A couple of years ago I wrote about the IT culture of Europe and the market opportunity it presents for vendors of open source software. If you're ready to take advantage of that information, here are some points American open source software vendors should consider when developing a plan to open new markets in Europe.
Before you make the decision to expand into a major new market, you need to do some serious prep work. Research regulations at the local, regional, national, and EU levels; a discussion with a local lawyer in every country you plan to enter can save hundreds of hours of time you might have to spend if you run afoul of the authorities.
Where to Start Conquering EuropeThe best entry points for an American firm are Germany, France, the UK, and Ireland. The former two lead the continent in OSS adoption, while the UK and Ireland require substantially less internationalization and localization work, though the English-speaking fraction of Europe spends less on OSS. Innovators and early adopters in most countries are willing to use an English-language product, but to capture the larger market, internationalization and localization are key.
Plan to internationalize and localize your user interface to the mother tongue of the target countries. This is especially important for Software-as-a-Service (SaaS) applications. Include localization and translation criteria in your QA process so you can catch translation errors.
Internationalization and localization means more than just translating menus and preferences. It can involve differences in how addresses are processed, how currency is formatted, and even the sizes of paper for printing. Make sure you adopt appropriate region-specific functionality.
As part and parcel of translating an application, make sure you translate the documentation. Be sure that the person leading the translation effort speaks the target language as a first tongue. It's not just words that need to be translated, but also concepts and style. Some phrases don't travel well across languages and need to be replaced.
Documentation goes hand in hand with support. Offer support services during local business hours in the target market's time zone and native language. This usually means hiring local service and support employees.
Once you've done your preparation, localization, and other due diligence, you're ready to build a marketing plan and a go-to-market strategy. The following diagram and discussion presents a broad outline; adapt this as needed to your requirements.
The graph above shows the technology adoption lifecycle as defined by Geoffrey Moore. The highest revenue can be generated when the early and late majority of users buy into the product. I have overlaid the graph with the go-to-market tactics that best work in the different phases. Typically, low- to mid-cost options such as community building allow businesses to attract innovators and early adopters, while mid- to high-cost options such as building a partner network and direct sales efforts are an effective approach during the high revenue phase.
Community-building is the first step to expanding into a new European market. When building your European community, focus on innovators and early adopters.
In many ways, this is the easiest step. During the initial community-building phase, your product can still be in English, and you shouldn't feel pressure to drive revenue, only adoption. Focus on word-of-mouth marketing campaigns and building teams of innovators and early adopters to internationalize and localize your product. Many innovators and early adopters find this kind of work rewarding, and will contribute their effort on a volunteer basis.
An important part of community building is viral marketing. Encourage early adopters to talk about the product with friends and co-workers. Set up pages for your product on social networks that see high adoption in your target market. Encourage users in your target market to make presentations, videos, and other collateral documenting their use of your product, offering prizes for the best submissions.
The next step is to begin providing infrastructure for customers to get your products and services. At this point you should offer a native-language version of your website for the target market, including pricing in the local currency.
Create a site oriented towards facilitating community translation efforts for your product, even if you are months away from investing money and resources into translation. You may find that translating the website creates all the momentum you need for the product to be translated for you.
Once your community efforts (including viral marketing) are running well, you should begin to see potential partners showing interest in your product. Signing up a few independent early partners will jumpstart your marketing and sales, and give you access to local technical expertise that will be invaluable while you localize and translate your product. Carefully select no more than three partners, ideally including systems integrators, who are willing to invest time, energy, and expertise into the partnership.
Speaking of partners, your choice of a go-to-market strategy – partnership or direct sales channel – should depend on which region of Europe you're targeting:
Your first overseas hire says a lot about your priorities and plans. Here's how your choice will be interpreted:
You are investing for the long haul, and building a robust community takes precedence over business considerations.
You are aggressively building a business in the target market, and revenue is your driving consideration.
You are interested in growth through a partner-centric strategy.
You need a local public relations firm to conduct a successful PR strategy in Europe. Not only are there differences in language and time zone, but also major differences in how press releases are written, and how messaging and positioning are conveyed. For instance, in the US, positioning is front and center in all messaging, including PR. In Europe, PR is expected to take a facts-first approach, discussing the actual facts and issues before getting into any other messaging or positioning. Most Europeans will ignore positioning-first PR.
Also, PR in Europe should be tightly focused on the intended target market. Because of the diversity of cultures, languages, and customs, any broad PR will fail to make an impact on most readers. The solution to this problem is to narrowcast PR market by market. You must focus each of your PR efforts in only one or two countries in order to be effective.
As your business in the new market grows, you will eventually need to build a local team. Your subsidiary should focus on translating and localizing the product, and on growing the local market, leaving product development and strategy to the home office.
Hire a local lawyer to help you set up the right corporate structure. Hire only essential staff, as the subsidiary should not grow too large. Your local team should include sales, marketing, localization engineers, QA engineers, and partner representatives if you are building a partner network in a southern European country.
All of these tactics increase the chance that your efforts to conquer Europe will succeed. Open source software is uniquely suited to the challenge of expanding to new and different markets. Proprietary software companies have to pay a large up-front cost to get involved in a new market. Open source software companies have an advantage due to the cost-effectiveness of community-building and viral marketing. This allows open source companies to feel out new markets and invest significant resources only if demand is confirmed by innovators and early adopters.
Above all, realize that every country in Europe is a unique environment. By focusing on the major European markets one at a time, you can build a unique business fitted to the strengths of your product and the local conditions.
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