Case Study: Is the Overseas Market Ready for Your Product?

This is a guest post from Paul Higgins, Consultant with Rapid Innovation Group

The Company:

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A technology company in Sweden had developed an innovative (and disruptive) solution for security firms and internal corporate security teams.

They offered outsourced alarm monitoring, teams of security guards, and video analytics as a monthly service via a Software-as-a-Service (SaaS) subscription model. They also leveraged a variety of third-party firms to deliver different aspects of the solution.

The company’s own core IP was held in its video analytics software. They partnered with local guarding companies and a national surveillance center, which allowed them to offer a complete service that was both cheaper and of a higher quality than the alternatives.

The Premise:

The company experienced rapid growth in the domestic market and took a round of funding to expand to the overseas market. The U.K. was a natural choice to investigate; it’s one of the world’s largest markets for camera surveillance, with approximately 4 million cameras in a country where the population is just over 60 million.

They soon identified and engaged the best U.K. equivalents of their existing Swedish service partners, which included a credible surveillance center that could cover the entire country.

The Problem:

The partner agreed that the technology behind the idea was exceptional and would provide significant value to the market. But … the market was not used to buying anything like this on a subscription basis. Purchases of cameras and other equipment were always made as one-off payments, and thus budgets were allocated as capital – not operational — expenditure.

No amount of salesmanship could overcome the fact that potential buyers in the U.K. could not sign off on anything that had a recurring cost element. For it to work, the company’s pricing model had to be completely changed. They’d have to invent a new price list based on a single up-front payment, which would bring new, cheaper competitors into play.

Ultimately, the company decided not to commit further resources to the U.K. market because of these structural differences. Instead, it found success by growing rapidly into other parts of Scandinavia and Eastern Europe, where the profile of the buyer and the structure of the market were closer to that in Sweden.

Key Takeaway:

This is an important lesson for those looking to push their companies overseas, as structural differences like the one described above do exist. In cases like these, forcing your existing business model onto the overseas market might not necessarily be the best move.

Paul Higgins is a consultant with Rapid Innovation Group, a U.K.-based strategy and execution firm that helps emerging tech companies accelerate their revenue growth and achieve market leadership. For more insight from Paul, check out the Rapid Innovation Group blog and follow him on Twitter @paulhigginz.