Lessons from a Market Entry
Launching a startup in one’s home country is hard enough; executing a multinational marketing and sales strategy to support that startup is a major task. Two years ago, my company, TrekkSoft, began offering tour operator management software in our home market of Switzerland and Central Europe. Our goal was to get global operators on board to scale up the software solution. We discovered, however, that jumping straight into sales and marketing isn’t the best course for launching a startup. Here are some other key things we learned when it comes to entering new markets:
Calculate a Customer’s Lifetime Value
In the beginning, we acquired multiple tour operators in Central Europe by spending a lot of money and time on business pitches. One of the ways we evaluated whether or not our marketing strategies were working was by focusing on the acquisition cost versus the lifetime value of the client. By focusing on obtaining new clients that—calculating their net lifetime values—are truly profitable, we learned a valuable lesson: You can’t spend hundreds of dollars on customers who only give you US$10 in net a month, especially if you don’t expect to keep the client for longer than a year. Realizing this, we used smaller companies that didn’t have established booking service providers as our core target group, and we established more of a business-to-consumer strategy than a business-to-business one. This proved to be much more effective, as it let us scale up our capabilities.
Customers Aren’t the Same Everywhere
Our second mistake came in the form of an assumption: We assumed that our customers were the same around the world, and that we could appeal to them by using the same marketing strategy. Big mistake. We chose small- and mid-sized tour operators from the 250,000 companies in our target market and approached them from a single scale. From our European background, we expected that cold-calling would be a viable and profitable strategy to expand our client base. It quickly became clear that it was not. We failed to catch our potential customers and burned financial resources without any impact on the bottom line. For a small team, the effort outweighed the benefits and the sales results ended up being insignificant. Looking back, we should have adopted targeted strategies for our diverse demographics, instead of assuming one size fits all.
Take Your Time with Social Media
The final pitfall centers on online marketing. We launched a large Facebook campaign and purchased Google Adwords, both of which had mixed results. Because of the wrong advertisement settings, bidding on likes and a manipulation from one specific user, we wound up paying for clicks from fake accounts. As a result, our first social media campaign led to a large amount of low-quality likes coming from seemingly fraudulent accounts. Apart from the money loss, we had to turn down a popular approach to advertising our product, which eliminated a big chunk of our social media marketing.
Like with Facebook, our work with GoogleAdwords also presented challenges. Our approach led to high costs, as we eagerly bid on keywords like “tour booking” or “online payment” without taking the time to do more research. Those keywords were too unspecific and wound up being very expensive. Seeing the error of our ways, we shifted our position and became more of an Internet-booking management service provider. This simplified the client acquisition process, making it much easier to market the service to consumers and gain critical mass crucial for media coverage. We also refined our Adwords campaign, building landing pages that provide relevant content to the user and advertising them with specific ads and corresponding keywords.
Looking back at it all, we learned some valuable lessons about executing marketing and sales strategies abroad. Ultimately, we learned the value of testing your strategies early to determine what works and what doesn’t, and how to cope with the backlashes that come with missed steps. At the end of the day, marketing is not about the big picture, but the details. It was an expensive lesson to learn, but it was well worth it for future business success.
Philippe Willi is a serial entrepreneur and the co-founder and CFO of TrekkSoft, a booking solution and payment gateway for travel companies. Fun fact: The first thing Philippe does when he wakes up in the morning is a 45-minute workout on his home trainer.