Friday, 9 November 2007

5000 miles and counting.

I mentioned in a previous post that US companies trying to break into the UK make the same mistakes over and over again, and that there are a few things which 'they' just don't seem to understand. I have an article coming out in Computer Weekly on this very soon, so I need to be careful I don't repeat myself too much, but basically there are a few pitfalls:

The UK market is not an extension of the US market.

Just because a product has worked in the US, does not mean it will automatically work in the UK. The laws in the UK are different, compliance isn't taken as seriously yet, there is a different attitude towards legislation and whilst less technology savvy in general, people are less easily led by advertising and will need something proven to them before they part with their hard earned cash.

If you don't know the UK market, you are destined to fail.

Many US companies will happily send an experienced sales guy out to the UK in an attempt to kick start things. Many will succeed, but in the meantime poor old Mike (all American salesmen are called Mike, don't tell me any different) is having triple bypass surgery at the age of 35. Many others will use a recruitment agency to find them an experienced sales person in the UK, at great cost, to help them out, without doing any market research.

Unless the product you have has such a high price point that you only have to have one or two accounts to become viable, sales needs to be done locally, and with local talent, people who know the market, and how to exploit it. This is the area which distribution tries to exploit.

The UK channel (distribution and resellers) exists because of the US attitude towards the UK market.

Very few people looking out from the US understand this. This is because the channel has grown up from the state of the market, it is not there to serve, but to feed from the US. Because no US company can set up a UK branch with any clear knowledge of how they are going to fare, they use agents, these agents pitch to resellers who are offered large discounts. When the resellers have made the solution viable, they can pitch to distribution, who will get even larger discounts to bring in even more resellers. Then the product becomes much more widely distributed, but the product is tied to a distributor unless the company becomes so large and successful that they can start manufacturing in the same region.

The channel is not as reliable as they would like you to think.

Some resellers and distis are better than others, in fact the quality of work is extremely variable. Not only that, the turnover of staff inside these places is staggering. A company who did well for you 6 months ago could be staffed by entirely different people now. Are you doing your checks on them from 5000 miles away?

The channel is not as exclusive as they would like you to think.

At the risk of incurring the wrath of a few resellers and distributors, what they do is rarely unique. Many of the top distis and resellers are now so close in their offerings that it is only acronyms that differ, not the service levels or support.

Incentives work differently in the UK.

Try starting a Beta program on the West Coast and you can easily come up against issues. People expect more out of your product, and they expect it to work. Not so in the UK, but you have to warn them. Beta programs can be much more successful, people expect discounts, but are very pragmatic in relation to the quality of code if warned in advance. In the US they expect perfection and immediate service. Britain grew up on British Rail. However, running a Beta program from 5000 miles away is not possible.

The UK market needs to be built again.

Just as you had to build up awareness of your product in the US, so we have to build awarenesss in the UK. If that took 4 years in the US, it will take 4 years in the UK. You may have seen me refer to the 4-6 year market lag between the US and UK before. This is why it happens. Those which take 6 years usually had a false start somewhere along the line, or a hard technology to punt in the first place.

This last point broadly covers a lot of issues. Think about business drivers, they are not the same. Think about the sales message. Think about the marketing message. Think about the support. SLAs, maintenance, delivery, replacement, etc. You can't just do it from 5000 miles away and expect it to go right just because you managed to do it in the US and you're really angry because it's failing.

I've seen a successful company lose momentum and practically disappear because of it's lack of vision in this area. I've seen a very small company make itself look like a huge corporation because of their clever use of ideas. I've seen some very intelligent people look like lost children when faced with the UK channel and disbelief when the product failed to make a dent in sales. I've also seen people embrace and empower their staff to go ahead and do what they think is best in the region. So far these are the ones who are doing well, but I still can't help thinking that this is an expensive way to do it.

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