Thursday, April 10, 2014

Establishing a Customer Base in Brazil: Avoid Common Pitfalls

 
This work by Marcelo Bernardes (@marcelobern) was originally posted on LinkedIn.

During a casual conversation, I heard the tale of a technology company looking to establish a presence in Brazil, but failing. It turns out the company had decided to solely rely on a local partner to develop the market for them, and had little checks and balances to track the progress being made by the partner.

With all the interest in the Brazilian market over the past decade, I have heard similar tales too often. Like many others, I also learned the hard way, so let me share some of that learning in hopes it will increase your chances of success.

Some common challenges

In order to avoid the most common mistakes, please consider this short list of suggested "homework" items which should be addressed prior to trying to establish an operation in Brazil (some of this rationale might even apply to other geographies as well):
  • Competitors and taxes: check if your main competitors have a local assembly in Brazil. If that is the case, be ready to fight an uphill battle, as your products will be taxed at import rates, while competitors will benefit from local tax breaks.
  • Language hurdle: if your customer support help desk does not have the ability to take calls in Portuguese, you will struggle, and likely government contracts are out of your reach. This is an item where a good local partner might help you easily bridge the gap.
  • Local references: initially, Latin American or even global references might suffice to win the first deals. Some customers (e.g. government) might require local references. Make this determination early to avoid spinning your wheels.
  • Red tape: be ready to jump through hoops to comply with local regulations. A good local partner should definitely be able to help here, even though expediting some processes may not be possible. So, be patient and add for extra time when planning activities early on.

Establishing your presence

If after your homework you still believe entering the Brazilian market is a good business decision, here are a couple steps which should help you win the first deals and setup a "command post" in Brazil:
  • Put your best foot forward: it will be critical to make a great first impression. So, plan to have a top subject matter expert fly to Brazil on a regular basis to help develop the first opportunities and get to know the customers. This might seem expensive but will help you make sure deals were not lost due to lack of technical expertise in the local team/channel partner.
  • Leverage your customers: check your installed base to determine which customers might have a presence or future interests in Brazil. Even customers with no local presence might have local business partners which could become your initial leads and even your first Brazilian customer. Parts of this sales strategy might help you also.
  • Channel partner selection: it is always easier to trust an old friend, so, if a current channel partner has presence in Brazil, you could leverage them. It is also a good idea to find out who are the channel partners for your main competitors in Brazil, and make sure your channel partner candidates are already familiar with their future competition.
  • Check and balances: it is critical to be able to measure the impact of your effort (direct or through a channel partner). In the case of a channel partner, make sure to keep track of proposals delivered, contact names, and win/loss analysis. An important point on the win/loss analysis is to uncover possible feature gaps, due to unique local needs. It happens more often than you might think.
Of course, each situation is different, for example, hardware, software, or services have specific challenges associated with each; so please use the comment box below to share your experience and I will be happy to reply with my thoughts on how to address any specific challenges you might be facing. For now, welcome to Brazil and good selling!

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(Image courtesy of domdeen - FreeDigitalPhotos.net; Post updated Apr/30/2014)