Martin works a lot with international B2B services companies in the software and IT space that want to enter the DACH market (Germany, Austria, Switzerland).
One issue that comes up a lot is this idea of “don’t compete with locals.”
For example, a German IT services company (prospect) to an Italian IT services provider (seller):
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“We need one CISCO networking engineer onsite at our customer’s premise in Frankfurt for about 6 months.”
That IT services company from Italy has many of such engineers in their team. Still, they have no real chances to convert the prospect to a happy customer.
That line above came from the mouth of a Project/Resource Manager.
The Resource Manager expects that this Italian company can deliver in the same, and hopefully cheaper way than his usual set of suppliers. His other suppliers for this kind of work are all local companies.
Why did the Italians lose against a local company although presented an extremely good candidate for that job?
- The prospect did not require an extremely good candidate. The requested skills and experience levels are not very hard to find — not even in Germany, where they lack a lot of available IT experts. Obviously at least one local company was able to present a matching candidate.
- By sending a candidate from Italy to Frankfurt for 6 months the overall costs for this engagement are not cheaper than any offer from a German company (travel costs, housing costs, daily allowances).
So, why would the Resource Manager go out of his comfort zone (language, unknown and new supplier, no significant advantages) and select the Italian company?
You tell me, I have no idea.
So how could an Italian company enter the German market?
I was lying when I said you should not try to compete with the locals. Of course you must! But not in a comparable way. Don’t compete one-on-one with their offer. You’ll lose that, always.
Let’s get back to the case one more time and see what we can do different.
The Resource Manager in our case has a very short term (tactical) goal. He is part of the delivery and the project is already sold — or is very close to being sold — and just needs to be staffed. To do his job right, he needs to deliver his project with the most convenient option. Identify one external guy with the right skills, onsite in Frankfurt for 6 months for the lowest possible costs because his company has to make some margin on top of that costs. Very unlikely that this Italian company can satisfy those personal needs if there’s a similar local option.
But what if we have unique strengths like a bundle of rare skills, valuable experiences from other innovative projects or any other unique advantage that can help that prospect to get projects they wouldn’t get without those unique strengths from the Italian company?
What if we could offer “CISCO collaboration and communications in a box” to the prospect to help them get additional business instead of support to deliver their existing business?
Would the Resource Manager listen to such a sales message?
No, of course not! He is in charge of delivering projects — not creating the demand for new ones. He doesn’t even see CISCO collaboration and communication projects on his to-do list.
But guess who should see such projects and opportunities?
Yes, Sales and management.
What could be a value prop for this Italian company?
We have to extract the expertise from several other projects and bundle that in a valuable and relevant offer and put it in front of people that have such needs (a.k.a. product-market-fit).
I’m thinking out loud, but a value proposition for that Italian company might look like:
“With our previous experience and expertise in that field we help services companies in Germany to get and deliver their first 3 CISCO collaboration projects and we enable their IT department to deliver the 4th, the 5th and the 6th on their own”.
Does that sound like a compelling offer for the prospect’s Head of Sales without making their IT an enemy? Could be.
Will local competitors try the same approach? Yes, some of them are capable to do that but most of them will not even try because they have a good product-market-fit in the current setup. Will those few companies pick the exactly same value proposition as you do? Probably not.
Understanding product-market fit here
Could this approach work for the Italians? It depends on how you frame the product-market fit:
Does the offer [CISCO communication and collaboration in-a-box] fit to the needs of Head of Sales [does he see such opportunities in their markets and do they want to increase their chances to win those?] of those companies [are the type of companies ideal? Industry, size, etc.]?
I don’t know. The Italians don’t know either. But it’s worth testing.