Your future is now, too. It’s time for you to take your small or midsize business (SMB) across the globe to the European Union. We’ve touched on what’s waiting on the other side of the pond before, but there’s still a lot more to learn.
Many SMBs lack the resources to research the size, scope, and operations of buyers in other countries. For those looking to expand internationally, this can severely hinder the efficacy of their marketing.
By researching the demographic data of French and German SMBs, companies in the United States can better know who they’re marketing to, and how much money is available for them.
That’s why Gartner Digital Markets asked 270 SMBs in France and 270 in Germany, as well as 700 in the United States, about their 2019-20 business software budgets and purchasing intentions (to read more about our methodology, click here).
France and Germany are both fiscally strong countries (ranking third and first, respectively, in the European Union) that have exhibited consistent adoption of myriad technologies. Looking at these countries’ tech budgeting plans can provide a clear picture of the forefront of EU technological interests.
In this article, we’ll take a look at what you can learn from comparing the SMBs in these two countries, which locations might be more receptive to international expansion, and what lessons you can take from your knowledge of American markets with you.
Where is the money in France, Germany, and the U.S.?
Let’s take a look at the following three graphs. For each of these countries—France, Germany, and the United States—we took the top three most-budgeted-for software types and broke them down by the size of the businesses investing in them in order to look at their rate of investment.
Figure 1: This graph shows the percentage of each U.S. business size surveyed that expressed interest in the various technologies.
Figure 2: France’s largest businesses seem much less likely to invest in popular software types. Read on to see why!
Figure 3: These graphs effectively demonstrate some of the differences between France, Germany, and the United States, as well as international corporate climates.
Why do these software types come out on top?
Cloud computing—including software-as-a-service (SaaS), platform-as-a-service (PaaS), and infrastructure-as-a-service (IaaS)—has become a de facto means of operation, especially at companies that require large amounts of storage and coordination across several offices in multiple locations.
Pivoting to data and information security software, both France and Germany are members of the European Union, which has incredibly stringent GDPR compliance requirements. Any company that conducts business with a citizen of the European Union must meet these requirements or face hefty fines.
This also means that any U.S. companies that interact with European citizens and businesses must also meet GDPR security requirements. Between trade with the European Union, increasing worries about cybersecurity, and various other security regulations, companies in all three countries would naturally invest heavily in data and information security software.
This is because the United States and Germany both operate under very similar roles in their respective places in the global market: at the forefront of trade, manufacturing, and transportation—all industries in which SMBs need a finance/accounting software suite in order to survive.
Interpreting the difference in rates of investment: 3 lessons
1. Large U.S. companies invest more frequently than French and German ones
Look at the rates of investment in Figures 1-3.
Save for those making less than $5 million per year, U.S.-based SMBs invest more frequently—in some cases almost twice as often—than their European counterparts.
While that does mean that there’s generally more money to be had in the United States for software vendors in the top three categories, don’t take that to mean you shouldn’t look to expand abroad!
Those larger companies have some deep pockets, but that comes with some stiff competition as a plethora of other businesses try to swoop in and make those sales.
2. Smaller businesses are key to selling in France
If you’re interested in selling your software in France, you should target smaller French businesses.
At every turn, France’s businesses with less than $5 million in annual revenue outpace U.S. and German companies of similar sizes in terms of their investment rate.
Here’s an example: 44% of French small businesses plan on investing in data and information security software, compared to 36% of SMBs in the United States and 29% in Germany.
3. Sell your emergent tech to larger German SMBs
German companies are either currently using or are planning on using emergent software and tech at an incredibly high rate. Companies valued between $10 million and $50 million and those valued at more than $100 million expect to be using IoT tech at rates of 54% and 66%, respectively, in the next two years.
That means that in order to access that massive market (which has very deep pockets), you have to begin your marketing campaigns early in the expansion process to increase your brand awareness.
What can you do with all this information?
Depending on how ubiquitous or emerging your tech is, you’ve got to figure out how to scale both your price and production to match your target business size.
Knowing the financial landscape and interest in your targeted country will not only give you a stronger sense of how to market but also of how much you can expect to make and how long creating a stable international business could take.
Information on Capterra’s Top Technology Trends for SMBs surveys
Capterra conducted this survey in June and July 2018 among 540 France and German-based SMBs with more than one employee and annual revenue of less than $100 million. The survey excluded nonprofit organizations. The qualified respondents are decision-makers or have significant influence on the decisions related to purchasing technologies for their organization.
Capterra conducted this survey in June and July 2018, among 715 U.S.-based SMBs with more than one employee and annual revenue of less than $100 million. The survey excluded nonprofit organizations. The qualified respondents are decision-makers or have significant influence on the decisions related to purchasing technologies for their organization.
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