How does market entry vary between the UK and US?
Two market entry specialists, Sophie Lechner (SL) of Global Commerce Education based in the US and Joanna Dodd (JD) of Rochester PR Group in the UK, swap thoughts about their clients’ market entry experiences. Which challenges are common to entering the US and the UK and which are different?
**Let’s start with some of the the biggest challenges companies face when expanding into the UK or US. Do the huge differences in country size mean companies face different challenges? **
SL Because the population of the US is so large, many foreign companies think “all I need is to get 1% of the market”, and they assume that a tiny market share means minimal effort and investment. But that is not how it works, it’s not a linear correlation. The effort and budget required to get a 1% market share in the US is not a 10th of what it takes toget a 10% share!
JD Although the UK is small in comparison, there is still a sizeable opportunity and a correspondingly competitive marketplace so there is still the complexity of getting it right. Clients often describe the UK as a great “test” of their brand with an “if it can succeed in the UK, it can succeed anywhere” mentality. And often that means the US as this is frequently the territory that businesses want to tackle after the UK.
SL What we definitely agree on is that we are both in very diverse countries, not just in terms of ethnicity which is a great attraction to inbound companies. The added complexity when thinking of the US market is that it cannot be approached as a single country; it is almost more like the European market in that each State in the US may have its own regulations, taxation, laws, and then also its own culture and business practices. One option to consider to tackle this complexity is to focus on just one local market, perhaps even smaller than a State. Start small, learn, correct, repeat.
What can we learn from what companies wish they had done differently?
JD Generally, I don’t think we have met a company who has not enjoyed trying to expand into the UK but they often mention a lack of understanding in terms of the right route to market for a particular brand or service. One thing we can say with some surety is that it never seems to work exactly the same as it does in the company’s home territory. We hear of many who give up because they simply fail to make the right connections in time.
SL I agree, there are many different strategies to enter the US market but most clients only consider a couple of them and thereby miss out on some options that would be less costly, less risky, have a higher chance of success and be faster. For example rather than first hiring a sales person it may be much more effective to enter an alliance with a company that is already in the market with a complementary product. With the partner’s existing client base and trusted sales force your sales can take off much faster.
What should a company do before it lands in the US or UK?
JD We are overwhelmingly in agreement on this one - start the market entry “journey” earlier, in other words, do more homework. We both see so many companies underprepared. And many who have simply not worked out their messaging for the UK. There are loads of networking and event opportunities to hook into here so try and work out before you land which ones are really going to deliver the right results otherwise you will fill your diary but not your pipeline.
SL Talking of landing, an exploratory visit should be made early on as you will learn a lot more by being there. Of course you will need help to make that visit useful. You must find an unbiased professional that can introduce you to the relevant partners you will need (lawyers and other service providers) as well as other companies in your industry and a handful of potential clients, so that you can conduct some informal “market research”. Begin this search by reaching out to other companies from your country who have successfully entered the market. Also don’t forget to speak to those who didn’t make it or who stumbled along the way as you may learn even more from them!
**What are the biggest misconceptions people had or the things that surprised them about the US or the UK? **
SL Actually the biggest misconception is thinking that because you are from the UK, Australia or even Canada, just because we have a common language and some shared history, the differences won’t be that big. The culture and business practices are vastly different and it may be even more dangerous to make assumptions because the differences may not be immediately apparent.
We once spoke with a UK food manufacturer who had set up appointments with US distributors. It seems a logical approach to her, given that distributors are the people she sold to in the UK and who promoted her product to the retail sector. Unfortunately it proved to be a waste of time and effort. She assumed a distributor in the US would have the same role but in fact, here in the US the market is structured differently, with more layers in the process, so distributors are not who she should have met with. So even a simple wrong assumption based on a single word can be an expensive mistake. It’s the kind of mistake that can be avoided by working with a local partner.
JD Talking of food brands, there are other word challenges for example “non GMO” might be the normal thing to say in the US but a UK consumer doesn’t expect a product to be genetically modified so it is a bit jarring to see that. Other elements of language and business behavior trip people up here as well. Apparent enthusiasm or politeness does not mean people are definitely going to do business with you. We’re just very good at being polite! And I think people are often surprised how long it can take to make things happen in the UK. One client told us that when you think of the UK, you should treble everything in terms of market entry: on the plus side that’s the fun, on the downside, that’s probably the time and cost.
Best piece of advice your clients say they wish they had listened to?
First tap into local knowledge and experience! It can save a lot of time and headaches!
SL In addition, take cross-cultural training to better understand how to communicate effectively as you go through your journey, and also to gain a better understanding of customer preferences. Talk to a lot of people and listen, listen, listen and learn.
JD And, when it comes to learning, listen and learn from local experts – even something as everyday as social media works hugely differently (for example the branded or “pay to play” nature of US social media can sometimes be off-putting to a UK audience). Whatever marketing and PR activity you do undertake, make sure it is integrated into your sales strategy.
If you are considering the US or the UK and would like to hear more from Sophie and Joanna, get in touch to find out when they are next hosting a joint session in Europe.