As companies gain experience with growing in new local markets, they typically reach a point in time where revenue growth slows down. No matter if it’s in good or bad economic times, when this happens, they often want to know why their business is slowing down in a given market, or what might be “off” or “different” about a local market. For this (very common) scenario, I generally give two standard pieces of advice:
- It’s not them. It’s you.
- There is no replacement for talking to local customers (to find out what you need to do differently.)
Let’s talk about the first one: “It’s not them. It’s you.” Yes, I know it’s hard to hear. But so many companies mistakenly believe they can “copy and paste” 100% of their go-to-market model from one country into another. This ignores the reality that your company is at a different stage of market penetration in the new market compared to your domestic market.
But more importantly than just time in market, the bigger reason you cannot just “copy and paste” your GTM into an entirely different market is because… it’s an entirely different market. Every country has different laws, different regulations, different preferred forms of payments, different marketing channels, different cultures, and sometimes different languages. Often, there are major differences even within those countries too.
Unfortunately, many leaders at companies frame the question of why they’re slowing down in a local market from a perspective of, “What is it about [France/Japan/Germany/Brazil] that isn’t working for us?” If you’re asking this question, your focus is on the wrong place. You are working to earn the business of customers in that market, not vice versa. Your focus should be on what you and your business need to do differently instead. Accept that the country itself is going to be different, and that you’re going to need to adapt. It’s a subtle shift in mindset, but it can make all the difference. When you start to open your mind to the possibility that it isn’t something inherent in the market that’s “wrong” per se, but rather something *you’re* doing wrong in that market, you adopt a more customer-first mentality, orienting your thinking around the needs of local customers versus merely the goals of your business.
Here’s the good news. There are always parts of your GTM model that will and can work in other countries. Whether you get 90% leverage, 80%, or 50% from your domestic GTM model, you will, rest assured, get some leverage. So take solace in the fact that you do get leverage! But, know that the percentages of leverage are never 100%, and that the percentages will change over time, likely shrinking, as you go deeper into new markets.
In other words, there will always be a certain percentage of your model that needs to be adapted too. If you go into another market with the expectation that certain things will need to be adapted, versus expecting your GTM to work perfectly, you’ll be operating from a place of cultural humility and customer centricity. Too many companies forget this, trying to maximize leverage of their global GTM model or worse, assuming they can use it 100% as is, then blaming the market itself.
Remember: Local go-to-market fit is just as important as local product-market fit.
Now that you have internalized that there’s something “off” about your own GTM in a local market, you can appreciate why it’s important to talk to your customers in the local market — so you can learn from them how best to adapt your GTM. Too often, companies try to do this from a distance that is way too detached from the local market itself. They will hire third party consultants and research firms to advise them. They will do deep analyses of what their competitors are doing. They will spend loads of money on reports about the local markets, and countless hours sifting through them, looking to uncover some sort of gem that will reveal a simple answer. When the simplest answer is right in front of them.
Talk to your local customers. Learn what you should do differently. Don’t waste your time burying your head in too much data about the TAM that actually isn’t going to be reflective of your company anyway, at least not until you nail your local GTM motion. Don’t try to copy your competitors, unless you want zero differentiation in the market. You don’t even need to talk to that many, but talking to local customers should be a priority for your company, not only at these “stumbling block” junctures, but during good times too, so that you can prevent hitting potholes that for most companies are inevitable in their expansion journey. Otherwise, your competitors will talk to customers, and they’ll be the ones to run off with the insights you need, turning them into actions to win business more easily than you can.
I’m a major fan of market research, but nothing replaces primary research you can conduct by talking with and gaining insights from your local customers directly. Recognize that market research reports, and so on, are secondary sources that are not going to be reflective of the subset of the market your customers represent, and use these to supplement your primary research. You can use consultants to help you conduct the primary research too. Just don’t forego the most important research — with your own customers in the local market.
Lastly, it’s important to keep in mind that for every local market you go into, you’re crossing a new chasm to gain access to the full TAM you seek in that market. So many companies forget this, and don’t even know that when they’re targeting “early adopters” in the early days, that these only represent a small portion of the true TAM. They wonder why their business has stagnated, and why they cannot accelerate growth any further in the local market.
If you want access to each local market’s full TAM, you’ll need to achieve not only product-market fit, but go-to-market fit, in each local market. That requires adaptability, humility, and a willingness to continuously iterate to meet local market needs until you’ve met the majority. It also requires your company to be truly customer-focused in your desire to figure out what percentage of your GTM needs to be adapted. It’s not an easy process, but it’s at the very least one you should be aware your business is going through, so that you’re not caught by surprise when it slows down.