If you don’t often work with companies outside of the US, you may not be aware that the stereotypes associated with Americans are not all bad—although the list of bad ones seems to be rapidly growing. In working with over 1,300 foreign entrepreneurs trying to expand to the U.S., I get to see the world through their eyes. One, in particular, is very positive… Americans are GREAT salespeople.
In contrast, entrepreneurs abroad often face challenges with sales in a way that mirrors, even exaggerates, stereotypes…
- UK: too self-effacing, unwilling to self promote
- Eastern Europe: strong in IT but weak in business development
- Germany: perfectionism: hesitation to take anything to market that isn’t perfect (aka not lean)
Now, these stereotypes are often wrong, and all of them have their own exceptions to the rule, but the challenges entrepreneurs face abroad often lead companies to make assumptions upon entering the U.S. market:
- Americans are great at sales and networking
- Just hire one of those great American salespeople, you know, the affable “relationship guy,’ or girl, that could talk a dog off a meat truck and has lots of “industry contacts”
- Our U.S. salesperson will be closing deals in no time
- U.S. expansion strategy complete
This may sound logical, but it is almost always a giant mistake. Let me tell you why.
Salespeople are NOT Entrepreneurs
Nic Poulos, of Bowery Capital, put it perfectly:
Many candidates that might seem like good ‘senior’ hires may be unfamiliar with the early stage startup environment — these folks are efficient when they have a full understanding of the sales funnel, but may struggle without the resources of the larger company around them.“
Salespeople are NOT entrepreneurs. They don’t only struggle because they are in a startup environment lacking resources, as Poulos points out, but also because of another giant assumption foreign founders make about their business: their product is a fit for the U.S. market.
New Market, New Product Market Fit
A little piece of advice to founders far and wide: Product market fit is not one-size-fits-all globally. Just because you’ve found a process that works in one market does not mean it will work in all markets. Companies need to start from the ground up in new markets, starting with a thesis: the fit I have found in one market will fit in another market. Then they test this thesis and, more often than not, the resulting data proves they need to find product-market fit all over again, the same way they did in their native market. That is the job of an entrepreneur, not a salesperson.
Resellers and Distribution Partnerships
Another very logical assumption founders make when entering a new market: If I could just find the right distribution partner, a reseller that is already selling to my target market, they’ll be able to help us break into a new market. Logical but wrong again. There are very few businesses we’ve seen where this type of relationship works. The problem is incentive. These organizations are typically selling a long list of products, some of which they are likely having real success with. Their focus is typically on two things: commission and ease of sell. Salespeople are motivated by the green, just ask any VP of Sales or CRO that is writing comp plans for their sales teams.
When a product pays them a large commission, they focus on it, like aiming for the 100 point hole in skee ball. And when a product is easy to sell, so they can rack up the points, they focus on that as well, like going for that consistent 30 spot over and over again (for the record, I’m terrible as skee ball so this is a questionable analogy).
Add a new product to the mix, one they’re less familiar with and don’t know how to communicate the value proposition to clients…good luck. And if you want to motivate them with commission you end up squeezing your own margins. Resellers and distribution partners usually a big waste of time for founders.
The Right Path: A Lean Sales Approach, Again
So, if hiring a salesperson or a reseller to attack the U.S. market is a mistake, what is the right strategy? It’s the same strategy startups employ when they first start: a lean sales approach. Get a founder into the market and treat initial client conversations like interviews, not sales meetings with the sole goal of closing. Ask questions, understand pain points, understand the competitive landscape, understand price sensitivity in the market (which often leads companies to charging more in the US, not less). Then search for where you can add value and iterate. This part of the sales process is called discovery, and it’s what good senior salespeople are doing in all initial prospect meetings. But it’s CRITICAL to finding success in a new market, because the founder has the control needed to iterate on the product, test new messaging, and try new pricing models. That is why you cannot hire someone to do it for you.
The result is finding product market fit for the new market. And the work pays dividends. Once you understand the needs of the market and pivot the product, messaging, and pricing to fit your target prospects, then you can hire one of those great American salespeople, arming them with the product, messaging, and pricing that will allow them to continue finding success. And you’ll have the data you need to understand
So don’t get lured into the trap, tempted with an easy strategy for a new market. Founders: avoid hiring a salesperson or reseller. Roll up your sleeves and do it yourself!