Account for language and cultural differences, new regulations in expansion, and find reputable partners.

Tom Herrmann, Vice President, Global Channels and Alliances

March 22, 2024

4 Min Read
International global channel program
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Starting and scaling a channel program is always hard, but channel leaders looking to grow beyond the United States face even tougher challenges. Global expansion can be an extremely rewarding strategy, but it's vital to be aware of cultural differences, language barriers and regulatory requirements that can make international growth more complicated and higher risk.

Channel leaders will need to identify the barriers to global growth (PDF), create a game plan for overcoming these challenges and then execute carefully and methodically to ensure that the channel program can be successful no matter the market.

Challenges in Scaling

  • Language and cultural barriers: While English is generally accepted as the global business language, there are many places where it isn't common — even at the corporate/business level. The way business is conducted is also very different from region to region. For example, it's imperative that sales and marketing materials are not only translated, but also "localized" to address cultural nuances. This can include seemingly unimportant things such as colors that may have specific meaning, or stock images that could be considered offensive in some cultures outside of the United States. Knowing cultural differences is key before forging into any new market.

  • Compliance and regulatory differences: Additionally, it's essential to follow United States export regulations, in addition to local laws and regulations in the countries being sold to. For example, failure to follow United States export rules can lead to millions in fines, imprisonment and loss of the ability to export all together. Local laws are much the same, so be sure to thoroughly research regional regulations in new markets before expanding, so there's no risk of breaking any laws and dealing with severe consequences.

  • Corrupt or unsafe markets: Do your research on corruption and risk in target new markets. There are several organizations — such as Moody's, Dun & Bradstreet and the World Bank — that provide an index ranking of countries based on risk factors. These lists typically rank countries from 1 to 100, with 100 being the safest. Countries under 50% are considered "high risk" — approach these with caution. Unfortunately, most countries around the world fall below that threshold. Some major western markets barely rank above 50%. Channel leaders need to carefully consider the risk before boldly forging ahead into new countries.

Tips for Success

  • Reputation matters: For channel leaders looking to dip their toes in the international market, the best place to start is with larger, more reputable companies that have a broader presence in the region than just one country. Distribution can help in this regard as many of the more regional distributors are well-versed in the local laws, taxation and how to best support their resellers. Consider starting with lower risk and more established markets before venturing below that 50% risk and corruption line.

  • Prioritize relationships: While there are always going to be differences in new markets, channel partners and customers outside of the United States often act more like family than associates. Relationship building is a huge and rewarding aspect of working with some international customers, and global channel partners will often want to know you on a personal level before doing any business. Additionally, channel partners often have strong existing networks and partnerships that they may introduce you to.

  • Hire local: Another good practice is to invest in hiring local channel managers that are familiar with the nuances in a particular country or region and have relationships with key channel partners. That tribal knowledge is invaluable and can help avoid costly mistakes, as well as ease the challenges of entry.

  • Know the cost: Finally, factor in the extra cost of doing business in countries where you have to provide additional margin or discount to support the local partner doing extra work on your behalf, such as localization of sale and marketing materials or providing support services. That said, the cost of employees or offices (and the cost of doing business via the channel) tends to be lower outside of the United States.

Takeaway

International growth is usually a fantastic strategy, and a natural step in any burgeoning channel program. Beyond driving revenue, global channel programs can increase brand visibility for an organization and forge crucial new partnerships.

Meeting people from all corners of the world and getting their perspective is invaluable and provides a diverse input into your business overall. Channel leaders will find that customers in other parts of the world find new ways to use products and often provide very unfiltered feedback that can make your offerings even better.

By mastering key business and cultural differences, channel leaders should be excited to take the plunge into new markets. While it can feel comfortable and safe to focus channel efforts primarily in the United States, global growth is essential for the long-term success of a business and can be a tremendously rewarding process. Take the leap — your channel program will be better for it.

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About the Author(s)

Tom Herrmann

Vice President, Global Channels and Alliances, Synopsys Software Integrity Group

Channel veteran Tom Herrmann is vice president of global channels and alliances at Synopsys Software Integrity Group, responsible for indirect routes to market and the overall partner program. He previously built channel programs at Tanium and ran channel sales organizations at Oracle and VMware.

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