Brexit turmoil may present short-term gains for savvy UK companies

Charles Whiteman
- Lean - Jul 04, 2016

Brexit turmoil may present short-term gains for savvy UK companies

Ever since the UK voted in favor of leaving the European Union on June 23, the global business community has struggled mightily to understand the implications.

Britain, too, is reeling. The value of the sterling pound plummeted to a 30-year low mere hours after the vote. Post-vote, domestic support for the Brexit also sank. Residents and politicians of many EU member states feel alienated and angry.

Questions abound. When will Britain begin its two-year exit negotiations? Will it hold another referendum and see another outcome? Will it strike a deal similar to Norway’s? (Norway isn’t an EU member but follows many EU laws, contributes financially to the EU’s budget, and has full access to its single market.)

Understandably, analysts are examining the Brexit’s long-term implications. However, my company—which provides globalization solutions for brands around the world—has been examining the short-term international business impact of the Brexit vote.

There are actually some compelling opportunities for UK-based companies, we’ve found—particularly those that embrace online channels for brand awareness and sales.

Pound’s value can generate short-term gains

Until new custom regulations and tariffs are enforced (if they ever are), the Brexit vote’s most critical impacts will be on currency exchange, and on consumer behavior towards British companies.

Most forecasts indicate the pound will continue to depreciate, with the most pessimistic outlooks hypothesising it will reach parity with the dollar. We believe a fluctuating change will be in place for some months, with the exchange heading back close to 1.4 USD per GBP next year.

A year of deflated sterling will have a profound influence on British trade—but can also pose intriguing possibilities for UK exporters. Companies manufacturing products in the country with low imported material will have lower costs. This gives them a chance to present lower relative prices to international consumers.

These cheaper exports will lead to higher conversions, which many project will lead to a short-term revenue surge. UK-based companies may actually see bigger gains in the upcoming months than in months past. However, this hinges on UK companies expanding into continental markets.

If they haven’t already done this, they’d better do it fast—and the smartest way is through online channels. By entering continental markets and establishing a presence there online (or by doubling down on local operations), companies can boost sales while prices for locals are low.

We’ve found that launching websites in these continental markets, in the markets’ languages of choice, is the most efficient way to engage new customers. The best website localization solutions can deploy fully-operational, translated versions of UK English websites in about a month—no matter how large or complex those sites might be, or what content management system they might be using.

This rapid deployment can maximize the reach of UK businesses, while also maximizing their ability to capture the benefits of current exchange rates. This is far less risky and expensive than hiring additional staff, or opening a new brick-and-mortar store in continental markets where costs are much higher, due to the appreciated local currency.

Such speedy online moves minimize immediate risk, too. While the current turmoil is keeping the value of the Pound low, there’s no certainty that the same will be true in six months, or in two years.

Customized content sidesteps consumer ire

A word of advice, however. While foreign exchange rates are easy to measure, a more subtle phenomenon is already at play: the European perception of UK-based businesses is shifting. In light of the Brexit vote, continental consumers could stop trusting British companies. (Indeed, this may already be underway in earnest, thanks to growing nationalistic sentiments in European countries.)

The most effective weapon in reducing this risk is, again, a website catering to local consumers. Websites can be easily and quickly translated—and customized—to accomplish this.

Indeed, we recommend that translated websites showcase more than authentic translations to serve continental markets. They should also present customized content. This content can be used to reposition more expensive products as “exclusive” (to offset risks of reduced purchases due to increased tariffs), or to minimize the foreign image of companies.

Websites provide a great source of data on consumer behavior and preferences. In the case of increased volatility or mixed opinions towards British brands, studying these analytics can help inform the creation of market-relevant “trust campaigns” to mitigate these risks.

These campaigns work. We recently helped a UK-based retailer gain consumer trust in North America, when it expanded to serve the US market online. Skeptical American consumers didn’t recognize this retail brand, which was hurting sales.

By leveraging localized banners that talked up the company’s robust return and shipping policies, we reduced consumer anxiety. A week after we deployed this localized trust campaign, checkout rates skyrocketed nearly 30 percent. This spike contributed to a monthly incremental revenue of nearly £2,000,000.

In fact, we’ve seen companies achieve a 50 percent average increase in conversion rates by publishing market-specific content customizations on these international sites.

While the Brexit vote will continue to generate uncertainty in the upcoming months, not all UK businesses need suffer. Companies that manufacture products in-country with low imported material should seize the opportunities that are currently arising—smartly maximizing continental their sales with localized websites.

Charles Whiteman is Senior Vice President of client services at MotionPoint Corporation.

 

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