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| Global Strategies: Speaking of Commerce |
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| Written by Don DePalma |
| Tuesday, 30 September 2008 19:00 |
 {mosimage} But one thing is clear: for every global Web site we review and every business globalization project in which we’re involved, there’s an infinite amount of opportunity around the globe but a limited pool of resources to do the work. It’s an unfortunate fact of economic life that meeting this quarter’s numbers for your home market often trumps future opportunity in other countries. Why should globalization matter to the people who own your budget? Talk the talk of the decisionmakers; give them a business case in terms they understand. Two talking points should dominate your presentation to the board: Market growth. The Web reaches roughly 1.2 billion users worldwide. Two hundred million of them live in the US. Sure, more than 200 million Americans on the Internet represent a huge, relatively homogenous market of people, with the same language and currency for US and foreign firms alike. But five times that many live and work outside America. Shareholders worldwide expect continued growth in new markets, which is why US-owned fast food outlets such as KFC and Starbucks, manufacturers like Hewlett-Packard and John Deere, and software firms like SAP’s Business Objects and EMC-Documentum actively market, sell, and support their products outside the US. It’s why their Asian and European competitors extend their own efforts beyond the Anglophone world into other markets that matter. Changing demographics. Ten years ago, the US stood at the epicenter of the Web universe, English dominated the airwaves, and the dollar stood supreme. Today, the US is 16th worldwide in the percentage of its residents with broadband access to the Internet and falling way behind in connection speed, China has become a huge potential market (and source of goods and services) for many companies, and the dollar threatens to be supplanted by the euro as the world’s favorite currency. Going global always leads to a triage discussion around resource allocation and which markets will provide the best return on investment. During this dialog, the first question we hear from companies is: which countries or languages should we do first? Some firms establish local Web sites in places where they already have a physical presence on the ground, including their own operations, customers, or a distributor. The next question involves benchmarking (What are our competitors doing? What’s the best practice for any company on the Web?). Finally, they ask which content and how much should they publish at each local Web site. Everyone recognizes that the World Wide Web implies global reach. Some companies assume that the fact that they’re accessible via the Web means that they are already global. However, in most cases, it just means that prospects (and competitors) worldwide can view their offerings. If your company is like most, what foreign visitors can see at your Web site will be information in your home-market language rather than theirs. In an ideal world, foreign prospects would be able to read about your company in their language, buy your products using their currency, and get deliveries through couriers they know and trust. In the real world, most companies still translate into just a couple of languages; if they’re outside the English-speaking zone, they often offer their own language plus English. If they come from an Anglophone country, they’ll have English and the languages of maybe one or two of their trading partners. In our 2007 study of more than 500 Web sites at the leading companies in 15 countries, we found that most offer just two: their home-country language and one other. What’s the scope of this challenge? It includes translating a Web site and all the registration, database, and transactional elements that allow two-way communications and commerce. That can be expensive and a drain on resources for just one language, let alone many. Those realities led me a few years ago to postulate that you can safely ignore most of the 190-plus countries and thousands of languages in the world. Yes, that’s right. You can ignore most countries and still get a great return on your globalization investment. Here’s our logic: the top 25 countries, as measured by gross domestic product, account for more than 80% of the world’s economy. The top 10 are the US, Japan, Germany, China, the UK, France, Italy, Canada, Spain, and Brazil. The next 10 are Russia, South Korea, India, Mexico, Australia, the Netherlands, Belgium, Turkey, Sweden, and Switzerland. Rounding out the list of the top 25 are Indonesia, Taiwan, Saudi Arabia, Poland, and Norway. We can quibble about cutting the data differently, but these 25 represent a great place to start because the world’s most economically active populations inhabit these countries. Their residents also show up among the most frequent users of the Web, so addressing their needs and desires should be top of mind when you’re talking about communicating, branding, and supporting customers on the Web. If you want to sell to them as well, you’ll have to adapt the transaction logic, currencies, and other country-specific details for each nation. As you develop your game plan for globalization, you can achieve maximum return by localizing your way through these top 25 economies. In our research over the last few years, we found some other interesting correlations. For example, just 10 mega-languages account for three-quarters of the people on the Web: English, Simplified Chinese, Japanese, Spanish, German, Portuguese, French, Korean, Italian, and Russian. Thus, if your goal is to maximize brand awareness, you can get the maximum bang for your buck by limiting your Web outreach to just 10 languages. Rule of thumb Here’s a guide to maximize the percentage of total online population (TOP) you can reach online: • The first 10 mega-languages give you 76.3% of the TOP. • The next nine laboriously crawl in 1% increments to 88.3%. • Six more languages each add at least one-half of 1% to push the number up to 91.9%. • Then it takes 25 languages more to get you to 95.9%. This number clearly demonstrates the diminishing returns of going after the long tail of languages spoken by smaller populations. There’s more to it than population, of course. Business Without Borders: A Strategic Guide to Global Marketing suggests a three-step approach that considers not only population numbers but also the need for your product and the socio-legal-political-economic environment into which you’re selling. Once you get off the Web or start selling products to specialty demographics, these rules of thumb (either the top 25 economies or top 10 mega-languages) may work for your product. For example, Indian carmakers designing the sub-$3,000 automobile will market to drivers in developing countries well before they turn their attention to buyers of commuter and city cars in Europe and North America. In summary, to maximize your return on Web site globalization and global marketing, work your way through the top 25 countries. For less economically active populations, look for channels other than the Web. And, in all cases, make sure you tailor your communications to local buying motivators, desires, and requirements. The bottom line: all commerce is local. Don DePalma is the founder and chief research officer of the research and consulting firm Common Sense Advisor and author of the premier book on business globalization Business Without Borders: A Strategic Guide to Global Marketing. |