Selling to Germany seems to be one of mankind’s biggest mysteries. We often hear from companies that want to sell into Germany: “We are talking to our legal advisor about setting up a GmbH (Ltd.) in Germany to be able to work the DACH market.”
Let’s debunk some of the myths here:
Do I need a legal entity in Germany?
No, you don’t need to create a GmbH (Ltd.) in Germany to sell into DACH!
At a later stage, when you have successfully tested the market and your sales playbook you might want to consider setting up a GmbH for tax and employment reasons. But this decision is not related to business development and sales.
What works better? Direct Sales or Indirect Sales
Sales partners (VARs) are good in selling their “value-add” but are in generally bad in identifying how to sell your stuff. In other words: If you don’t have a proven sales playbook for a VAR (including value prop, differentiators, local references) it is very unlikely that they will develop this on their own. Usually this means you have to get your first end customers in Germany with direct sales to develop and provide your German sales playbook. Here’s some additional info The Pros And Cons Of Indirect Sales.
What shall my Country Manager look like?
What role are you looking for in your first employee in Germany? A managing director? A senior sales director? A seasoned account executive? A motivated (young) lead generation person? An experienced inside sales anchor? A channel/partner manager?
You might wish for an all-in-one candidate but honestly, this doesn’t exist. If you haven’t validated the market and your local sales playbook you should aim for an account executive supported by a lead generation service (internally from the Headquarters or from a local Lead Generation Agency). All other roles will not generate your first revenues in Germany. Take a look at this article German Expansion: Who Shall Be Your First Employee?
Shall I go for Freelance or Employment?
Our experience is that in enterprise sales (long and complex sales cycles) it takes about 12 months to find out if your new sales hire was a good choice.
Additionally, the labor law in Germany is very “employee friendly” and makes it hard to lay off people.
One more thing: very good sales people don’t need to apply to job ads. What do you have as a company to attract these calibers?
Typically not the best set-up for entering a new market, right?
Instead, there is a talent pool of highly specialized (industry, domain, etc.) sales freelancers available in Germany that might be a more lean and agile approach for entering the German market. They know the German market specific, and act local and speak the German language. Let them start doing the business while you can spend more time in the recruitment process of finding your ideal first employee.
We are happy to introduce you to a few freelance sales experts we know.
How important is the German language?
If the users of your offer (SaaS, software, service) don’t speak English every day (e.g. blue collar workers, non-international businesses, etc.) , then it is obvious that your offer needs to be available in German language as well to experience a good adoption.
Does your sales collateral (website, presentations, emails, proposals and contracts) need to be in German? Well, it depends. For commodity offers absolutely, especially when you compete on the same value proposition with the local providers in Germany. Also true, when you sell to non-english-speaking technical buyers. In all other cases (especially when you sell to internationally acting buyers) we do not see a significant advantage (<20%) of having your sales collateral translated to German language.
Does my sales executive need to speak German?
Speaking the language of your clients is never a bad idea, no question about that. But is it mandatory to be successful in the DACH market? No, absolutely not!
More important than understanding the language itself is to understand the German business culture. Here’s the big difference! Buzzwords, call-to-actions and “next steps”, that work well in UK and other countries in Europe surprisingly do not work in Germany. Also, you will learn that your sales cycles will double and your customer loyalty will tripple.
Native German sales executives (employed or hired) do not only come with the German language, they also come with being part of the German business culture.
To expand your business to the German speaking markets, you can start immediately in a lean and agile way without major upfront investments and optimize step by step at later stages.
BizXpand brings B2B enterprise customers from the German-speaking markets to international SaaS, software and IT services companies.
- 45% of our clients are in the SaaS/product/solution space, while 55% are in the IT services business.
- 67% of our clients sell from a distance; they don’t have local sales reps in DACH.
- 72% of our clients target companies between 200 and 5000 employees.