Are you a growing IT networking, infrastructure and/or security vendor and plan expansion into new emerging markets territories? Many vendors in search of new sources of growth naturally stumble upon the Southeast Europe region (SEE) region. If you are tasked to expand sales and build a pipeline in SEE, some considerations might not be obvious at first, so let us go into more details here.
SEE is a highly fragmented region. For the purposes of this post, we’ll take a narrower definition and exclude some countries, notably Romania, Greece, and Turkey. In most sales organizations, these countries are usually handled separately, as their size justifies an individual approach.
However, the countries we’re left with are, because of their size and market potential, usually taken together:
Albania
Bosnia and Herzegovina
Bulgaria
Croatia
Kosovo
North Macedonia
Montenegro
Serbia
Slovenia
With the exclusion of Bulgaria, the above countries are sometimes referred to as “Adriatics”. To get some sense of proportion regarding the market potential, all the countries in this group combined (Adriatics + Bulgaria) generate a GDP of 50% of Poland’s economy, just a bit more than a “single” Romania, and certainly a small fraction (~6%) of the mighty DACH region (based on 2021 current USD data from World Bank database).
Although one might be discouraged by such proportions, the fact is that the SEE region is growing fast and can be a nice differentiator to reach your numbers at quarter end.
Now, let’s turn our attention to planning the headcount resources to deploy a successful sales effort across the region. Conventional wisdom dictates you need to hire local resources and combine them with global or CEE resources. The labor market is tight, and wages are going up, if only to adjust to rising inflation. The following are the resources and costs you might consider deploying (figures are total costs i.e., include net wages, taxes and contributions paid, equipment, and so on):
Regional sales: starting from 120k EUR/year up to 180k EUR/year for a connected seasoned veteran. You need local presence in at least some of the countries above, and there are inherent challenges to find a single person who can logistically and personally cover all the countries.
Presales engineering: this is usually a shared resource for a wider region, nevertheless always scarce and costly as well, so you might assume 110k EUR/year up to 160k/EUR year.
Marketing: shared resource, and you need to consider investments into trade press, regional conferences, coop activity with distis and resellers, etc. 50k EUR/year up to 80k EUR/year is a safe assumption.
Administration: shared resource for backend processing and inside sales, probably 30k EUR/year up to 50k EUR/year.
So, it’s quickly becoming apparent that your investment for a local team is running north of 300k EUR/year, and therefore it becomes extremely critical to shorten the time to market to get a viable ROI.
To do that, the natural approach for any vendor is of course to leverage a distributor to quickly scale sales across the regional partner channel.
However, it’s no secret in the industry that to get the attention and allocation of resources from a typical regional distributor, you need to have a market potential of at least 1M EUR/year revenue with an average 8%-12% disti margin and a clear route to the market within a year. Anything less than that will get you into the typical “fulfillment mode”, and you will struggle to get the attention your services and products deserve. Distribution and channel are essential, but to leverage that “tool”, you are faced with a chicken and egg situation: to start sales and leverage distribution, you need existing traction and demonstrable revenue, something you obviously lack, as you’re just starting in the region.
Having all this in mind, what should be your approach?
You need to optimize your investment and pursue a leaner approach, so that your upfront cash burn rate is more in line with your gradual revenue growth, at the same time being complementary to distribution and channel growth.
To make that happen, actions can be taken so that sales teams don’t need to build the numbers from zero and burn out in the process:
Continually position your technology across a curated audience of both channel partners and potential customers, to influence buyer personas and channel ecosystem.
Generate engagement and leads, leveraging a competency in latest digital marketing tools: from webinar production, to newsletters, lead generation pages with gated content, videos, and social media reach – all integrated and repurposed across the various channels, whenever possible in local languages to maximize engagement, traction, and visibility.
Quickly gain exposure and visibility across external media, trade press and conference providers.
Build a healthy and qualified pipeline of projects with the help of IT professionals who deeply understand the technology behind the IT acronyms and can connect the dots.
We can help precisely in the areas above! By using our services, you can achieve results quicker thereby saving time and money, with clear implication for your ROI.
Interested? Let’s talk – contact us!