NZTE Export News, April 2012

“Should I stay or should I go / If I go there will be trouble / And if I stay it will be double.”

Back in 1981 The Clash neatly summarised the dilemma of many fledging exporters, especially in the technology sector. The challenge of “going” offshore is significant, costly and risky. But the implications of not exporting heavily impact a company’s long term growth prospects.

As Kiwis we tend to the “Should I go?” approach. We are of course a nation of exporters, built on our pioneering forefathers who sent primary produce around the world.

The 2011 Market Measures study of New Zealand technology companies, conducted by Concentrate, PWC and Swaytech, showed local technology exporters embody the nation’s pioneering spirit. Almost all sell locally, but they start exporting very early in their growth cycle.

63% of companies categorising themselves as start-ups were exporting, while 94% of ‘early growth’ firms were selling offshore. Overall, 85% of companies were exporting.

The most common market for technology companies to sell into was Australia, then the USA. UK and Western Europe were the next most popular. Asia didn’t really figure, even though three of New Zealand’s top trading partners overall are China, Japan and South Korea.

There are a lot of dimensions to assessing whether it is time to stay or time to go (well covered in NZTE’s “Get ready to export” online resource), but in terms of sales and marketing there are some important considerations.

Being confident you have exhausted the sales opportunities in your home market is key. Too often companies go offshore without achieving a strong market share in New Zealand, and all the benefits that provides.

From a product perspective, being confident that your offering is well proven in your relatively safe domestic market is important. Not so much the core technology, which with Kiwis is often of high quality, but all those other things that make up the product – technical support, documentation, complimentary products and so on. It’s easier to make your mistakes in the same town, than thousands of kilometres away.

Being battle hardened in a sales and marketing sense also helps. Having tested out various promotional tactics, getting an idea of the best sales process, experimenting with pricing models and trialling partner relationships are all strategies you can work through in the domestic market. Things will be different in Melbourne, Manchester or Miami, but at least you have a proof of concept you can work with.

If the answer is “I should go”, then there are a few sales and marketing basics that need to be considered.

How much do you know about the market? How attractive is it? What are the key attributes such as size, shape, profitability, competitiveness, location, language and regulation. What ability does your company have to execute in this market: resources, skills, knowledge, reference sites, market share, product competitiveness and partners?

The more you know the more obvious your strategy will be for penetrating a market will become.

Being as focussed as possible is critical. Selling one product into six countries is akin to selling six different products into six different markets. Underestimating the amount of effort required to ‘fit’ your product into a market is easy.

What sort of localisation does your product need? Is it just documentation, or are there support considerations? Is the name right? What about relevant regulations in that market? It might only be little things – like using US English instead of NZ English, but they can have a significant impact on the customer’s impression. I’ve encountered US customers who weren’t aware there was another flavour of English, and simply thought the New Zealand material had typos.

Who could you partner with? As exporters of technology, Kiwis are not that good at using channels, even though studies show that high growth is correlated with effective use of channels. Partners can come in many forms, from simply providing you with a known brand in the market though to doing everything for you.

Sometimes we undervalue the work a partner does, and are subsequently reluctant to give them a substantial margin (around 30% is the average). Selling and supporting a product is hard, and that needs to recognised.

Competition is another aspect you really need to understand. Most Kiwi exporters will be battling against larger, better funded competitors. Really knowing them and understanding where you offer unique value is important to being able to outmanoeuvre them in the market with smarts and flexibility.

What about your pricing strategy? It is at the core of successful exporting, but too often it is driven by purely financial factors rather than looking at the broader position in the market. Research has shown that as a rule, our technology exporters have to take a lower price than competitors, as we need to discount to combat our lack of brand awareness. Too often we are selling Rolls Royce technology solutions at Toyota prices.

That raises the final question - what is your strategy for building awareness and generating leads in your chosen export market(s)?

Online channels have given Kiwi firms a powerful and relatively inexpensive way of reaching customers. To exploit these you must be very clear on who you are targeting, what your value proposition is, and be willing to ‘give away’ some intellectual property to build relationships.

Effective social media, especially in B2B selling, is driven by quality content. Providing white papers, checklists, survey data, opinion articles etc all helps you attract the interest of prospects that can be turned into sales leads.

As Kiwis we tend to rely too much on building the website, creating the collateral and sending our sales people to the trade show to hunt and kill. What’s critical is supporting them with a programme of activity that raises awareness of your products amongst the target market, making the sales person’s efforts more efficient.

“This indecision’s bugging me” lament The Clash in their punk rock anthem. You can be decisive as an exporter by being laser focussed about what markets you target, finding out as much as you can about them, and then observing a few sales and marketing basics.

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