The discussion on whether you need a remote office or offices in software and hardware companies is one which has diverse opinions. While it may seem like a simple topic on the surface, the decision to spend precious resources on additional physical locations is actually quite complex.
Where your opinion falls on this topic depends upon a number of factors including but not limited to your personal background/experience, whether your company is software or hardware-based, the product price point, the product’s ease-of-use, typical sales cycle complexity & length, current company capitalization & fundraising potential and channels availability in your market segment. Let’s dig in a bit on this important decision which at one point or another faces many technology companies:
Do you really need a remote office?
There are a number of things to consider when deciding whether or not remote offices make sense for your software or hardware company. Say you’re a SaaS company; you might think why would I need remote offices? But it’s important to look below the surface before making this decision. Listed here are a few important considerations:
- Product localization – if you product requires a lot of customization for foreign markets, there is a high likelihood that a local approach to sales and possibly marketing will also be important.
- Sales complexity and average sales cycle length – The more complex and longer the sale is, the more important it will be not only to have local people on the ground, but that they also need to be employees to be as knowledgeable and focused as possible.
- Distribution partner value-add – in some market segments and geographic regions it’s possible to recruit distributors that to a great extent act as the developer/manufacturer in their region, not only selling proactively but also providing outbound marketing and technical support. In other regions, usually the more developed ones (notably including the US/UK), the distribution partners you’re able to attract will likely be more limited in the scope of their value-add, sometimes only providing inventory, credit and purchase aggregation services to your end users and/or resellers.
- Need for technical support – the more support-intensive the product, the higher the likelihood that local support can play a role in building the business in a remote location.
Can you afford a remote office?
For many people this will be an easy question to answer; you either have the money for this type of expansion, or you don’t. But especially for those contemplating a fundraising endeavor, prior exploration of whether remote offices need to be a key component of your sales & marketing strategy can be very important. Investors always want to know what your use-of-funds will be and deciding how many offices will be needed and forecasting how much money will be required to get your remote offices to a self-sustaining level can be an important exercise.
If you need remote offices – when?
Oftentimes you can get started without any remote offices, even when you believe that to fully exploit your market opportunity it will be important to open a number of them in the long run. I recommend that you hold off until you’ve really gotten the product to a stable point, you’ve proven the product/market fit, there is a repeatable sales process in place and a substantial customer reference list. If you invest what can be large amounts of substantial capital in remote offices prior to meeting these milestones, there is significant risk of that being a an inefficient use of scarce funds. Worst case, you end up retrenching and closing many if not all remote offices; with a plan to restart at a later date. This can be very painful and has played a role in killing many early stage companies. Moving too early is to be avoided if at all possible. The only time I recommend taking on this risk at an earlier date is in a hyper-competitive market where the remote offices are seen as critical and waiting adds more risk than it mitigates.
Distributors vs. remote corporate offices
This is one of the key things to consider when composing your international sales & marketing strategy. It is a complex topic which I’ve written about previously and one beyond the scope of this article to delve into in real detail. It’s very important to match up your specific company’s situation to the ultimate strategy chosen. All too often I see senior tech company executives “do what’s comfortable” in this area. If they’ve come from a background of far-flung, worldwide corporate offices these folks often tend to assume this is the right direction. If they’ve been in situations previously where distributors were used heavily (and successfully), they may see this as the most effective (and cost-effective) approach without fully thinking through the current circumstances facing their company.
This lack of depth in consideration of international strategy should be avoided. Do you have the large amount of capital available to invest in a substantial number of markets? If not, are there key markets where you absolutely need an office, while others can be handled well by local distributors? Is your product really that “sales-intensive”, or maybe it can be promoted effectively through worldwide marketing campaigns executed from your corporate office – possibly even sold “self-service” on your website? How competitive is the market overall and in each individual remote market where you would potentially set up an office? Is local tech support critical, or can you also handle it mostly self-service or with live chat on the Internet? Even if you are able to utilize local distributors as part of your sales & marketing value chain, are they the type of distributors that will be ineffective without local sales, marketing or tech support from employees of your company? These are just a few of the many important questions that should be discussed when formulating your international business strategy.
Remote office duties & composition
“Remote office” is actually a vague term for an auxiliary office of a company which can include a variety of functions, depending upon the company’s specific circumstances. Below are a few functions that are most commonly a part of a remote company office:
- Outside Sales – this is probably the most common function staffed in a remote office, although an argument can be made that in many cases it shouldn’t necessarily be. The first “remote office” employee is usually a sales rep tasked with bringing new business in from the target remote territory.
- Inside Sales – probably the second most common function, although it can be argued that this function can be done well from the home corporate office. But having local people speaking the right language with the right accent and available during local business hours can in some cases be a powerful market advantage.
- Outbound marketing – the third most common function that is done remotely. The broader and more “mass market” the segment being targeted (B2C being more likely than B2B) is, the more localization of the product that is required and the lower the price point, the more importat it will be to have a local marketing budget along with personnel to execute local campaigns.
- Tech support – This is the fourth most likely function to be supported in a remote office, but imo opinion in many cases it may be the most IMPORTANT. While local sales reps can be very important to penetrating a remote market, having good tech support reps who can both provide both pre-sales support and quickly address customer issues during local business hours in the local language is often critical to remote success.
- Product customization – The least likely function on this list to be staffed locally in remote markets is product localization. This could consist of local software developers, product engineers or technical writers. But even when product localization is important, these functions are still far more likely to be conducted from the home corporate office. In some cases this can be a real mistake, due to lack of knowledge/skills pertaining to the remote locality
So there’s an example set of questions to explore when you’re deciding on whether or not to open remote sales and marketing offices. Doe this match with the process you would use? Please post a comment with your own list of key questions and decision criteria.
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