By Gerald Hoff
Sales and marketing are crucial topics for every entrepreneur. It is not without reason that most acceleration and incubation programmes touch upon this topic early on. Many startups with excellent products and ideas have failed because they were unable to find the right paying customers for their solutions. When thinking of selling your product or solution in Germany, international startups should keep a few aspects in mind when reaching out to potential business customers.
Target Audience – Small Businesses vs. Mittelstand or Big Corporates
First of all, you will have to analyse your target group. “In Germany, a distinction is made between small businesses (up to € 1 Million turnover), medium-sized businesses (up to € 1 Billion turnover) and big corporates (more than € 1 Billion turnover),” says Gerald Hoff, Sales and Marketing Expert in Germany. “Depending on who is to be addressed, international startups may need to work out different key messages to put forward to the customer. Furthermore, the larger an organisation gets, the longer are the sales cycles,” he further points out. Despite these characteristics, the average deal size, the startup is looking to turn around is another key aspect to be kept in mind when reaching out to customers. The larger the expected sales volume the better the seller should be. “Especially in Germany sales cycles take longer. This can be traced back to the mentality of German buyers. Depending on who is to be addressed and how large the organisation is, the startup may first reach out with a formal address such as ‘Sie’,” Gerald Hoff says. When doing sales in Germany another question quickly arises: “Which image do I want to transfer to my customers?” – Fresh and innovative or reliable and quality-conscious. Startups looking for clients in Germany should keep this in mind as it strongly depends on the target group. You can test your assumptions early and learn with an audience test and friendly customer interviews before investing heavily into sales into the wrong direction.
Digitalisation and Innovation Status
Germany has been the world export champion and the country with the most hidden champions, i.e. market leader in a small niche. “Made in Germany” stands for high quality and reliability and is recognised across the world. However, in terms of digitalisation Germany has lost significant ground in recent years. It is not uncommon to hear statements such as “We do not use cloud solutions or especially not non-German cloud solutions” or “The risk of trying something new is too great for us”. Especially Indian digital startups may be challenged to reach out to potential German clients. Therefore, it is important to develop convincing arguments when selling digital products to German customers that address pain points such as “Which problem does my customer want to solve?”, “How can it be solved?”, “How can it be solved better with my product?” and “Why is my product better than others?”.
German Buyers Mindset
Germans are known to be risk adverse. Same applies to German buyers working in SMEs or corporates. “They most likely hedge their bets and try to take as little risk as possible,” Gerald Hoff says. “Therefore, it is a fundamental mistake to enter the German market with a classical US-American marketing style,” he further highlights. Building trust is by far the most important step a startup can take when trying to do sales in Germany. This also includes developing sales material in German. “In Germany a lot of business is done through relationships, networks and recommendations. Knowing the right people may open doors to decision-makers that otherwise would have remained close,” Gerald Hoff says. Indian startups seeking to sell should therefore stay some time in Germany and visit as many events as possible, keeping in mind that the right target group is present.
As highlighted earlier, focusing on the target group is the most important thing. “Usually startups that focus on one target group instead of on many are usually more successful,” Gerald Hoff says. The channels to reach them depends majorly on the target group itself and their characteristics. Channels that are successful in the US or in other markets such as Facebook, LinkedIn, Capterra or Instagram may not work in Germany. However, there are many different ways to fuel the marketing and sales funnel with the right leads. For example, if the target group is hotels, it is advisable to attend events, read hotel magazines and talk to members of this target group. In addition, there is an association for almost every industry in Germany. Most associations hand out their member lists for a nominal fee (e.g. €50). Once the startups have identified the right customers, it is important to address the target group with valuable content. The keyword here is ‘Content Marketing’.
“Also, when reaching out to potential customers, keep in mind that not every decision-maker can be found on LinkedIn. There is an alternative platform called XING which is more commonly used by Germans,” Gerald Hoff points out.
Another important thing to keep in mind is the UWG (law against unfair competition), the DSGVO (GDPR) and the data protection law that must be observed when dealing with clients or customer data. For that startups should reach out to an experienced B2B sales professional or lawyer.
Sales Team and Workflows
Often startups do not have sales teams in place yet and it is generally the founder or CEO that acquires the first customers. However, as teams grow, it is most likely that the startup will have either a sales team or representatives. “The founder of a startup is usually the thought leader behind the company. He or she knows the solution or product best. It is therefore common that many clients would prefer to rather buy from him or her than from a regular salesperson,” Gerald Hoff says. But as the startup grows and latest after the first round of funding, it is most likely that a professional B2B sales team is put in place. “When looking for staff for the sales team, the startup should ensure that it is a person that knows the local target market and the mentality of the buyers,” Gerald Hoff further points out. However, to be successful the sales team should be build-up of the following setup:
- Sales and marketing tools (CRM, newsletters, email campaigns, website tracking, lead scoring,)
- Lead generation as an ongoing process
- Sales enablement (Pitchdeck, case studies, whitepaper, contract templates, etc.)
- Recruitment and onboarding of the right salespeople
- Establishing of a success guaranteeing sales team culture
- Base salary, career and compensation plan
- Strategy for sales, marketing and PR
- Pricing and discounts
- Feedback from market/customers to product development
- Sales and marketing automation
- Focus on one audience with a perfect fit, instead of a broad audience
- Establish customer success/support
While the German market or buyer isn´t an easy one to target, customer relationships are likely to last once they have been established based on trust and reliability.