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4 Steps to Understand Customers in a Foreign Market

For a growing international business, it's a coup to land international customers and expand overseas. But before taking the continental leap, it's imperative for business owners to understand their new customer base inside and out.

Hiring a local representative on the ground is one way for a company to really get to know its customer base. But for smaller companies, the luxury of a full-time partner may not be an affordable option. Fortunately, when they are armed with the right information, business owners can learn to meet the needs of a foreign customer base.

Here are some steps to help business owners better understand a foreign customer base.

“You have to make sure that what you’re selling is what the people expect and what they want.”

— Neil Payne, managing director at Kwintessential

1. Study the Region

It's critical for business owners to analyze everything about the region where their customers reside. "You need to ensure you have sufficient information about the country," says Venkat Eswaran, senior vice president of global services at Nair & Co., a Sunnyvale, Calif.-based firm that specializes in helping companies grow overseas.

For his clients, Eswaran always conducts what he calls a "PEST analysis," which evaluates a new market from Political, Economic, Social and Technical standpoints. "Get your homework done," he says.

2. Consider the Cultural Differences

To get the full picture, a company must also familiarize itself with the local culture of its target customer base, as cultural nuances can have a big impact on how a business operates. 

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"It's all about localization," says Neil Payne, managing director at Kwintessential, a London-based consulting firm that specializes in helping businesses navigate language and culture. A company, he says, must ensure that its image, product, service and brand are all synced with the culture, "so the people in their target country get them and understand what they're doing."

Payne cites an example where a well-known toothpaste company launched its product in Southeast Asia without realizing that by cultural standards, it was considered beautiful to have dark teeth. "You have to make sure that what you're selling is what the people expect and what they want, and see that it's delivered in a way that's culturally fit," he says.

Businesses venturing into foreign markets may want to have a local representative on the ground in the beginning. To start, business owners should find out how much it would cost to hire someone as a full-time local cultural advisor, Payne says. If that's impossible, he recommends seeking out external consultants. "The costs will vary dramatically dependent on the country and also the level or expertise of the consultant," Payne says. For example, an annual full-time employee may cost upwards of $20,000 in the U.S. and upwards of $15,000 in Turkey. If the business uses an external consultant, the daily fee may be upwards of $500 in the U.S. and upwards of $300 in Turkey.

If hiring someone from the outside isn't possible, a company can always go the do-it-yourself route. "The Internet is full of information," he says. With time and study, a company can determine a lot of information on a generic level that will be very useful, such as cultural nuances, how people like to do things and even history. "You'll be in a lot better position than not having anything at all," he says. "Then, at least, you can make some generalizations."

3. Understand the Local Language

Beyond regional and cultural differences, it's also important for business owners to understand the local language spoken by their customer base to avoid linguistic snafus. 

It's critical to evaluate the entire suite of a company's literature, product marketing and website before expanding overseas, says Michael Kriz, president of Acclaro, a translation agency based in Irvington, N.Y. that offers localization and language consulting services.

When looking into these considerations, Kriz advises business owners to ask themselves:

·      When an English brand name is pronounced as it would be in the local market, what does it sound like or mean?

·      Could the spelling or pronunciation in that foreign market have any meanings that would undermine the essence of the brand?

4. Follow Local Trends and Modify as Needed 

A company may consider surveying target customer groups or offering samples of its products to determine if its customer base wants a product as is, or if they would prefer an altered version to fit local tastes.

Diego Patane, CEO and partner at Global Business Union LLC, an international business consultancy based in San Diego with branches in Milan, Amman and Dubai, cautions against a complete makeover unless there is ample research to warrant that step. "Changing the product may be a little bit too drastic if a comprehensive assessment has not been previously made," he says. 

Instead, Patane recommends small changes based on customer analysis, such as changing the packaging, modifying the distribution channel or targeting a different customer niche, which would tweak the marketing plan, as well.

When surveying target customers, business owners may also want to find out what international payment methods customers prefer. This may help business owners decide whether to use tools such as a trusted online foreign exchange service to execute international payments and secure the latest exchange rates. In addition to providing relevant insights and helpful tools such as email market-rate alerts, online foreign exchange providers typically have low markups. In addition, enabling customers to pay in their local currency makes the international payment process extremely easy and convenient, which can translate to a wider customer base and more repeat customers in the future. 

By taking the time to gain a deeper knowledge of what customers want and need, a business can position itself for growth in a foreign market

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