The Press, November 2004
The USA is big with a capital B. Big cars. Big waistlines. Big economy. If New Zealand was a company we would only rank 10th in the Fortune 500. Bill Gates alone boasts a personal wealth greater than our GDP. So how can our technology entrepreneurs market to a country as large, diverse and well-developed as the US?
There is certainly interest in the US amongst Canterbury companies. 23% of companies surveyed recently by Canterbury Software Incorporated said they were exporting to the US market. But many of them don't profess to be well prepared. 60% of all companies in the survey said they do not have a well defined strategy for export, and 37% of those exporting to the USA had little knowledge about competitors.
The potential of a multi-billion dollar market ('healthcare', 'banking', 'retail') in the US can be alluring: "we only need to sell to 0.05% of them to make a fortune - let's go!". But it doesn't work like that. You only have scarce resources in a white hot competitive environment where everyone is bigger and stronger. There is no way you can realistically cut through.
Tightly targeting segments of those markets with buying needs closest to what your product offers is the best approach. For generalists like the typical New Zealand entrepreneur this can be frightening, but the more you can concentrate your scarce resources the greater likelihood of success.
Companies in the US that focus on narrow market niches can grow to huge size. From the top 500 software companies in the US there are numerous examples. Jack Henry & Associates helps small banks and credit unions automate transaction processing. Their 2003 revenue, $US 307.7 million, making them a sizeable company by New Zealand standards. Dendrite, which specialises in productivity software for the pharmaceutical industry, turned over $US 321 million.
There are a number of New Zealand companies that have done well in the US market. From the established successes of the likes of Dynamic Controls or Pulse Data Systems, to today's export leaders like SLI. That success has come from focus.
Online search technology company SLI have targeted the top e-commerce companies in the USA - identifying around 2,600 that are generating significant traffic. They identified decision-makers within those companies and are starting to communicate with great results. They also use this list as a filter for making key marketing decisions - what tradeshows to visit, what magazines and websites to advertise in, how to target direct marketing and telesales.
So how do you start when looking north across the Pacific? The first step is research. You need to understand as much as you can about your market before you get on a plane. There's an enormous amount that can be learned from the Internet, but other sources such as Trade New Zealand can provide invaluable data. When Jade Software entered the US market in 2001, the enormity of the market shrunk to manageable proportions as research revealed that there were just over 400 large corporations eligible for a technology conversion service the company was pitching.
The second important step is ensuring you understand the market need your product fulfils, and then prioritising what sort of companies require it the most. Funding a US business on New Zealand cashflow is a challenge that can quickly defeat any company. Focussing as much as possible, on a defined market segment, is the best way to use scarce resources. Identifying that market also operates as a crucial decision-making filter: helping you assess what kind of marketing mix to employ, or other important challenges such as where to locate your office or who to employ.
A third step when thinking of tackling the US is a simple one - ask others. New Zealand boasts a number of smart technology companies that are familiar with doing business there, as exporters or subsidiaries, Mail Marshall, Jade, Pulse Data, Tait Electronics, Trimble, Sunguard. Not just for tips on marketing strategy, but for the simple stuff like leasing offices, cellphones and cars.
Tackling the US market is the great challenge for a New Zealand technology company, akin to selling ice cubes to Inuits. It offers enormous opportunity, but it is also the most competitive economy on earth. There are three fundamentals to facing, and prospering, in that sort of environment: focus, focus and more focus.