Every week, we will seek out expert advice to help a small or medium-sized company overcome a key issue it is facing in its business.
StarTech.com Ltd. is in global expansion mode.
Last year, the London, Ont.-based manufacturer of hard-to-find computer connectivity parts – think cables and splitters – entered Spain, the Netherlands and France, adding to a presence in Europe that had been limited to Britain.
European sales now account for about 15 per cent of StarTech’s business, and there will be more, with plans to further expand later this year into Belgium, Italy and Sweden.
“We’re definitely growing in Europe,” says Paul Seed, founder, president and chief executive officer of StarTech.com, which sells its products online and through distributors, who, in turn, supply retail stores.
But going global has Mr. Seed thinking about whether and how he needs to “localize” StarTech.com’s services – business speak for adapting to the needs and culture of a local market. He wonders how StarTech.com can serve its European markets in a way that makes customers feel like they're doing business with a local company.
StarTech.com has a handful of agents – one or two each in country – looking after sales in Europe. Other functions continue to be handled out of the 160-employee company’s Canadian headquarters.
It would be nice to have customer support personnel in each of the European markets, Mr. Seed says, but he worries about how to manage these people from another continent.
He’s now considering hiring customer service agents in Canada who speak the languages of StarTech.com’s European customers.
He’s looking at agents based in Toronto who would work from home and visit head office at least monthly for training and to stay connected. StarTech.com, which celebrated its 25th anniversary last year, recently launched websites in French, Spanish and Dutch – but Mr. Seed feels there's a need to do more.
The challenge: Should StarTech.com localize its services in European markets, and how best to do it while managing its costs and maintaining control?
THE EXPERTS WEIGH IN
Merril Mascarenhas, managing partner, Arcus Consulting Group, Toronto
StarTech.com’s model essentially is selling product, not advice or solutions to customers. So the question is: Is there a unique customer requirement in Spain versus Italy? The answer is no. The only difference is language.
So the lowest-cost option is to have their customer support team in Toronto, which can be managed out of London. We really do not see a significant advantage to having a customer support team in Europe.
At the same time, StarTech.com should add marketing and communications resources at a central location in Europe. Timely local insight is critical. Europe is a fragmented market with different customer and business requirements.
Having said that, many global companies manage their marketing and communications from one low-cost, low-tax location in Central Europe – usually Brussels or Geneva. Many European marketing and communications professionals speak several languages and travel extensively within Europe. So there may not be a significant requirement for marketing and communications resources in each country in Europe.
Sandy Huang, president and principal consultant, Pinpoint Tactics Business Consulting, Vancouver
The common customer needs for StarTech.com’s products across international borders give the company a good cause for pursuing a global strategy. Mr. Seed’s decision to centralize control makes sense as it allows economies of scale and cost-sharing.
He may, however, want to consider deepening the company’s brand position by creating a “universal story.” Instead of a focus on localizing services, it is more impactful and cost-effective for Mr. Seed to find the common ground among all of his markets.
While it is important to acknowledge that StarTech.com is an international company, understanding the common connector and building its company culture around the idea of a “global community” will help make it appealing to its customers, employees and stakeholders.
Knowledge transfer is another important success factor for a global strategy. An international sales force with front-line knowledge should have the opportunity to provide input into the strategic-planning process. A strong technical and social network will ensure that StarTech.com stays cost-effective while maintaining control of its growing global business.
Ronnen Harary, co-chief executive officer, Spin Master Ltd., Toronto
At Spin Master, we have our own subsidiaries, and each of those offices has their own channel managers who report to a senior VP in Toronto. The challenge is you're managing through your channel manager, you're not on the ground and not as close to customers as you possibly can be.
If StarTech.com wants to increase European sales, then it would probably be advisable for them to pick one country to be their base in Europe – maybe the U.K. or France – where it’s just a train ride away from all their local markets. It’s easier to engage and interact with people on the ground when you're in similar time zones.
I’m not a huge believer of relocating large numbers of people – it’s too expensive and there are often complicated family issues.
Instead, it’s better to hire locally and maybe bring in one senior person from North America and match that person with someone local who’s also at a senior level. Let them manage together with the idea of eventually transitioning the North American person back home once the local person is fully trained.
The European market is a long-term commitment. If you start investing in local talent today, you’ll wake up five years from now with all this great human capital that would open the doors to even greater market potential.
StarTech.com might also want to look at who their biggest competitors are in Europe and explore the opportunity to acquire a competitor.
THREE THINGS STARTECH.COM SHOULD DO NOW
Build a multilingual customer support team
Whether this team will be based in Canada or in Europe, it’s important for StarTech.com to ensure it has support personnel who can speak its customers’ languages.
Set up a marketing and communications office in Europe
Effective marketing calls for timely local insight. StarTech.com needs to have at least one person in charge of marketing and communications for Europe operating out of a central location.
Cultivate European talent
StarTech.com should slowly build a talent pool in Europe, starting with a senior-level manager paired with a manager from North America.
Special to The Globe and Mail
Facing a challenge? If your company could use our expert help, please contact us at Small Business.Report Typo/Error
Follow us on Twitter: