How to Approach Digital Global ExpansionBy Guest Author | Posted 09-12-2016
By Chris Davis
The world is a big place, and despite what you, as an IT leader, think you know about the international digital heavy weights’ control of the market, there is still a lot of runway for your company to make its mark.
The first encouraging point that your digital future is not yet written comes from Dr. Peter Diamandis’ book Abundance: The Future is Better Than You Think, in which he estimates that by 2020, 3-5 billion new consumers will come online, adding tens of trillions of dollars to the global economy.
The second point can be found in the awe-inspiring data that Internetworldstats.com publishes on the 20 major world economies. For example, 50% of the world's internet users are in Asia, but the 2.3 billion people in Asia that don't yet have internet access constitute 31% of the total world population. This constitutes a huge future opportunity for businesses you should be planning for it now. Whether your company currently has an international presence or not, this is where your company’s growth will come from over the next 20 years, and you will want to lay the groundwork before your competitors establish a foothold.
But let's not oversimplify. The Asia market is multi-lingual, multi-cultural, and comes with digital (double-byte characters), political (Google being blocked) and competitive (Uber selling to Didi) challenges. A "one size fits all" approach didn't work for Walmart the first go-around, and it is taking a new look at how it re-establishes its presence in China. To compete in the modern marketplace—where digital is or will be the medium of choice for commerce—all companies need to invest heavily in designing their global-local digital strategy.
Dipping your toe in the water won't be enough.
How to Approach Digital Global Expansion
In Metis Strategy’s work with clients across multiple geographic and industry profiles, we have determined that there are five keys to developing a thoughtful approach to digital global expansion.
The overarching theme is that you have to transcend the mindset of a U.S. company operating globally to be a global company that happens to be headquartered in the U.S.
Here are the five keys:
1. Be Native. It might sound counterintuitive to suggest that a company based in Europe or the U.S. "be native" to a country like Indonesia, but it's not. Figuring out the needs of a culture where the language and daily habits of consumers vary so vastly from your own is difficult, if not impossible. You should make the investment in local staff, and partner with local agencies to tailor your approach to tastes, cultural norms, customs, device types and partnerships. Matrix and integrate the local staff into your corporate strategy, but don't control the entire budget. If the local team doesn't have the resources to succeed, but are held accountable to growth targets, they will pursue the paths of least resistance, which may not be in your best long-term interest (e.g., bad partnership deals).
Also, empower local talent with the tools to be nimble, localized, and relevant. For example, ensure your campaign, e-commerce and content management systems enable the team to speak, design and engage in natural ways. Simply translating English to Mandarin through a translation company, on a streamlined version of your website, simply won't cut it. Local content generation or co-creation requires careful governance and design standards but in our experience the rewards usually justify the investment.
2. Grow With Them. Much of the world is still in the earlier part of a digital revolution, and a successful digital approach should not be focused on year-one profitability only. Instead, commit to testing, learning, brand building and positioning yourself to eventually own the direct relationship with the customer across the entire customer lifecycle, whether you are a B2B or B2C company. Again, leverage local agencies and expertise that can help tap into local markets and be on the ground when doing consumer research. The beauty is that you have little to lose, but so much to gain, so shake off corporate conservatism and experiment relentlessly.
3. Mobile First. Asia and Africa are leapfrogging PCs with mobile devices and connectivity. Design your digital capabilities with either a mobile app, mobile-responsive web, or even SMS as the engagement medium. This will help you ruthlessly prioritize the core "must-have" features that will differentiate you in each market, rather than replicating decades of long-tail enhancements. WeChat, in China, is a powerful example of when mobile wins and expedites the ability to create adjacent service offerings that lend themselves to viral adoption. If you don't know WeChat, read this: It's Time for Facebook to Copy WeChat.
4. Invest in Marketing and Branding Early. Familiarity and credibility matter. As a company entering a new market, you must either first establish credibility or tap into familiarity. Credibility can be built by hard work and service delivery, but that takes a long time. It is paramount to build awareness early on, so you will need to invest in digital marketing, a native digital experience, and avoid copy and pasting your website from brand.com into brand.cn. Please don't redirect to an English-only page for transactions, or assume that data entry forms, such as address fields, follow the same logic everywhere!
You should also explore partnerships with brands that decision makers know and trust, but with an eye on developing ways to add unique value and engagement in a locally appropriate way. You may consider partnering with local brands on co-sponsored advertising campaigns, marketing a “suite of services” where your offering fills an important gap, or in the form of sales distribution and acquisition. No matter what the form of the partnership is though, you’ll want to create unique value that creates stickiness with the consumer. It is great to acquire a net-new customer through a partnership, but if the consumer receives a benefit and never comes back, you did not really accomplish your objective of growing your market share. For example, you can add unique value and create stickiness through locally modified loyalty programs, digital services that layer onto physical experience, or special benefits for consumers that establish a direct relationship with you.
Another way to tailor your approach to local customs is to completely re-brand in a locally appropriate way. Unless you have the brand awareness of a Louis Vuitton, where the foreign brand is the value proposition, you may be better off with a fresh approach. Think of this branding fail as food for thought: when KFC first entered China in the 1980s, its "Finger-Lickin' Good" campaign translated to a not-so-appetizing phrase: "Eat your fingers off." Try this thought experiment: you are a "digital immigrant" trying to learn your new land, rather than a tourist with no investment in the culture.
5. Partner to Enter, But Have an End Game. Partnering with regionally recognized brands is an efficient way to enter a new market and navigate political complexities—especially for companies that don't have brand awareness. However, you'll want to enter the relationship carefully with an end game in mind regarding how you will eventually shed yourself of a profit-eating partnership. For example, when many travel companies enter China, the first stop is the travel site C-Trip. That is logical, if not necessary, but if you train the consumer that your offering is a commodity on the shelf, you'll spend 10X trying to un-train them through marketing.
This all may sound like a lot of effort with limited payoff, but I challenge you to think about the long game. When corporate budgets are set in 12-month increments, it's easy to water the big tree and neglect the seedlings.
Chris Davis is a vice president at Metis Strategy, the business and technology strategy consulting firm.