Many foreign companies are interested in offering their products for sale in the HUGE US market. Besides, the market is relatively uniform. Seemingly one language and one culture make it easier to localize a global product to the US market than localizing it for the 28 different countries of the EU for instance.
But many European companies stumble when entering the US market. Here are 4 mistakes to avoid:
The US Market is HUGE
What many companies often do not realize is how HUGE the market really is. The market here is probably many times bigger than the market in the home country. Being successful in this much larger market will require a different approach.
All over sudden you will cater to a potentially much larger customer base. Having to address such a large audience requires that a review of the company’s communication methods. Possibly the way you have informed your potential customers about the benefits of your product is no longer sustainable.
Geography plays a role as well. Even though the US looks as a giant market, gaining traction in one locality may not help you in another as they are geographically separate. It is just not physically possible to see someone in Phoenix, Arizona and New York in the same day. And there can be a three-hour time difference between the two cities. The US customer is very demanding, the vast geography can cause significant problems servicing customers in a timely manner.
Lack of Focus
Many foreign companies have never had the “luxury” of being able to focus. Their domestic markets are too small to build a strong successful company with a single product. Instead they have to diversify and enter many different markets. Because it is in their nature, they want to do the same when they enter the US market. It’s rarely the right thing to do.
The fact the market is huge probably means there is fierce competition. If you want to make a mark you will have to fight for it. Unless your company creates a totally new category you will face established companies who have been in the game for a while. You must have a plan to beat them before you throw your hat in the ring.
Being successful in the US will require a change of mindset. Laser focus on a specific customer, with a product you have adapted for a very specific market niche, and standing out against the competition, will help you gain traction.
Lack of a PLAN
The cost of reaching out to your customers will be much higher than what you have to spent in other economies. Because your competition will invest heavily in communicating with your customers, you must do so as well. You must be prepared to spend the money.
This is where time and money invested in preparation will pay off. Unless your budget is unlimited, you’d better figure out what market you want to address and how you will compete. And unless you want to fight multiple competitors on multiple fronts at once, I strongly suggest focusing on a single, winnable battle. The are probably several battles you can choose to fight. It’s up to you to figure out which one you will engage in.
Even at this, some of the very best companies can fail: TESCO, the world’s third largest retailer left the US within 10 years from entering.
You must plan to have enough firepower to make a dent. It will cost money. If your budget does not measure up to the opportunity you will become disappointed with the results and give up before gaining traction. The best way to avoid this problem is to plan and estimate the costs of the endeavor. If that cost is more than you can swallow, don’t start – or curtail your plan to something you can manage.
Underestimating Cross-Cultural differences
Without a doubt, the US can claim an out sized role in cultural exports. Everyone has seen American movies and “understands” American culture. Everyone “knows” the American judicial system. Many people outside the US even follow US politics and know who is President.
Because of this casual familiarity, many underestimate the Cross-Cultural differences. In Europe especially, people often think their exposure to US culture has sufficiently prepared them to cross the cultural divide. Many professionals have traveled to the US on vacation, and some have studied here. So, how hard can it be?
It turns out to be harder than most expect. And for many Europeans that’s unexpected. I am afraid that the “casualness” with which European companies enter the US market, leaves them poorly prepared to deal with the inevitable cross-cultural issues. Better for them to enter a totally foreign market such as China or Japan, where the potential conflicts are clearly obvious, and management understands the need to properly select and train personnel to cope.