Whether you have chosen  a direct or indirect Go-to-Market approach, entering a new geographic market which consists of the same type of customers, but with a new territory, language & culture, is always a major challenge. Most software companies spend far more money and time than initially planned to make the entry. Many software companies are even forced to withdraw from their first attempts with severe losses.

Is there a less risky approach?

From our experience with more than 100 internationalization projects, we know there is a way to keep our cost under control until we have our reference customers in place and a revenue stream from which we can expand our market position.

We call this approach “Creating a Bridgehead”

What is a bridgehead?

The term Bridgehead originates from military vocabulary:

“In river crossing operations, an area on the enemy’s side of the water obstacle that is large enough to accommodate the majority of the crossing force, has adequate terrain to permit defense of the crossing sites, provides security of crossing forces from enemy direct fire, and provides a base for continuing the attack.”

In commercial terms the bridgehead is a number of customers in the new territory willing to support our further market penetration as references. The approach means using our existing organization and resources to sell into the new territory and win these first reference clients directly. In other terms we do not make any investments and OPEX commitments in local representation, staff, advertising, offices, exhibitions etc., before we have a position from where we can continue the penetration with some form of leverage.

How do we create a bridgehead?

Creating a bridgehead requires that our customer value proposition is so compelling that a number of key customers are prepared to do business with us regardless of our lack of local representation and track record.

We must expect that the majority of potential customers are reluctant to deal with a newcomer. But there are always 5-10% of the customers who are prepared to take some risk and go an extra mile if the value provided is substantial and difficult to get elsewhere.

Leverage from strength

We must concentrate on potential customers in the market segment where we have an undisputed position. We must make it obvious that we provide a value proposition which has been tested and verified in their industry and with customers of their size, although in another geographical area.

We should then look for ways to get in touch with potential customers through our existing customers, our suppliers and our network. We must make it clear that we are looking for reference customers and that this is the first step in the process of becoming the market leader.

We should be extremely tough when qualifying our potential customers.  We do not want to spend time with potential customers who do not express a serious interest and willingness to work with us on our current terms and conditions.

Using our existing resources

Don’t approach a new market with new people!

We must assign existing sales resources to the project. We should choose our best sales people and give them this assignment (and allocate time and a budget). We must put together a project team as required and we must give the team substantial executive attention. We will always be traveling an interesting learning curve when entering a new market and by using existing resources we can much better distinguish market related issues from “the opinions” of new staff or partners and their individual learning curves.

The universal approach?

Is creating a bridgehead a universal solution for entering a new territory? We actually believe so.

We have been involved in cases where we were able to find a very professional and committed partner or local sales person, who was able and willing to do the very initial penetration.  But these are rare exceptions and not the rule.  It is extremely difficult to find someone who is willing to take the kind of risks we are prepared to run ourselves. Finding partners and staff in the new territory is far easier and represents a much smaller risk, when we have proof of a concept and a revenue stream.

This article was originally co-written with Nils Kierkegaard for the TBK Newsletter TNN and was published first time in September 2008