After creating your business, establishing your brand, and building a loyal local customer base, the next step is to go global – but how?
There’s no getting around the fact that global expansion is complex. For every apparel market, from Canada to China, there are unique challenges, different cultures, and new channels to navigate. Not so many business owners have taken time to understand the dynamics and all that is involved in this massive transition.
Below, Anna Bezrodna, CBDO at Raccoon.World has shared with us five tips, which we hope will help you navigate this change.
There were several reasons why we decided to focus on European markets. At Raccoon.World, we analyzed potential markets and chose Poland and Germany as the most attractive ones. Here are a few reasons: favourable market situation, increasing demand for innovative technologies in physiotherapy, and appropriate countries’ institutional contexts.
Physical therapy services are in demand in European countries. There is a large number of inpatient and outpatient rehab centers as well as physiotherapists as private entrepreneurs. Both our target countries have a quite big number of practising physiotherapists per 10,000 of the population – over 20 PTs in Germany [Source: World Physiotherapy] and between 15 and 20 PTs in Poland [Source: World Physiotherapy].
Despite a large number of physiotherapists, patients have to wait several weeks for an appointment. The situation becomes even worse during the corona lockdown. Many rehab centers were closed or limited in treating their patients.
We strive to improve the current situation in the rehab market, providing rehab facilities with Raccoon.Recovery, software and devices for telerehabilitation.
The key factors in selecting markets are the following:
- Market’s size and growth rate. If the market is large, there will be a significant number of potential customers. Also if the target market is growing, then the company will have more opportunities to sell the product.
- Сosts and revenues. Monthly recurring revenue (MMR) plays an essential role when it comes to the determination of profitability. What is expected monthly revenue brought in by new customers? Is the consumer’s buying power high enough? What are the taxes and fees? How money is distributed among customer segments? A few questions that are worth answering honestly.
- Competitive environment. It is important to understand who your real competitors are, their strengths and the weakness, their market share and how aggressive they act.
- Technology adoption (for tech projects). Use quantitative and qualitative assessments to measure acceptance of a new product or innovation, according to the demographic and psychological characteristics of customer groups.
- Legislative situation. Sometimes external factors can make your market entry impossible. For example, in Germany for a long time there were no even fixed terms for teleservices in medicine and rehabilitation. No term = no possibility for the facility to get money for such services = no chance to launch a product on the market.
To succeed in the new market, it is necessary to understand how the ecosystem works from the institutional point of view. The core question is who is the main stakeholder that influences the success of the international expansion. Determining the key stakeholders will show how easy it is to enter the market or if it is possible at the current product development stage at all.
For example, in the UK, healthcare is covered by state insurance. The National Health Service (NHS) is the publicly funded healthcare system in the United Kingdom. The NHS provides healthcare to all residents. This is the only stakeholder who makes a decision on whether to cover a particular digital health application. Despite the previously defined market attractiveness, the UK is not the best market to start with as Raccoon.World needs more flexibility to deal with different market systems.
A beachhead market can be defined as a small market with specific characteristics that make it an ideal target to sell a new product or service. It is extremely important for a startup to focus on one beachhead market to put all the resources into creating a product that will 100% satisfy one segment of the market and bring you first brand advocates, users, and money.
If you try to make something to satisfy everyone, you will definitely end up having a product that creates interest but nobody is buying it. Because it is 80% of what they need. The choice of the market is based on the compatibility between the resources available, the product, and the market itself.
Here are the top criteria to determine the best market opportunity, according to Disciplined Entrepreneurship by Bill Aulet:
- Is the target customer well-funded?
- Is the target customer readily accessible to your sales force?
- Does the target customer have a compelling reason to buy?
- Can you today, with the help of partners, deliver a whole product?
- Is there entrenched competition that could block you?
- If you win this segment, can you leverage it to enter additional segments?
- Is the market consistent with the values, passions, and goals of the founding team?
The beachhead market for Raccoon.Recovery is small and medium outpatient private physiotherapy facilities. We decided to focus on this segment because of several reasons, including the following: this beachhead market has a higher demand for digital rehabilitation solutions because they suffer more from lack of clients due to COVID; the solution implementation process is at least 3 times faster compared with large clinics; it’s easier to satisfy all the need therapists have with our current team.
Product/market fit means being in a good market with a product that can satisfy that market. To prove business or product ideas, every founder needs to talk to customers. One-on-one interviews will help to figure customers’ needs and desires, identify what problems they face, and understand how they feel about the product. Building relationships with customers also forms the basis for further product improvement, so it fits the market needs.
Talking to customers, you can find unexpected insights about features that might have not been needed on your previous market but are essential for the new one. On the example of Raccoon.Recovery: We have recently added a pain map to assist therapists in better identifying the underlying cause of pain and symptoms. This feature is widely used in Poland but almost nobody uses it in Germany. Such kind of market differences can be validated during customer interviews.
Some companies are drowning in a variety of market entry possibilities. However, the best strategy to enter the new market is focusing on a limited number of channels. Chosen potential sales and promotion channels should be tested with small budgets. It is worth focusing on the best-performing channels after the test.
An interesting fact is that the German nation tends to be critical of digital advertising, at least the ads of eHealth solutions. Furthermore, people in Germany like in-person meetings. That is why the promotion of the physiotherapy platform Raccoon.Recovery through digital ads was not as successful as expected.
The requirements of the General Data Protection Regulation by the European Commission (the GDPR) are very high. Legal grounds for processing, technical and organizational measures and other security measures have to be fulfilled to be considered compliant. The price of mistakes is higher than ever, as the personal information of individuals is priceless, especially when it comes to sensitive medical data.
For companies in the field of healthcare, MDD/MDR CE certification as a medical device is required. Without certification, you will not be able not only to sell the product but even agree to conduct a pilot or test, especially if patients need to be involved in the process.