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Paritech News -
February 2001
Paritech launches in the US
Austrade
Online - Silicon Valley Update Issue 8
Melbourne’s Paritech, develops
and markets advanced investment tools for the retail and corporate markets.
Paritech has grown to become a global enterprise with offices in Sydney,
Singapore, London and San Francisco. Core products include charting and analysis
software, global data feeds and multimedia training products.
We spoke to Paritech’s, USA based CEO, Rick
Klink, about the challenges the company faced breaking into the US market.
“We had three main goals for our entry into
the USA marketplace. Our first goal was to leverage the great potential customer
base here in the United States for our products and services. In this goal, we
have been quite successful. We also discovered that increasing our customer base
by a factor of ten, does not simply and immediately lead to a related tenfold
increase in sales! That said however, this goal is progressing nicely.
Secondly, we decided to base operations in the
San Francisco Bay Area. The main reason for choosing this location was for us to
be immersed in the heart of the technology universe. This allowed us to meet and
network with related technology companies and seek out new venture
opportunities, whilst at the same time, allowing us to attend Industry related
events. However, there are some distinct downsides to this. The main one is the
very high cost of living in the Bay Area. For example, the median price of a
home in the Bay area is now around A$1 million.
Our third goal was to be able to go head-to-head
with bigger competitors. In our Industry, the key players are based in the USA.
Being in a position geographically to compete with these competitors on
opportunities has forced us to lift our products and sales/marketing skills to
world-class standards.
We were fortunate with our US
market entrance as we had some very strong US business partners already in
place. Most of these relationships had been developed over the two years prior
to our expansion. These partners have worked closely with us in marketing our
complimentary products to their customer bases. These relationships helped us
achieve immediate cashflows, whilst at the same time, saving us the very
significant marketing dollars normally required to attain such sales.
Marketing is extremely expensive in the United
States. Ensure that your products are ready for the US market. Make sure your
sales channels are well identified and locked in before leaving home. One of the
best ways of achieving this is to ensure that you have suitable US partners in
place suitably who are motivated to help you market your product. In my opinion,
this is one of the lowest risk forms on entry into any market.
One of the unexpected issues we came across in
our industry was the high levels of product returns by US consumers. Many
software manufacturers targeting the investment sector sell their software with
an unconditional 30 day money back guarantee. This tends to result in very high
levels of product returns - over 50% for many companies. As one has to offer the
same guarantee to be competitive, this dramatically raises product marketing
costs.
And lastly, whilst there is definitely a larger
customer base here to sell to, make sure you understand the differences between
the markets in regards to potential sales of your products and services, and
build your business plan accordingly. When in doubt, plan conservatively!
My final comment - "Hang in there, it
definitely gets easier with time !!!!”
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