Posting in Energy
MADRID -- Sales Force Europe tells us how opening a London HQ is no longer the formula for multinational success.
MADRID -- You're a North or South American company looking to expand abroad. What do you do first? Of course, you ship a sales manager from your home country to set up a London headquarters. Wrong. London is, more often than not, an over-saturated market, and bringing outsiders into existing markets is often a sure way to fail.
"The number one rule in Europe is you need to hire within," says Rick Pizzoli, CEO of Sales Force Europe, based here in Madrid, who reminds that "London is not the States."
Madrid-based consultancy Sales Force Europe instead will find you an already-on-site part-time head of sales, or several, to test markets from the inside and help you integrate your company into a new marketplace. The investment and risks are less.
"[C]ompanies want to expand to Europe. What most Americans do is spend a lot of money to send someone to London," Pizzoli says, in order to "establish presence" in Europe.
Also typically, companies seeking expansion, take a sales manager away from his homeland position and plant him in the new place full-time. If given this position, they were obviously good where they were.
Then, when they get to Europe: "They were doing their job, but it was a two-day-a-week job," Pizzoli says. Companies can be wiser and more frugal during expansion by hiring a consultancy company. "There's a better way to use this guy's time," he says.
Pizzoli says his guy is "more senior" than who companies usually send, and "can start right away," as your local contact. SFE is a network of former, top-level execs who are looking to support companies' expansions, while pursuing their own projects or supporting three negocios simultaneously. One of SFE's consultants is the former VP of Cisco. "I'll pay him 2,000 dollars a month for (working) two days a week to do a market study or qualification," Pizzoli says. "Six guys in six countries for three months."
This should save a company from taking someone doing a good job in their own country, who must then take the time and energy to relocate. "What we say is there's another option to hiring a full-time person, and you don't know if there's a market there," Pizzoli says. "Maybe if you're only targeting T-1 accounts, he's all you need." Once the company's new overseas office is set up, the consultant moves onto another company and another project.
The U. K. and Ireland are no longer the natural choice for expansion. "Because of the language, and they think, 'We're taking it seriously, so we're going to get an office in London'," Pizzoli says.
Similarly, Spain must now look beyond Latin America.
Of course, it is easier in your native language and culture, which is why Pizzoli recommends an insider. "Any problem that you have in your home market is going to be five times as hard in another country in another language. In your home market, your company is developed and integrated," he says. "Once you go international, your company has to have names, release numbers," and to know the labor and employment policies of that country. He says SFE "packages everything up, so you are able to sell."
He admits, in this way, for SFE, "There's been a bit of a gap for us in Spain."
"You need to package everything up and you need to be able to sell," Pizzoli says. The needs of customers in different countries vary, as does the use of language, for example, with Spain, Argentina and Mexico. "In Spain, they are so young and there's this fear factor and this trust factor," a lack of follow-through, he says. "The challenge is that we have with a Spanish company [is that] they want to do everything themselves to bring" a company internationally.
"If your strategy is to sell through channels," you will need local support, Pizzoli says. "Front-end sales needs to be value-based," but, of course, these values differ by cultures. Even Spanish companies are beginning to realize this, as SmartPlanet previously talked about how top telecom companies Telefonica and Orange are looking to "repatriate" their telesales and tele-service teams because, no matter how globalized the world is, customers are much more comfortable with those they know.
Pizzoli also says that "We don't want to take your last 50K." He says there are a lot of consulting agencies focusing on giving advice and mentoring, but SFE is "for the next step," when funding is ready and the time is right for expanding internationally. SFE will however provide engagement planning for about a grand. It's a "snapshot" to gage a company's readiness. "We create a ten-page report to see if you're ready, and waive the fee, if you're not." Pizzoli says that often the recommendation may not be to forgo the expansion, but maybe to delay it three to six months.
There's a monthly fee and commission for SFE and the consultant's salary, which Pizzoli described as two to three thousand a month, "on the low end." Usually the typical client of SFE is a company that generates anywhere from one to 20 million in revenue a year, is looking to expand, and they "know their end game."
Sep 20, 2012