There are now over 3 billion people connected to the internet and nearly 2 billion smartphone users worldwide. Access to online services is nearly frictionless and user generated reviews have made customer satisfaction more transparent than ever. This brings an unprecedented worldwide audience within reach for any company with a website or mobile application and innovative, product-driven companies now have the potential to see adoption on a global scale. Prior to spending any money in paid marketing, our portfolio companies SurveyMonkey, Prezi, Jimdo, Animoto, Lucid Software and PicMonkey were used by customers in nearly every country in the world. Even consumers in Uganda and Liechtenstein are sending SurveyMonkey surveys and creating presentations with Prezi.
While the internet gives today’s online businesses unprecedented reach into global markets, there are many challenges in fully capitalizing on (i.e. monetizing) international users. Take SurveyMonkey as an example; when we invested in SurveyMonkey in 2009, nearly 35% of the company’s website traffic came from outside of the United States, but these same users accounted for less than 20% of the revenue. And SurveyMonkey is not alone – it’s a trend we’ve seen repeatedly across many of the businesses we’ve partnered with.
The International Monetization Gap
At Spectrum, we’ve actively supported our portfolio companies in realizing the full commercial potential of their global user reach. In particular, we cross-pollinate the learnings that each of our businesses have had as they’ve scaled globally (as you can tell from the graphic above, some are further along in this evolution).
We generally find that the biggest points of friction (and initial globalization successes) often lie in the customer buying process. Based on findings from WorldPay, 71% of electronic transactions in the United States and Canada are made with credit cards, whereas just 59% are in Europe and 37% in Asia-Pac. The story is even further nuanced on a country-by-country basis; nearly 50% of Finns like to pay with bank transfers while approximately 25% of their neighbors in Sweden do. Without accepting a myriad of fragmented local payment options, you’re likely to be shutting the door on many of your international customers. Not surprisingly, customers outside of the United States often prefer to make purchases in their local currency, so pricing has to be set and tested for each different country and presented in local currency. Beyond payments and pricing, the language on your site, app store listing and search advertisements all need to be translated for non-English speaking countries.
These efforts to globalize have been relatively low hanging fruit for our portfolio companies. While there is no single solution to accomplishing all of this quickly (at least that we’ve found), the work can usually be done by a relatively small staff based at company headquarters (i.e. it does not require local employees in international offices). There are also a growing number of outside payment, compliance and translation vendors who can be very helpful in this process.
Globalization vs. Localization
While globalization efforts can mitigate the sense that users are being shoehorned into a United States-centric experience, they often fall short of creating a user experience which feels authentic and native in a single country. The process of truly localizing a site requires a much deeper commitment, although it is one that is usually required to unlock a company’s full international opportunity.
In this globally connected world, consumers haven’t become homogenous. They often show preferences for different product experiences. A/B tests run by a few of our portfolio companies illustrate that the French have a strong affinity for free online services. Germans, on the other hand, are more willing to pay but fiercely value privacy and security. A good depiction of how consumer geography can change the product experience is illustrated with WeddingWire.com in the United States vs. WeddingWire’s Bodas.net in Spain. Reviews feature prominently on the site in the United States while vendor descriptions and media are more of the focal point in Spain.
Different User Experiences
US Results Page
Spanish Results Page
Designing an outstanding user experience for a single country requires native speakers who create site copy which is purpose built, not translated. Local language nuance really matters. It requires dedicated customer success teams who can collect user input and advocate for local product improvements. Marketing efforts must also be initiated at a country level, with locally-optimized creative, media buying, SEO and a dedicated public relations focus.
The challenge in all of this is not the lack of opportunity, but one of prioritization and resource allocation. We always enjoy engaging with our management teams on these tough questions:
- How should international investments be prioritized relative to a focus on improving a domestic user experience?
- Which countries should be focused on and how many can we tackle at once?
- Can the international focus be delayed or will a window close to become the first mover?
While globalization and localization initiatives require significant effort to implement successfully, it is an endeavor that can be well worth it if the end goal is to create an enduring, global brand and company.
The specific companies identified above may not represent all of Spectrum’s investments, and no assumptions should be made that any investments identified were or will be profitable. View the complete list of our portfolio companies.