives through:

  • Engineering 
  • Product 
  • Marketing 
  • Legal 
  • Finance
  • Data analytics
  • Creative

It will take your entire team to build an international strategy that works for everyone. Any plan you build should include training on aspects of your new markets, processes, and localization tools you use. 

What tools and processes do you need?

Many companies find market expansion chaotic because there aren’t clearly defined tools and processes. Instead, lots of manual work. Scattered files. It’s a pain and your team feels like it distracts them from their core work. 

As the person leading international expansion at your company, you’re in a position to advocate for and invest in the right tools and processes – the key to driving performance at scale. 

If you think about scalability in the context of market expansion, it’s clear that you want a replicable process that you can apply to all new markets and languages. In which systems is content created, stored, and published?

In an ideal world, the content will live in a content management system (CMS) with connectors to a translation management system (TMS). That will ensure you have a truly “central” place where content gets stored in multiple languages company-wide. 

Note: If you’re planning your 2022 expansion needs, we made a guide to choosing the right translation management system to help you find the platform that’s right for your company and team. 

Do the legwork before entering your first market  

While the key steps listed in this article are general, they will give you a good idea of the legwork needed to make international expansion easier. As you can see, there’s a ton that goes into launching in a new market.

There will be many other questions and items to consider depending on your business model, company stage, and industry. But the most important thing to successfully enter your first market is to have a market entry framework that your company believes it can rely on.

And once you’ve done it a few times, you can develop a playbook that works for your company.

Want to know more?

Get the Lokalise guide to unlocking international revenue and learn how to equip your business for global-ready growth from day 1. Get the guide

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