How to succeed with geographic expansion in B2B SaaS
23 November 2023
23 November 2023
Are you considering expanding into a new market? Geographic expansion can be a major driver of growth and help software companies achieve ambitious growth goals.
At Viking Growth, many of our portfolio companies are already strong in their home markets at the time of investment, with clear ambitions to expand into other Nordic countries, broader Europe, or the US.
Successful geographic expansion, however, requires a deep understanding of local market dynamics, disciplined planning and execution, and the ability to adapt along the way. The right market-entry approach will also depend on the company’s broader strategy and the characteristics of the target market.
Andreas Sandbu, Senior Investment Manager at Viking Growth
Viking Growth portfolio companies have pursued several approaches to geographic expansion. Some grow organically by establishing a local presence, while others enter new markets through mergers and acquisitions (M&A). Others serve international markets directly from their home market or through local partners.
This article focuses on organic expansion through establishing a physical presence in a new market. It provides a practical guide to successfully expanding into new European markets as a B2B software-as-a-service (SaaS) company.
In a previous article, we explored how to choose the right growth strategy, including where to play and which markets to prioritize. In this article, we focus on what comes next: the key steps to consider once you have decided which markets to enter.
Before entering a new market, it is crucial to develop a clear understanding of the local market dynamics. Start by conducting thorough research into the market’s size and growth potential, the competitive landscape and competitors’ value propositions, customer preferences and buying behavior, and relevant regulatory requirements.
This research will help you identify market opportunities and potential barriers to entry, understand where your offering can differentiate, and determine how to position your SaaS solution effectively.
For practical examples of how to conduct this research, see our article on growth strategies or download our strategy playbook.
Customer needs, buying behavior, language, culture, and regulatory requirements can vary significantly across European markets and between states and regions in the US. An ideal customer profile (ICP) that works well in your home market may therefore not translate directly to a new one.
Take the time to understand which customer segments are most attractive in the local market and whether their needs, priorities, and purchasing processes differ from those of your existing customers. Based on these insights, refine your ICP and adapt your positioning and communication accordingly.
Market research should not stop once you have decided to enter a market. Continue to monitor market trends, regulatory developments, technological advancements, and changes in the competitive landscape. Regular desktop research will help you keep your assumptions up to date and adapt your strategy as the market evolves.
Key areas to monitor include the attractiveness of different customer segments, evolving customer needs, competitor positioning and activity, and relevant regulatory requirements.
Desktop research can only take you so far. Spending time in the market can provide valuable firsthand insights into customers, competitors, and local business practices.
Attend relevant industry events, conferences, and trade shows to meet potential customers and partners, test your assumptions, and build a deeper understanding of the market. These interactions can help validate your ICP and positioning before you commit significant resources to the expansion.
Once you have developed a clear understanding of the local market, the next step is to prepare your product and go-to-market approach for entry. Your product, website, content, systems, and customer support should all meet the expectations of your target customers.
Consider which language customers prefer, how your messaging and positioning should be adapted, which product requirements are specific to the market, and how your go-to-market (GTM) model should be set up to support growth. Below are some of the key adaptations to consider before entering the market.
Customize your SaaS offerings according to local preferences and regulatory requirements found in the research phase. Flexibility in adapting your product demonstrates your commitment to meeting the unique demands of the local market. These adaptations could include specific must-have integrations (e.g. to ERPs) or features required in the local market.
Adapt your website and marketing content to the local audience. This goes beyond simply translating existing materials. Language, terminology, imagery, customer references, and value propositions may all need to be adjusted to reflect local customer expectations and buying behavior.
A well-localized website and relevant content can strengthen your credibility and make it easier for potential customers to understand the value of your offering. Where possible, use local customer cases, industry terminology, and proof points that are relevant to the target market.
Make sure your CRM, marketing automation, analytics, and reporting systems are set up to track performance in the new market. For example, configure your CRM, such as HubSpot, to capture relevant market, lead, pipeline, and customer data.
Having the right tracking in place from the start will allow you to evaluate performance, identify what is working, and continuously refine your go-to-market approach.
Once your product, positioning, and systems are ready for the new market, the next challenge is building awareness and generating demand. Your target customers need to know who you are, understand the value you provide, and have reasons to trust you.
A combination of digital marketing and in-person activities can help you build visibility, test your messaging, and generate your first local leads.
Invest in localized search engine optimization (SEO) and answer engine optimization (AEO) to increase your visibility among potential customers. While SEO helps your company rank in traditional search results, AEO focuses on making your content easy to discover, understand, and reference in AI-powered search and answer engines.
Develop high-quality, authoritative content that directly addresses the questions and challenges of your target customers. Localize this content for each market, using relevant terminology, examples, customer cases, and data. A strong presence across both traditional and AI-powered search can help potential customers discover your company as they research problems, solutions, and vendors.
Combine these efforts with targeted digital advertising. Search behavior, competition, advertising costs, and channel performance can differ significantly between markets, so avoid simply replicating the approach that works in your home market. Continuously monitor performance and test different messages, formats, channels, and campaigns to understand what resonates with your local audience.
High-quality video content can also help establish a professional and credible presence in a new market. Local customer testimonials and case studies are particularly valuable, as they demonstrate how companies facing similar challenges have generated value from your solution.
Participate in relevant industry events, workshops, conferences, and trade shows. These provide opportunities to demonstrate your expertise, meet potential customers and partners, and generate leads.
Look beyond simply exhibiting. Speaking opportunities, workshops, and other forms of active participation can help position your company as a knowledgeable player in the market. Use these events to build relationships, gather feedback, and learn which messages resonate with potential customers.
The last step in your geographic expansion is showing commitment to your new market.
As described in the introduction, you can enter a new market in one of two ways: organic or inorganic. Organic expansion typically involves entering the market with your existing or newly hired sales staff and growing through organic customer acquisition. Inorganic means entering the market by acquiring a local company operating within the same or an adjacent market as yourself. As previously mentioned, we'll elaborate on the organic approach below.
Establishing a local office can demonstrate commitment to the market while bringing your organization closer to customers. However, opening an office and hiring local salespeople is not enough.
The composition of your initial team can have a significant impact on how quickly you gain traction.
In our experience, companies should consider sending some of their strongest people from the home organization into the new market. Ideally, the initial team should have the capabilities to identify prospects, sell to them, and onboard the first customers. This creates short feedback loops between sales, customer needs, and the broader organization and helps establish the company’s culture and ways of working from the start.
At the same time, strong local hires bring important advantages. They understand local business practices and cultural nuances, have relevant networks, and can engage with customers in their preferred language. Combining experienced employees from the home organization with strong local talent can provide a solid foundation for scaling the business.
Attensi, one of our portfolio companies, has successfully expanded into both the UK and the US. Read about 10 lessons from Attensi’s international expansion.
When entering a new market, potential customers may be less familiar with your brand and track record. Customer references, testimonials, case studies, and peer reviews can help build trust and reduce the perceived risk of choosing a new vendor.
Encourage satisfied customers to share their experiences on relevant review platforms and, where possible, develop strong local customer references. Independent validation from customers and other trusted sources can be particularly valuable when establishing your reputation in a new market.
Make sure you comply with relevant local regulations and industry standards. Depending on your product, industry, and target customers, specific certifications, approvals, or accreditations may be required, or may significantly strengthen your credibility.
Identify these requirements early and prioritize the certifications and approvals that matter most to your target customers.
Successful geographic expansion requires more than replicating what has worked in your home market. B2B SaaS companies need to understand local customers and competitors, adapt their product and go-to-market approach where necessary, build awareness and demand, and establish the local capabilities required to scale.
At the same time, avoid overinvesting before you have validated your assumptions. Start by developing a deep understanding of the market, test your positioning and go-to-market approach, and use what you learn to guide further investment. Successful expansion is an iterative process where you learn, adapt, establish traction, and scale.
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