the challenge of expanding into new markets

The Challenge of Expanding into New Markets

Case Study-

Copyright © 2015 Sales Focus International

BackgroundA company based in New Zealand decided that after years of success in their local

market an overseas expansion to drive new business and growth would bring further

prosperity. Their principal product was specialised training programmes, which required of

customers, significant time and financial commitment. Through marketing they had already

commenced building a profile through key note addresses and other events off shore. The

training was seen as a natural extension of those activities.

The company was highly profitable in their market, they had gained notoriety with multiple

marketing awards for brand development, and were considered widely as the market

leaders. They were successful by their own right. Therefore, it was assumed that the

business model could be emulated into a foreign market.

After careful consideration, the directors decided that due to similarities in culture and

demographics the Australian market was ideal to deliver the growth they sought.

The strategy was developed based on their personal knowledge of the market and industry,

and an overall feeling that they knew the customer, motivations, and that sufficient

demand existed.

The strategy was weighted heavily to marketing which was their expertise and where they

believed they could gain the most traction. The marketing and selling model included

selling events in Melbourne, Sydney and Brisbane backed with direct and electronic mail

campaigns, and the sponsorship of a multinational conglomerate. The leads generated

from these events would then be passed to the sales force, who’s primarily responsibility

was to close.

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To manage the sales process extensive resources were allocated to the establishment of a customer

relationship management (CRM) programme and sales enablement personnel. Further, considerable

time, and capital was invested into the sales strategy and as such, the following performance standards

were established. With an understanding of the size of the market, this number of sales was realistic.

This was further confirmed based on initial testing in their own market.

As can be observed from the above table ‘second-year’. The performance expectations were changed

to reflect the higher closing ratio of improved lead quality and conversion ratios by the sales team.

First Year Closing Ratio

Sales Made Appts-Leads Weekly Initial Meeting

Follow-up to sign them

Total Weekly Appts

0-3 months 1 in 8 10 80 7 3 103-6 months 1 in 6 20 120 10 5 106-9 months 1 in 4 30 120 10 5 159-12 months 1 in 4 30 120 10 5 15

90 440

Second Year Closing Ratio

Sales Made Appts-Leads Weekly Initial Meeting

Follow-up to sign them

Total Weekly Appts

0-3 months 1 in 4 25 100 8 4 123-6 months 1 in 4 25 100 8 4 126-9 months 1 in 4 25 100 8 4 129-12 months 1 in 4 30 100 8 4 12

100 400


In order to generate traffic to the speaking events, a series of direct mail campaigns were

dispatched to 2000-3000 contacts along with many electronic direct marketing campaigns.

The results of the direct mail campaign proved disastrous, the response rates were not

generating the anticipated leads for the sales force to action. In effect, the marketing

activity was failing.

Due to ineffective marketing, the sales strategy was adjusted mid-campaign in an effort to

alleviate haemorrhaging sales. The sale team’s primary activity switched from closing leads

to prospecting. This in effect forced the sales people to focus on inefficient cold calling.

The result of these changed tactics had a profound impact on the internal culture and

demotivated the sales force. The business model continued to fail; insufficient business

was gained and the expansion was becoming unsustainable. The problem was exacerbated

further as the company was experiencing high staff turnover due to the low morale.

With resources stretched thin the company was committed to providing expensive training

to a customer base below a profitable threshold. As a result, the business model collapsed,

and the new venture abandoned. Hundreds of thousands of dollars was lost, customers

disenfranchised, and brand equity destroyed.


The marketing model was flawed from the outset. It relied on weak assumptions and

managerial judgement. It lacked a clear and concise branding strategy, failed to understand

realistic response rates, and did not use integrated marketing communications. The

quantity of the direct mail was woefully small and thus produced insufficient leads. It

would have served the company well to forego any assumptions on what they considered

to be effective marketing and instead apply rigorous and impartial analysis.

The first step any business should undertake before launching new products or services

is to prove the business case. This can only be achieved through quantifiable market

research. This research should test the strategic assumptions, customer responsiveness

and identify any barriers to entry, including competitive threats, substitute products and

pricing.

The business would have benefited by integrating their marketing communications, in that

all activity is interrelated and support one another. Successful communications appraises all

the tactics available and then apply them strategically to maximise their impact. In today’s

marketplace, companies can no longer rely on the assumption that a simple, direct mail

campaign and an event will drive the results required for success.

In the light of dramatically changed buyer behaviour a content marketing strategy, using

highly optimised web content would nurture prospects and establish a strong competitive

position for the product. This supplemented with a strong social media presence to

encourage shares and interaction, backed with press advertisements would serve the lead

requirements of the sales force ensuring their success.

The selling model also proved to be inadequate. The choice of direct sales people in

the field proved to be expensive and failed to generate the required revenue. When

the marketing efforts failed rather than changing the directive to cold calling a carefully

selected mix of inside sales and direct selling would have proved more efficient and cost

effective.

Analysis


In order to bring new products and services to market, sufficient

resources are required to ascertain the validity of the selling and

marketing models. Validation through independent review and

testing being imperative. It is imperative to consider all the tactics

available and then choose the most appropriate ones considering

that market. To rely on what has worked in the past can often prove

disastrous in new, changing or emerging markets

For a confidential discussion on how Sales Focus International can

assist you with the implementation of your marketing initiatives and

growth strategy, please contact your local office.

Lessons learnt


Sales Focus International is one of the leading dedicated sales and marketing consulting firms in the region. We work with companies to assist them in delivering sustainable revenue improvement. We are renowned for delivering results in shorter time frames. We transform

company cultures to embrace contemporary practices creating a competitive advantage.

Since 1990, we have been passionate about achieving better results for our clients.

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the challenge of expanding into new markets

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