Article | July 24, 2017

How Software Breaks Into Foreign Markets: 5 Tips From A CEO Who Made His Life's Work Doing It

By Noriyuki Matsuda, Founder and CEO of SOURCENEXT

Connecting Software World

Given the crowded tech economy, it’s no surprise software publishers are looking to launch abroad to expand revenue. After all, how hard could releasing your software in another country be? People are people, right? Sure, preferences and styles may change from region to region, or country to country -- but ultimately, we all need the same things.

Turns out, it’s not as simple as translating and launching in the local market, and many successful companies fumble the launch, leading not only to setbacks in a new market, but also potential brand backlash in the U.S. The soup-to-nuts software launch operates very differently in foreign markets. Here are five make-or-break factors for entrepreneurs trying to expand:

Branding -- Calibrate Your Creative

Often, U.S. companies underestimate the depth to which they have to adjust the brand based on the tastes, behaviors, and expectations of foreign consumers. For example, some companies think the English language gives them a cool factor or provides brand name recognition, but it doesn’t. Hollywood realized this a long time ago, and has been changing movie titles across regions since the 1980’s. Software companies should take a page of out their book. In countries where almost no one speaks English, sticking with an English brand name can potentially alienate instead of attract.

Beyond language, even design elements as basic as colors and aesthetic principles may need to be wholly different in the new market you’re trying to reach. Colors and designs have local connotations and associations with style or tradition, and companies need to assimilate.

Marketing -- Master The Mores

Similar to branding design, marketing practices that are taboo here may boost your brand abroad, or vice versa. Don’t discount any tactic without learning the market first. For instance, celebrity promotion is huge for software promotion in Japan, compared to the U.S. For some cultures, a popular, attractive icon offers the stamp of approval -- even if the consumers know that person may not exactly be a power user.

When marketing to a new, foreign customer base, it’s also essential to look beyond your perception of that demographic to the reality of the consumer. Japanese consumers are often seen as very tech-savvy, but their average age is about 15 years older than that of the U.S. They don’t want the “new thing;” they want what everyone has. In Italy, consumers aged 65 and older use retail apps to purchase products more than any other age group, including millennials. Be sure to dive into the demographics of the country you are launching into, and match to your marketing mix.

Distribution -- Come To The Consumers

The way that consumers discover and purchase new tech varies wildly from country to country, depending on a number of factors. Business buying behavior, and what and who influences those B2B purchases, have equally abundant variables. So it helps to understand the nuances in how certain audiences in different countries discover software and mobile apps. For instance, in the case of apps, the Google Play Store’s presence in China is dwarfed by third-party Android stores, while Brazil relies heavily on it, matching nearly 50% of China’s total app downloads.

On an even more basic level (think physical vs. digital) in some markets, people still primarily buy software at brick-and-mortar retail. For instance, in Japan, SaaS tools and enterprise software like Evernote are often sold in a box, and the transaction primarily takes place at the register, not online. Most software is bought at physical retail stores, and that number is actually growing. Some cultures still put stock in the retailer - trusting in the transaction and the support. For them, buying local matters.

Pricing -- Pay for Presence

Companies often balk at the idea of drastically changing price points in other countries, but you might have to do so in order to break through to a new region and sync with local price ranges.

If you are willing to give a little leeway on profit margin, you’ll often find that at a lower price point you can really boost sales overall profitability, along with building favor among customers. And if it’s a brand play and you’re simply trying to gain visibility and recognition, you may need to accept those lower prices at first to simply get the name out there and establish market traction. It’s hard to put a price on customer trust.

Besides, there may be more opportunity to earn revenue after the initial software purchase or base subscription price, with premium feature purchases for desktop software, or in-app purchases for mobile offerings. That can make up the difference, and, if you’re changing the price in another language and currency, you likely won’t have to worry about backlash with your current customers in the U.S.

Support -- Take Cultural Cues

Cultural differences can also make or break the personal touch of continued tech and customer support. For instance, while outsourcing customer support is common and accepted by consumers in the U.S., it may be more jarring in other markets. Some consumers may expect to have a common cultural background with the person they’re coming to for support, or they may expect to be able to put a face to their support, not just a name in a live chat box or phone line. So think about the persona, the channel, and even the time of day for your customer support processes.

Overall, there is clearly massive depth and breadth to what you need to consider when launching software in a new country. It’s a huge undertaking, and it’s impossible without some level of regional expertise who can guide you through the process. Your product may be your baby, but it takes a village of partners to help it break into and achieve lasting profitability in new markets. Don’t let that keep you from taking the plunge. Done right, you can mitigate the risks of going global and tap strong revenue streams across borders, cultures, and countries to achieve “breakout” status yourself.

About Noriyuki Matsuda

Noriyuki Matsuda is the founder and CEO of SOURCENEXT Corporation, Japan’s publicly traded, market-leading software publisher and distributor with US headquarters in Palo Alto, CA. In addition to its own top-selling titles, SOURCENEXT helps foreign software companies launch their desktop and mobile apps in Japan with a full-service market penetration program to drive ongoing profitability. Previously, Noriyuki worked at IBM Japan, Ltd. as a system engineer, actively engaged in system development for financial institutions, before founding SOURCENEXT in 1996 and later listing the company on the First Section of the Tokyo Stock Exchange in 2008.