Episode 146:  Shiv Narayanan of How To SaaS on Developing a GTM Strategy to Expand Geographically

Episode Transcript   

 

00:01 - One of the reasons we scheduled this and and decided to do this topic is that I meet a lot of clients, uh, and private equity investors that are investing in companies that have a desire to expand their regional footprint or expand to different countries, uh, or different regions.

00:22 - Um, good example would be an American company that wants to expand to Europe or vice versa, a European company that wants to expand to the US because there's a lot more value to capture there.

00:30 - And so, uh, I think we had initially positioned this as "How do you expand to the US?", but really it's a general talk on: if you are focused on a specific region and you want to expand to a different part of the world, what's the best way to to go about that?

00:46 - And as a disclaimer, and some of you guys who have taken my C-level marketing course have seen this slide, is we're going to be focusing on the approach and the overall strategy or how to kind of go about this.

00:56 - We're—I'm not going to dive too deep into super tactical stuff because the tactics will be very different depending on the type of business that you are operating in and the types of customers you have and what you actually end up selling.

01:10 - So more I want you guys to walk away with a way to think about this problem and so that you can kind of think about what is the order of operations for your business or how can you actually capture the value that's that's sitting there for for your companies.

01:40 - Um, and before we jump into the geographical side, I want to just set the stage a little bit in terms of how we look at this, is that there—when we're when we're talking about expanding geographically, we're talking about one of the many avenues available to a business to to grow.

01:48 - And as a baseline, there's really only three ways to grow any business.

01:50 - One is you get more customers.

01:51 - Um, two is you increase your average value of sale or how much you sell per deal.

01:52 - And third is you have more repeat business or better retention.

01:54 - And together these three things create more customer value.

01:56 - And depending on the type of business that you're in, like we can take those three buckets and we can split them further.

01:58 - Like it could be about expanding existing accounts or landing more net new revenue, or cross-sell, upsell, or pricing, or new products, or new verticals you kind of enter, maybe M&A.

02:08 - And so you have all of these levers available to you.

02:11 - And the question is like, where do you actually start?

02:13 - And I've shown this framework before, um, was this idea called "profit from the core."

02:18 - The idea is that you want to maximize your core business before you start to expand to other adjacencies.

02:24 - And adjacency could be geographical, but it could also be different products, different segments.

02:30 - And a lot of companies get this wrong because they do things in the wrong order.

02:33 - When they haven't maximized their core, they start to expand to other adjacencies.

02:38 - And so if you're actually thinking about expanding internationally, one of the first questions I would ask any company that's thinking about that is, "Have you maxed out your go-to-market budget or your overall spend in your core markets? And is there more value to capture there?"

02:52 - Because it's almost easier to grow in a market where you have a footprint, there's customers, there's referrals, you have good word of mouth, and and there's campaigns that you can run that you can potentially scale up, and there's data that you can kind of build on top of.

03:03 - And so, uh, let's assume that you have done that work.

03:06 - Then the question becomes like, how do we actually find these additional levers of growth?

03:12 - And in every business this looks different, right?

03:14 - There's—you can expand through new channels, you can expand through new segments, you can expand to new geographies, which is what we're talking about today, and then you can also expand by, uh, investing in new value chain steps or entering a new type of business or offering new products depending on the type of business that you're in.

03:32 - One, two, or three of these will make more sense than the others.

03:36 - But the idea is that as you move from left to right, the amount of risk and resources that you require to actually capture the value that's sitting inside these boxes changes dramatically.

03:48 - So as an example, like if you enter an entirely new line of business, you have to invest in all kinds of new infrastructure and people and business processes and go-to-market and product and all this other stuff before you can actually capture that value.

04:04 - Basic example would be like Amazon launching AWS.

04:07 - AWS is an entirely new business, albeit it's considered part of Amazon.

04:13 - Um, and—but it's it's very clear that the go-to-market of AWS is very different than the go-to-market of of of Amazon and everything else that's involved in terms of the product and the people and the infrastructure and all those things.

04:29 - So, uh, whereas on the flip side, if all you—we were talking about is investing in new channels, the risk is quite low.

04:32 - Like all you have to do is like maybe increase your program spend.

04:34 - And so for geographical expansion, I'd say it's one of the most powerful levers to scale because it's on the lower end of the risk side and it expands your total addressable market considerably.

04:46 - And I'd say this is probably the number one reason to expand geographically, which is that you have this product or this service or solution that customers want and they do care about it and they're willing to pay for it.

04:48 - And there are other markets where the same product can be sold, but you are not present and there's either local competition or other alternatives, or maybe there's not even a solution in that market, uh, that's currently being offered.

05:10 - And so by entering into a new new geographical space, you increase your TAM significantly without needing to change other core components of of your business.

05:25 - And a way to kind of visualize this was this.

05:26 - Let's say this is an example of a business where they have 5% penetration in Europe, 2% in North America, 2% in APAC, and 1% in Latin America.

05:32 - If they were to look at their potential targets in those spaces and look at their current customer net revenue retention or their CAC payback, it might be that we're more penetrated in Europe, but there's way more opportunity in North America and the unit economics or the net revenue retention is just better on North American side.

05:50 - And so why not expand to North America, or why not potentially even expand into APAC if the investment or the risk level, uh, is is low enough?

06:00 - And so assuming you've done some of this work and you're able to see this opportunity, then the key question becomes: how aggressively do we want to expand geographically?

06:17 - And I'd say this is something that people maybe get wrong or don't think about enough, is that in order to expand geographically, it requires the whole organization.

06:22 - And depending on the variation that you choose, there's different levels of commitments and changes from each department.

06:29 - So there are things that marketing will need to do, sales will need to do, you might need to change your pricing, your product might need to change.

06:36 - And so understanding like how aggressive are we going to be here changes the level of involvement from all of these different parts of the business.

06:45 - And I don't hear companies talk about this or even individuals inside companies that are pushing for these ideas think about this enough, right?

06:57 - As a basic example, if you were to offer your product in APAC and you're currently in North America, at the very least, you know, one of the challenges you might run into is let's say you have a support phone number that people can call.

07:03 - Well, if you don't have a local support team, the hours of operation are going to be different from customers in that market, right?

07:06 - It's very basic, simple to understand.

07:07 - Um, the same thing applies across all these departments.

07:09 - And so, it's important to look at geographical expansions almost on a on a spectrum.

07:11 - So on the right side you have high investment, on the left side you have low investment.

07:13 - And I'd say there's really five models that I've seen work effectively.

07:15 - Um, and you have to think about which one applies to your business the most.

07:17 - So number one is that it's a completely passive expansion.

07:18 - You're just continuing business as usual and opportunistically companies might come in your pipeline that are based in a different region and you—they—you let them convert or or you sell those people on it because they just happen to come in.

07:25 - Number two is you scale your inbound presence in those markets because that's probably one of the easiest places to deploy more.

07:28 - And I'm going to walk you through all of these in more detail.

07:30 - Third is a full company strategy shift where you're saying, "Okay, I actually do want to be actively in these markets and I'm going to invest resources to to get there."

07:35 - Fourth would be a localized presence or team specifically in markets or or or verticals or or for solutions where local presence really matters: local partners, local local sales reps, etc.

07:40 - And then finally, there's an M&A opportunity that allows you to enter that market.

07:42 - So instead of going in and building it yourself, you actually just buy a company that has a local presence in that market.

07:45 - And that obviously has way more risk and way more investment and debt and integrations and all the stuff that's that's involved.

07:48 - And so understanding the spectrum is step one of like, which one is most accessible to your business or which one is the right fit for your company.

07:52 - And again, coming back to this idea of your company strategy should inform which avenue you choose.

07:55 - And depending on what you're selling, uh, it almost should force your hand in terms of which one that you pick.

07:58 - And I'm going to give you examples that that illustrate this, but, uh, because of your business context, there are going to be market dynamics that play, your business model plays an impact, the overall go-to-market makes an impact, and there's product complexities including compliance and legal and and regional issues like language that that come into play that help determine which of these five options you should really choose.

08:21 - So, let's run through these and I'm going to give you guys some active examples as well.

08:24 - So, number one, hands-off and passive.

08:27 - This is best for companies: one, they're usually smaller companies, so they're strapped for resources; and two, they're not maximized or they haven't maximized their core in their in their core markets.

08:37 - And so expanding geographically is just like another idea or project that can distract from the core business.

08:40 - Uh, and so in these cases, what you really want to do is you want to continue business as usual.

08:83 - You want to be opportunistic with the inbound opportunities that come through.

08:85 - You don't really want to change product or CS or your overall go-to-market.

08:87 - You don't want to change your pricing.

08:88 - And then you focus on the same language that you offer things in.

08:90 - And so an example of this would be like, you offer services in in the UK and you just expand to other places that are English-speaking.

08:93 - So people from Germany might come through.

08:94 - People from Australia might come through.

08:95 - People from India or the US or Canada might come through.

08:96 - And that's just opportunistic because that's what all your marketing is in.

08:98 - Your pricing is the same.

08:99 - And for some—some of those markets might be too expensive, but you just say that is what it is.

09:02 - This is what we offer.

09:02 - And we have other things that we are focused on.

09:03 - Um, example of this just from my my own, uh, past is Wild Apricot.

09:05 - That's kind of how we initially expanded internationally is, we were focused in North America, and then we would get people starting free trials in Australia, New Zealand, Singapore, Germany, Malaysia, like all these different countries.

09:10 - And the conversion rates were lower, but opportunistically we had an inbound PLG motion and people would convert.

09:15 - And a lot of—a lot of companies fit into this bucket.

09:16 - Especially if you are a PLG business, this can work quite well because then you don't need a sales force against the demos that people are signing up for, right?

09:20 - Whereas if you have like this demo AE model and you're doing enterprise B2B sales, that can be more challenging.

09:23 - So, um, again, that comes back to this business context of like, what is your business model?

09:25 - In this case, it it works because the business model allows it to—for us to be passive.

09:28 - Number two is to scale inbound channels.

09:28 - So this is where you acknowledge that, "Hey, like, we we don't want to go fully into this market, but we see that our product is a fit for this particular geography, and so we're going to just expand how much marketing we do in this area."

09:35 - And we have a lot of clients that operate like this, where they'll just launch paid media campaigns in different regions and they'll have dedicated landing pages for those paid media campaigns because it's for the local market.

09:41 - Um, and then they potentially adjust their pricing, but it's not necessary.

09:43 - There might be some basic product updates like onboarding where maybe you need to identify which country you're in and that impacts which features are important.

09:47 - But in general, like the bigger thing is just that we're scaling our go-to-market through inbound channels that are self-served.

09:50 - Um, and so at a high level, that means that, you know, the market you're targeting—same ICP.

09:53 - Your go-to-market change is really just the increased spend and programs, and the product and pricing remains largely the same.

09:56 - And this can really work well if your product is such that on a per-market basis not much needs to change.

09:59 - Like Trello is a great example of this.

10:00 - Like whether you are here or in Germany or in the Netherlands, wherever you are, really as long as we can customize landing pages to the language, the product is very similar, uh, in in terms of what the customer needs to experience.

10:26 - And so scaling inbound channels, it for a lot of companies, especially where compliance legal issues are not involved, can be probably the most healthy and lowest risk step that allows you to capture a chunk of the value that that sits in that market.

10:33 - Third is a full company strategy shift or how you position yourselves.

10:35 - And so in this—in this type of a situation, it's like—it's acknowledging like the TAM in these markets is massive and us as a business, yes, we are maximizing our core in this core market, but there are just as many buyers in these other markets.

10:41 - And so we need a dedicated go-to-market strategy for all of these different countries and regions as well.

10:44 - So this means that we actually need to customize our strategy, our positioning.

10:46 - We might do competitor research: where do we fit into the competitive landscape?

10:48 - We will have to adjust our pricing to fit with that region.

10:50 - And then we'll have to also look at all the channels that we can leverage for that particular market to actually reach those end customers.

10:53 - And that needs to be combined with we actually need to make a lot of product updates to be relevant in those regions and be competitive against the alternatives and even have support and help that that connects to those product updates and allows, uh, people to find success with our product.

11:01 - And so we look—again, looking at it at a high level, this might mean we're targeting new segments.

11:04 - There's regional messaging and positioning.

11:05 - We have increased spend, but we might also have regional sales reps, regional sales enablement.

11:08 - This often lends well to companies where there's a demo, it's not necessarily a self-serve model.

11:10 - And then we have updated pricing and regional support and and CS.

11:12 - And especially in companies where there's compliance and legal issues, like this is QuickBooks.

11:14 - Uh, and this is—uh, I think this is their Mexican website, I believe, or just Spanish website.

11:17 - Um, but there, depending on the region, accounting laws and and approaches are different.

11:19 - You have different potential standards that you have to be held accountable for.

11:21 - Taxes are filed differently.

11:22 - Reporting is done differently.

11:23 - And so QuickBooks legitimately needs to have different versions of its product for different markets, and that's a way bigger investment than, let's say, Trello, where project management looks roughly the same in most markets.

11:30 - Um, and so to make this type of a decision, QuickBooks would have to go, "Well, we are targeting bookkeepers everywhere or accountants or CFOs everywhere. There are CFOs in every every market. The TAM is massive in Spanish-speaking countries or uh or or in French-speaking countries or or or in different regions around the globe where they are trying to solve these same problems, and we have a phenomenal product, we just have to adjust it for for that region."

11:42 - And I would say that especially as a marketer, being aware if your company fits into this paradigm or into the scaling inbound channels paradigm is really important.

11:46 - Like, if you try to expand to a market, um, with a full like go-to-market shift, but you don't have the product support for a market that requires it, this strategy fails.

11:50 - And so this is like a whole company, holistic company initiative to acknowledge, to say, "We're actually kind of going to go after this this market."

11:54 - Um, number four is a localized presence and team.

11:56 - And in some markets, this is super, super important because if you don't have a localized team or a localized presence or a localized office, it's very difficult to sell.

12:00 - There's some markets where relationships are very important, or you're doing enterprise sales and the sales cycles are very long, or you're selling into government entities or or non-profit organizations that are very large and have—there's a lot of nuance involved with selling.

12:07 - And so in those cases, having a local presence, a local team, a local office, you're investing in local partners, you have a local P&L almost.

12:11 - You're almost running this as its own business in that specific region.

12:13 - There's a lot of companies that do this, and especially large international markets like Brazil would be an example of that, India would be an example of that, where you need this localized presence to actually make inroads in specific areas.

12:29 - And so here it means we are investing in not only the language and product changes and all of that, but the local presence, uh, aspect of the business.

12:33 - And that is a much bigger investment than just updating our product to be in a different language or or for compliance, because that means that we actually have a physical presence in that market and there's a whole, uh, management of an office and and a P&L required there.

12:40 - Um, a good example—this is a very large example, but this is a, uh, recent news of Amazon is is investing a huge amount of money into India to build AI data centers, right?

12:45 - And so this means that instead of going the route of just working with their data centers in in any other region, they're investing capital in India to do this to be able to capture that market.

13:00 - And for certain—for certain industries, this is required, and they're building out teams and offices and all of that in that base to improve, uh, their their local footprint.

13:04 - Um, and then finally, M&A is is is an obvious avenue, but I would say it's like the last one that you want to kind of pull on.

13:07 - But the idea is that instead of going and building this stuff from scratch, we're just going to buy a local vendor that does this in an exceptional way.

13:11 - And it's a strategic way to basically bypass years of building out the asset.

13:13 - Um, and over time that means like, you got to integrate the products, there's got to be a unified go-to-market, you might have different differentiated pricing, you might be targeting different segments with this new acquisition that you have, and you can kind of kind of, uh, uh, short-circuit the expansion into that market a lot faster.

13:22 - And there's risk involved, but also you're getting the asset that's involved with that acquisition.

13:25 - Um, and I know a lot of private equity investors that have expanded into international markets just with this strategy.

13:28 - Even in your companies, you may have bought a company that is in another market simply because geographically they're getting you exposure to to that market.

13:32 - Good example of this is Uber.

13:33 - They recently, I think last week, just bought this, uh, massive food delivery service company called Delivery Hero.

13:36 - And one of the biggest things is that it gives them access to like 99 more markets and presence in certain countries that Uber Eats does not have as big of a footprint in.

13:41 - So for your business, that's—there's likely going to be acquisitions like this.

13:43 - And the question is: where does that sit on the hierarchy of priority of all the other variations that you can kind of run through here?

13:46 - Um, and so to summarize that—this this piece of of the presentation, I'd say I created this like basic cheat sheet, is like—and we'll share this deck with you—is to say which one of these likely applies to your business, and what is actually required for you to expand into a particular segment based on what you choose here across all areas of the business.

13:56 - And that will give you some idea of like, what are the conversations we need to have with every single person or key stakeholders involved, whether it's the your, um, chief client officer or or your head of sales or or the CEO, about what type of investment approach you want to take.

14:03 - I'd say in general, if you have never done this, the best strategy would be to start in these first two buckets, uh, and maybe inch towards this one.

14:10 - Um, because most expansions can be done within these first two to three phases.

14:14 - The last two are like: we are making a massive bet because we know it's going to work.

14:18 - Um, and and in some cases it it it works out works out great or it's it's worth putting in that investment.

14:24 - But I'd say in in most companies, you can get like—you can do the first three and capture a big chunk of the value.

14:31 - Um, which brings me to this point of: the same principles apply as you're expanding geographically, uh, as building any marketing engine.

14:39 - And I've talked about this stuff on many presentations.

14:41 - So, if you've followed my content, you've probably seen some of this stuff, is that building the right strategy and having the right focus areas is such a key element of this.

14:51 - And when we talk about what is the order of operations, like, I'm a big fan of just doing things in the right order, and that's what we teach our clients as well.

14:58 - Um, is thinking about, if you're expanding internationally, do you have all the foundational elements to actually penetrate that market?

15:05 - And then if you're—depending on which model you choose.

15:08 - So if, for example, your approach is to scale inbound channels in that particular market, and that means that, well, we need to have, uh, we need to potentially adjust our pricing, we need to make adjustments—slight adjustments on our product, and maybe scale some of our paid media or content efforts.

15:27 - Well, immediately the question becomes like, if you're expanding to different regions, do you have all elements of your go-to-market built out here in order to be able to penetrate that market?

15:37 - So that might mean landing pages, sales enablement materials, some updates to products, uh, product marketing and positioning, basic demand gen campaigns, basic nurture content, maybe webinars, and all those things, and doing things in the right order.

15:51 - And then at the same time, you want to work backwards on every single channel that you decide to invest in.

15:58 - And I've talked about this as well, which is that, depending on your average deal size, certain channels are more important than others.

16:02 - I would add to this is, depending on the geography, certain channels can become more important as well—more important as well.

16:09 - So, for example, channel partners may not be important in your core market, but if you're expanding internationally to a certain region, channel partners can be very powerful because that might be the way to enter into certain accounts.

16:22 - Um, and then coming to this point of—excuse me—coming to this point of working backwards on every single channel, we want to combine this with the model of what we—what we've chosen to work on.

16:36 - So, for example, if we're scaling inbound channels, the step one might be: we start with core landing pages that we update or core email sequences.

16:40 - It might mean that we are launching late-funnel paid media campaigns and SEO content that ranks in those geographies.

16:43 - It might mean that we don't change our pricing just to make sure that this is actually working, or we adjust certain onboarding workflows, and those are the lowest-hanging fruit items for us to actually enter those markets.

16:49 - On the flip side, if we're doing a full company strategy shift and really investing in a market, it might mean that we are actually fully overhauling our messaging and positioning for that market.

16:54 - It might mean that we're prioritizing certain certain features on our product side to be able to penetrate those markets.

16:57 - And then finally, we might even update our onboarding or pricing strategy, or which channels we're scaling based on that.

17:00 - Um, and so the same principles apply, and that's why I try to connect all these things for you, especially if you've been to other sessions that we've done or read read the books that I've written.

17:05 - Like, all of these concepts are are really connected.

17:07 - And again, bringing it to life, uh, for something like like paid media, you—it's a—it's the same thing.

17:10 - Like if—if in your core market, for example, you have branded campaigns and retargeting campaigns, and you're on listing sites and you're doing competitor campaigns or retargeting and things like that, you want to do the same campaigns in the same order for the markets that you're—for the markets that you're working in, uh, or you're trying to expand into.

17:18 - You would want to make sure your branding campaigns are doing great in in APAC, if that's where you're expanding into.

17:21 - You want to make sure that you have retargeting against those customers and those landing pages on the other social platforms, and making sure you're targeting customers in those in in those, uh, in those regions.

17:26 - If you're running ABM campaigns to named accounts, you want to make sure that it's being targeted in those regions in the right order.

17:30 - Maybe you start with people who have—who already know about you, or who are already customers and there's whitespace opportunity.

17:34 - The same thing applies for content.

17:35 - You want to make sure that you are localizing case studies and examples before you start to create random blog posts.

17:38 - You want to make sure that you have localized demos and localized sales nurture campaigns.

17:40 - And you kind of work your way backwards this way on every single activity for marketing.

17:46 - And that's how you slowly enter a market and and build your positioning in that space.

17:50 - And so, as a summary, for each area of marketing—and I've listed like five to seven things here for paid media, for website, for ABM, partners, etc.—there's like a a version one or a basic version that you can do, and then there's like an advanced version.

18:02 - Most companies have never done any of this stuff, and I'd say regardless of where you are, some of these things you can do today and it will help you enter markets in a very low-risk way.

18:16 - Like late-funnel paid media campaigns are quite easy to turn on in every single region that you're in.

18:19 - You should be doing that.

18:20 - You should have localized landing pages.

18:21 - That's quite easy to create because you already have the solutions pages.

18:23 - And especially with AI and some of the agentic work you can do, you can stand these landing pages up quite quickly.

18:26 - And then you want to do the same thing for your email sequences or webinars or account-specific ABM, because those are low low-hanging fruit items.

18:29 - And then as you start to do some of those things, you get to an advanced stage where you would want to do more of these—more of these other campaigns to take it to the next level.

18:34 - This could be, for example, if you're doing localized online webinars, you might do an in-person event or a roadshow that, uh, targets your large accounts or named accounts you kind of want to penetrate.

18:39 - And so thinking about this version, I I would say try to fill this out as well for your business.

18:42 - Like, what are some basic things you can do?

18:43 - And I'd just summarize or or end this or close this off by just saying that the goal of this is to capture the increased TAM and to try to do this in as like less risky of a way as possible.

18:48 - And so try to identify which of these models you kind of want to start with and prove it out.

18:51 - And as it starts to work, then you use that as a business case to kind of move towards the right side of the scale over time.

18:54 - For example, if your inbound side works really well, then you can push product to develop more features.

18:57 - And if that starts to work well, maybe that leads to a localized presence and team, or maybe it leads to an M&A or strategic bet.

19:00 - It should happen gradually over time and you should be proving things out along the way.

19:02 - And that helps you get more budget and more support and, um, more more, uh, more more sponsorship from your from your CEO and your and your board.

19:06 - Um, and that's pretty much it.

19:07 - Uh, we'll stop there.

19:08 - We will share the slides with you and and all the links are here