Originally published on the 3rd of December 2019, updated on 30th of March 2021.
Are you a new business owner or do you run an existing company that’s looking at different markets and regions? It’s important to know what to consider when entering a new market and the key challenges you’ll face. As a leading payment service provider with a strong payments consultancy background, we’ve helped countless businesses to overcome the challenges of moving into a new market. We’d like to share some of our insights to help others starting out on the same journey.
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What to consider when entering a new market
Entering a new market can be a smart business move, but it comes with its share of challenges. To leverage this opportunity effectively, you’ll need to modify certain aspects of your business strategy and develop a ‘market entry strategy’. It’s vital to understand the challenges, as much as the opportunities, before entering a new market. Consider things like:
- behaviours of your new target customers
- communication channels (and their usage)
- cultural differences in certain markets and regions
- languages and currencies
- common payment methods
- regional regulations
Explore the demographics and get familiar with the nuances. From a payment perspective, think about how you need to adapt your payment experience for this new market (or markets), considering the unique requirements.
Carry out extensive research so you can appeal to your new market audience, meet their needs and accomplish your business goals. To help you, we’ve outlined the key challenges you’ll face when entering a new market, along with expert advice on how to overcome them.
Key challenges of entering a new market
Different communication channels
It’s important to know the communication and social channels most used by your new audience when entering a new market. Why is social channel usage key for merchants? Well, an ODM Group study found that 74% of consumers rely on social networks to help with their purchasing decisions.
In Europe, we typically consider the likes of Google, Facebook, Instagram, YouTube, Twitter and WhatsApp as the leading social networks and communication channels that consumers most commonly use to engage and interact with brands. But it’s a fast-changing digital landscape – just look at the emergence of TikTok and its influence in the last year, especially during the pandemic. And the landscape can also vary in different regions, with certain channels and networks favoured in different parts of the world.
See the Statista chart below showing the world’s social network usage:
When entering a new market, you need to be aware of the communication channels and social networks that are most popular with these customers, and the behaviours that influence customer engagement, satisfaction and loyalty.
Different age groups have different ways of seeking out or interacting with brands. Younger generations are more likely to browse Instagram before heading to brand websites compared to older generations, who tend to browse, buy and contact businesses all directly via the website. Those younger consumers also make more voice searches than their older counterparts. And when they need customer support, Gen Zers and Millennials are more likely to seek chatbot interactions rather than picking up the phone or sending an email.
It’s vitally important to understand your new audience and cater to their needs and preferences. The more you know about their habits, the better success you’ll have selling to them and retaining their business.
Good customer support is crucial for customer loyalty these days and you need to minimise consumer frustration. So, the channels you choose for communicating and supporting customers need to be appropriate for your audience in the new market you’re entering. Many new businesses fall into the trap of thinking they should utilise as many social and communication channels as possible. Consider the channels that are most suitable and ensure you can manage them effectively.
Having the right communications will help you to:
- appeal to your new audience
- aid faster, smoother and more meaningful communication
- resolve issues promptly
- encourage customer loyalty
- nurture and reengage with customers
- drive repeat business
Another challenge of entering a new market is appealing to new cultures. Different regions have different cultural values, attitudes and norms. You may discover features of the region’s culture that require you to adapt your marketing tactics and sales approaches.
Different languages are a factor too. Customer engagement can be difficult if your website and communications don’t serve the languages in your key regions or are badly translated or don’t account for local dialects. This can lead to disengagement and loss of revenue.
The same goes for payments and the route to purchase. What makes sense for one market, doesn’t necessarily align with the expectation in another market.
Research is key, but we recommend having someone on board with experience in these markets and their cultural differences to advise you on the dos and don’ts and how to frame your messaging for marketing, sales and customer engagement. For instance, some cultures will accept more direct and explicit forms of marketing and sales communications than others. This also applies to things like attitudes towards money, nature, personal well-being, etc.
Ensure your brand messaging, marketing and communication approach is tuned into the culture of your new audience before entering a new market. In an age where bad reviews and negative social media reactions can really cause companies problems, you want to avoid reputational damage.
Consider optimising your website for the languages spoken, with links to translated pages or dynamic content that changes when certain locations are recognised. Another option is using multilingual chatbots. They can automatically determine the language your customers are using and respond in this language. They can also redirect customers to an appropriate customer service representative for each language.
When it comes to the payment experience, you’ll need to adapt it to meet cultural preferences, as consumers in different markets have varying expectations of the checkout and transactional process, such as the number of steps and the information required, and from a regulatory perspective. Your payment service provider can advise you on your approach.
Different payment methods and behaviours
These days, consumers expect a smooth checkout and payment experience so that it’s as easy as possible to make a purchase and receive goods promptly, using the payment method that suits them. If not, their loyalty will be seriously tested and it won’t be long before they source products elsewhere.
The communication channels you use, the cultural nuances and preferences, and languages used in different regions can all affect your payments experience. But there are other aspects to consider with payments when entering a new market, such as the payment methods you make available to consumers.
You’ll need a suitable payment service provider to support you in entering a new market. They can help you to understand your new consumer base concerning payment methods and buying behaviours, providing you with data intelligence on customer preferences, purchasing patterns and preferred payment methods in your region of interest.
This graphic shows how payment methods and preferences can widely vary between regions:
Pricing is also a key factor when entering a new market. We advise working with local financial institutions to adjust your payment system to match local standards. Adjusting your prices to be in line with the buying power of local customers will generate goodwill for your brand, which is essential for running your business successfully in new regions.
If you think you’ll need to source a new payment gateway to support your venture into other markets, we have a handy payment gateway checklistto help your selection process.
Regulatory considerations and barriers
From a payments perspective, you need to ensure your payment flow makes sense for the behaviours of this new audience. What assurances do they need? What are the regulatory differences and requirements? Compliance is key. What’s acceptable for one market can be vastly different in another. For example, you might be used to meeting the requirements of EU payment directives and Western regulations, such as PSD2 and SCA. But what about in other regions?
It’s also worth considering things like contactless payments limits in different regions (if you’re planning to have a bricks-and-mortar presence in your new market), plus payment information required for validation, to help straight-through processing (STP) and avoid payment failures.
Investigate your regulatory requirements for entering new markets and ensure that your payment service provider has the necessary technology, data protection and security tools and protocols to support these. This will ensure you can be confident of compliance with different payments regulations.
To drive a high STP rate, you need to be aware of the factors that lead to payment errors and delays, such as differing bank data information requirements in certain countries and jurisdictions, and public/bank holidays in different regions. Gathering this intel can help you avoid payment failures/delays and customer/partner dissatisfaction.
How payment service providers can help
Payment service providers can support you in planning for entering a new market and addressing the key challenges. A good provider will have the experience, expertise and technology to ensure you tailor your payments experience to new markets. You may need to invest in a new payment gateway, FinTech solution or integration to make sure that you can adequately address your new audience’s needs.
Firstly, you need to establish a clear market entry strategy and your payment service provider can help you to scope this out.
Develop a market entry strategy
Work with your payment service provider to determine all the key factors and requirements for your new target customers and align this with your business goals. They can advise you on how to adapt your payment flow to meet the needs of your new market and develop a market entry strategy that accounts for all the potential pitfalls and challenges.
A market entry strategy will take into account the timing of market entry, the risks, third-party requirements and the methods of distribution and delivery of goods and services. A well-planned strategy will ensure you’re fully prepared and have taken proactive measures to address and solve any challenges that may arise from entering a new market.
Looking for a suitable payment service provider? Learn the key questions your business should ask before approaching providers.
Summary: Adapt your approach when entering a new market
Entering a new market is a proven growth strategy, especially if you’re operating in an industry niche with little local competition. However, meeting the needs of the new market and addressing the potential challenges and risks is vital. Your ability to handle these challenges will determine your capacity for growth and your market entry strategy will be your foundation for success.
We hope this article has helped to make you aware of what to consider when entering a new market and how to address and solve the challenges you may face. Got any questions? Reach out to us at email@example.com or head to our contact page.
If you’re a new business looking for a suitable payment gateway, download our handy checklist for choosing the best payment gateway for your business.