Beyond simple revenue growth
Companies often think of export or global sales in the context of incremental revenue. That's a seductive story when one considers that 95% of the world's buyers are outside the US. But for companies that are doing "well", or even "OK", simply adding more sales may not be enough to move the needle.
Beyond revenue however, there are five key and often overlooked reasons why strategically adding global sales is often good for companies. These include:
- Lessons learned abroad improve domestic business
- Lower taxes
- Millenial engagement, recruiting and retention
- Domestic Latino market savvy
Let's take a closer look at each.
Nearly every company I've seen successfully export has started off planning to sell their product internationally (often simply referring to internet inquiries) and very quickly developed versions and use cases from observing overseas application. Those new insights often create entirely new market opportunities domestically, adding benefits from diversification, incremental revenue and often reduced competition in new application areas.
Taken several steps further, in this interesting case a company created a product concept and floated it to the world to see which markets would embrace it. They then took lessons learned to adapt it for broader appeal.
“When Musical.ly was built, [the founders] threw it out to different countries to see which one would stick. Interestingly enough, the people who responded were teenagers in the US,” said Hans Tung, managing partner of venture capital firm GGV Capital and a board member at Musical.ly. GGV Capital is an investor in Musical.ly. South China Post
It seems likely that shifting political winds in the US will lead to lower taxes on both corporate profits and the "pass through" (SCorp & LLC retained earnings) income of small business owners. That may reduce, but likely not substantially change the calculus of the tax benefits of an IC-DISC structure for handling profits from export (direct and often even indirect) sales.
The White House and Congress agree that a key to our nation’s economic recovery is strengthening our manufacturing sector and encouraging exports. The IC-DISC is tailor-made to encourage exactly such activity – providing a tremendous tax incentive for small and medium business owners who manufacture and export. The door is open for significant tax savings for these businesses – they just have to walk through. For those interested, here for more details. from Forbes
You've heard all about how tough millenials supposedly are to recruit, manage & retain. Everyone agrees they want to feel like they're making a difference and they want to be engaged.
Here's a perfect opportunity to appeal to, and challenge this generation that was raised with a global mindset.
By selling internationally you will open up opportunities for global sales, research, design, marketing, administrative, finance, support, logistics and legal.
And the resulting growth will create more space for advancement and professional development of the rising generation of employees
Latino market savvy
Putting aside the political hot potato of immigration, the US is already home to a substantial Latino population. But marketing and selling to a "Cuban" in Miami is just as different from selling to a "Brazilian" in Framingham, MA or a "Honduran" in Houston as selling to a Yankee in Boston and a Hipster in Seattle.
It's simply not enough to have American English and some monolithic "Spanglish" approach to marketing to the rapidly growing Latino market in the US. Instead it's important to understand that there are distinct segments - geographically, by nation of origin, culture, language and dialect. The best way to learn more about each is to become expert in marketing to people in the nations of origin. Get really good at reaching Colombians in Bogota, and you'll learn lessons that will make you vastly more effective reaching their counterparts in NYC.
Every market and industry has good times and bad. And while global markets experience similar trends, the magnitude and timing varies. Additionally fluctuating currencies and demographics mean that different markets experience up and downturns to different degrees at different times.
US Department of Commerce research has found that companies that export both pay higher wages and are more resilient. In an Amex Insight Guide packed with case studies, several successful exporters discuss how their global sales saved their businesses during the 08-09 recession.
But is it feasible?
"So" you may be saying, "it all sounds pretty groovy but I've heard what a colossal, risky, expensive and frustrating undertaking growing global markets can be. I'm not interested."
15 years ago you would have been partially correct. At the time you really had to chart a laborious course:
- decide to go global
- research market opportunities and make a best guess on a hypothetical
- invest speculative resources of time, money and diluted management focus
- lose money for 3-5 years
- hope at the end of that time you had turned the corner and the sunk costs were an investment you made and not a projection of the next five years
The internet changed that though. Today, if you do your digital marketing really well (like you need to be for your domestic business anyway) you're going to generate international leads. Some of those will percolate through to the sales pipeline, and some will even become customers. (All you have to do then is manage the transactional details of payment and logistics.)
At the same time you're attracting leads and customers you're also accumulating data to prioritize market opportunities. Then you can incrementally localize your marketing for those markets. Maybe a few local language keywords...leads to a local language landing page...then to a local language offer...maybe a local language microsite...even possibly hosted in the local IP range...and then full on SEO and blog. (Just, please, please don't simply translate!)
The point is that the risk is essentially removed.
Want to learn how to turn your domestic digital marketing into global sales....and then to realize these five benefits of exporting?