Many small foreign firms coming to the US market will fail. They will fail because they do not pay attention to the following 12 rules for market success in the US.

Probably the first and most important rule for success in the US market is that you must have enough financial resources to do a successful launch. Many small foreign firms with some success in their own domestic market come to the US because it is large and tempting. However, launching the US is expensive and as successful typically costs around $3M.

	Likelihood of success	What you can do
<$500K	Poor.	One-person operation. Web site. Find distributor. Viral marketing approach. Use of commissioned sales reps. Localize brochure. Provide same time zone support. Watch competition.
$500K to $1M	Low	Regional roll out. Web site. Sell to highly targeted market. Use of commissioned sales reps. Localize brochures. Watch competition.
$1-3M	Medium	Proper launch plan. Web site. PR campaign. Good literatures including white papers. Better web site. Competitive analysis. Usability testing. Market research. Limited advertising. Testing of direct response approaches. Telemarketing, seminars and cost effective sales approaches.
$3-5M	High	Small national launch. Product management.

If you don't have sufficient funds, then you have three basic choices: (1) raise more money, (2) joint venture with another small home market company so that together you have sufficient funds, or (3) work with a US firm that can lower your cost of entry by becoming your distribution arm.

If you are thinking of hiring a sales force, but don't have the resources, talk to Eclicktick to see if we can help you share the costs of a sales force with other firms that have complementary products or services. Two firms can often benefit from shared sales representatives, provided that their products are not competitive and they target the same buyers.

The second requirement for success in North America is excellent management at the US subsidiary. Most small firms coming to North America start off with too small a management team. Many high tech firms send over technical staff and are surprised when they cannot do marketing or sales.

If you cannot afford a full management team, then you need to consider a distribution deal with a firm that has a full management team that can act like a trading company and handle market research, product management, localization, product launching, inside and direct sales and customer support.

Another approach is to hire American staff on a part time basis. Talk to Eclicktick about how we can help. We can provide you with contract part time staff who have US product launch experience.

Traditionally foreign companies have tended to compete in the US on the basis of low price. However, increasingly buyers are moving away from price as a key deciding variable in selecting suppliers. Particularly in the area of software, purchasers are looking a issues such as total cost of ownership (TCO), supplier capabilities and life expectancy, and the ability to provide a high level of services and technical support.

New product research suggests very strongly that the products and services with the highest probability of success (90% or higher) are those with unique, differentiated and customer perceivable high value.

If your product is a `me-too' product with average value competing against existing US competitors, then your chances of success are low. They are very low if you have a small launch budget and a management team with narrow experience.

Success in the domestic home market does not automatically lead to success in the US market. A major difference between the US market and most countriesis the dramatically different scale of the US market. There are more competitors in the US markets and the market is geographically harder to serve. American marketing management teams generally have excellent experience in serving large markets and are skilled in the use of marketing and public relations to create awareness of their product.

Foreign firms without strong marketing management will generally fail in the US because (1) they underestimate the cost of launch (2) the launch plans are weak, and (3) they fail to do their marketing homework and try to service too many types of customers.

Selling the US is a very different proposition than in a small country. You should think of sales in the US as a process for manufacturing customers. Different approaches are used at different stages in the sales funnel. At the early stage tools such as web sites, direct mail, email, publicity and advertising create awareness for a product. At the second stage, customer support centers and inside sales staff “qualify” prospects and determine who is interested, ready and able to buy. At the third stage, closing efforts are attempted by direct sales staff.

Remember also that if you are using a distributor, that distributor need to be serviced. If you don't manage distributors, they will forget about you. Servicing a distributor is as much work as servicing end users.

If you have not modeling your sales and customer activities, talk to us about using sales modeling software for modeling your sales and customer support activities.

All startups, international and American, underestimate the existence of competition. You can assume in the US that you will always have competition. The competition will come in various forms:

Competitive analysis is an easy task to contract out to consultants. For firms with very small budgets, we recommend purchasing Copernic from www.copernic.com.

The US high tech sector is currently in recession. Another way of looking at the US situation is that the availability of inexpensive capital has lead to an explosion in the availability of software and high tech services. These two facts mean that the task of getting your first customer or reference site is more difficult than ever before.

For many startups, a product-oriented strategy is wrong in today's environment. Many customers are looking for solutions, out-sourced services, narrow or out-tasked services, or the purchase of a complete solution.

Remember that systems integration and consulting firms are very difficult to use as channels of distribution. You are better off creating a consulting contract and bringing it to them.

In the large US market, segmentation is normally a requirement for success. As a general rule, the impact of the Internet has been to increase the amount of segmentation in markets. So while a high tech product can, in theory, service multiple segments, the reality is that most startups will end up as a niche supplier.

For non-mission critical software, you may be launch a product initially. You should sample different market segments and quickly focus upon those that buy the quickest.

For products with long sales times, you should first consider ways of shortening the sales cycle time. If that is not possible, then you should make sure that you have done extensive market research.

International companies launching in the US should be careful not to attempt a strategy of doing everything themselves. Selecting competent suppliers is a critical skill in any product launch. Selecting the right suppliers and services will reduce your cost of launch.

However, be particularly careful of suppliers who make extravagant claims. Always ask for references and do check the references out. If you are having difficulty selecting suppliers, then put together a Board of Advisors to help you. The money or shares that you pay to these people will be worth it.

Because markets are unpredictable, it is important not to be too stubborn. One high tech firm I worked with was very rigid in how it thought of its business. It thought it was a software company and so for 8 months, it avoided taking on large and profitable service contracts. It was not until they were out of money that they had a change of heart and switched their business model.

Bear in mind that the purpose of a launch should not be just to make sales, but also to figure out where the profitable sales area. As a general rule, 20% of your customers will account for 120% of your profits, so testing and tracking the effectiveness of your marketing and sales activities is a key learning from your product launch.

It is a bad idea to assume that success will take a long time. A better approach is create a launch strategy that produces early success even if it is initially less profitable.

If your strategy is based upon a long sales cycle or expensive advertising campaign, my strong suggestion is to change your sales, marketing and pricing approach to make it easy to buy from you.