I caught up with Madan Bharadwaj, Founder of Measured, a leading expert in multi-touch attribution systems. As we learn from this video, while Madan considers himself a data ninja, big data geek, and machine learning technologist, he is also in pretty good physical shape!
I asked Madan to give us some advice on how U.S. software companies can sell their products online in overseas markets. My take-aways are shared below.
Top things to consider when selling SaaS overseas
Localize the business model: Typically, SaaS solutions or their substitutes are sold via business models that are radically different than how they might be sold in the US. It makes a huge difference in how you go-to-market, when you understand who the buyers are and how they buy against the value that your SaaS solution delivers.
It may make sense to repackage the SaaS platform in some cases, say with accompanying localized services. Even when that is not meaningful, just being aware of the local context and deliberately positioning for it, goes a long way in helping succeed in foreign markets.
Currency exchange rates vs gross margins: Typically, SaaS products are conceived, engineered and priced for unit economics (Eg: unit costs, unit revenues) in a certain market. When they are extended to other markets, the unit economics may just not pan out the same way.
For example, an adtech SaaS service may cost say $1/1000 API calls ($1 CPM) , but it may turn out that $1 in unit costs is too expensive in local currency for the same services. And it may have to be priced at say 1/3rd that for the foreign markets. But the unit costs will still remain the same, regardless, in many cases, and hence may make your gross margins far less profitable.
Working out the economics for local markets and constructing deals to account for unit economics and scale become far more important to protect P&L health than it may be when working in US markets.
Local partners: Business environments vary drastically from country to country. The go-to-market that makes perfect sense for the U.S. may be irrelevant in a foreign market. Having a local partner, who can open doors and drive the first 10 or so deals in the foreign market, is in many cases the make or break factor between success and failure.
It is not uncommon for SaaS companies to relocate a senior executive in the foreign market to work through the nuances of the foreign market while keeping the essence of the core value proposition undiluted in the SaaS product.
Localize the product: This typically is expensive to do, and even more expensive and hard to do well. Most companies invest in product localization once the foreign market has shown some real promise and lack of product localization is a big factor holding back further market expansion.
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