Latin America is a region with 20 countries and an estimated population of 650 million habitants, the GDP is around $5 trillion and it’s one the most developing regions in the world for businesses and startups.
Since there’re 20 countries, most of them speaking Spanish and the biggest country having Portuguese as the native language, there are a few culture specificities in this region. Each country has it’s own regulation and banking rules, generating headaches for a company to expand to all the countries at once.
We experienced how these local and individual differentiations from other jurisdictions complicated companies to expand to the region. For that reason, we listed a few things that helped companies to improve their local sales:
Read on to understand more about the problems in this market and how you can increase your company's sales in Latin America.
Paying in Instalments
Mostly in Brazil but the same behavior it’s seen in other countries in Latam, making big purchases usually impacts significantly the user monthly budget and for that reason locally they have access to credit through vendors that split the payments in instalments for all the users.
It’s well known that a buyer can go to a local electronic store in Brazil and buy a television paying it in 10 or 12 instalments. Doing it, the buyer expects to have a lower impact on their monthly budget paying each month just part of this television.
This is something that happens a lot in countries with higher inflation rates, due to consumers trying to use a future revenue as buying power before the funds arrive. It’s almost mandatory for companies selling products to local customers, to offer installments options and usually the financial network already provides this kind of payment option against interest rates charged on the transaction.
Paying monthly subscriptions other than annually
Once I was discussing with a potential client why his company wasn’t performing well in Brazil since it was launched there, he explained that a big part of the users that enrolled in the freemium license of his platform usually its not converted in a paying customer.
During our discussion we understood that the pricing was ok and the product was quite good and already adapted to Brazilian consumers, so the only problems that could impact their performance would be involved with local marketing strategy and actually was involved with the way they were charging the users. Locally is very difficult for users to enroll in annual subscriptions for any kind of platform, this is the way they’re marketing their platform.
After reviewing this part of the strategy, they relaunched their marketing locally and after two weeks they had more paying customers than they reached in the last 18 months. The conclusion is that local users needs to build their trust in a platform before joining as paying customers, but besides it, they don’t want to compromise the annual budget to a product that may not be that good or usable in just a couple of months.
Paying in local currency
In Latin America, each country has its own financial system and different currencies, for that reason each economy is impacted by strong currencies differently during the time, having also impacts related to local election, local economy situations, inflation and other reasons. These impacts are not followed by the whole region, it’s common that in a country the economy is great and this country neighbor has a completely different situation.
Due to the local currency factors, the economy is based on it’s own currency, having credit cards in local currency and also local alternative payment methods, local users feel more comfortable and has more payment capabilities if they are making a purchase in local currency. In some cases, local cards charges taxes for purchases in different currencies due to regulation, and the cards administrators charges between 5-7% to run the currency conversion, so it’s very expensive for shoppers to use local cards in Latam to buy online in a different currency.
The best way for them to make online purchases is using local payment methods and in local currency, this way their purchase could have a fair cost.
Accessing Translated Platforms or Websites and Local Language Support
Local users are very exposed to local language, and most part of the time they are just speaking their native language, just a few part of the population speaks English, even though this is the second language for all the local countries.
Due to the small parcel of the population speaking English, it’s hard for foreign companies to offer its services or products in a different language. If a company provides local support and website in local language, they already can offer a good experience for their local customers.
A complete solution
We saw a lot of different industries entering in Latam and providing a great customer experience, the involvement that we have with these industries made us consolidate these tips for building a good local strategy. The local strategy is everything for a company to reach all the potential market locally.
Our solution was designed to be part of this expansion, providing a fast integration with a complete payment network, becoming part of the master plan of increasing the company capability.