The DACH region (made up of Germany, Austria and Switzerland) is an attractive one for many companies looking to expand into new markets. After all, Germany alone is the largest economic market in Europe with strong purchasing power, meaning there are a lot of opportunities!
However, not everything is sunshine and rainbows, as Germany is also one of the most heavily regulated in terms of compliance requirements. Which, unfortunately, can lead to unforeseen complications for those who come unprepared…
We spoke to Gregor Hufenreuter, Operating Partner at Armira Growth and previously Country Manager DACH & CEE at HubSpot, about what it takes to run successful GTM strategies in the DACH region so you can hit the ground running, avoiding any nasty surprises!
The European lag
It’s fairly well known that Europe in general is lagging a little further behind internationally when it comes to digitalisation. And Germany is no exception. However, this is not necessarily due to a lack of interest in innovation.
Gregor Hufenreuter thinks that, ultimately, it comes down to a risk-averse nature within German culture. This contributes to the fact that companies in this country are less quick to embrace innovations.
German companies are more generally reluctant to make rapid and radical changes - but according to Gregor Hufenreuter, this is not necessarily a bad thing.
He said:
“We strive for longer partnerships and are focused on quality. Sales cycles take longer as a result. You have to build up more trust, especially if there is no proof of concept. But if you manage to position yourself accordingly, you will stand out in the industry.”
Essentially, if you have an innovative product that is low-risk, you’ll have a fairly easy time in DACH. Even if you have a higher-risk product but can show how you can mitigate said risks, you will fare better in DACH.
But if you fail to reassure prospects about the risk your innovation carries, you’ll encounter resistance.
Communication styles and expectations
German values
A typical German cliché tends to stand true across the entire region:
Reliability, precision, and punctuality are values practised in the business world.
If you want to succeed in DACH, this is a simple premise you need to adhere to. Companies in DACH will not get far with ‘window-dressing’ and emotional promises.
Gregor Hufenreuter explains that international companies often resort to “scare tactics” regarding compliance with regulations. However, this isn’t an effective approach for the DACH market.
Gregor said:
"Fact-based arguments and building trust and relationships work better than scare tactics."
Localising messages
Another important thing to consider when moving your business into DACH is localising messages properly. A mere translation will not be enough. Instead, you need to consider what this message means within a DACH context.
For example:
Marketing slogans from the USA often come across as too aggressive when translated into German - or at least from a German cultural perspective.
Gregor said:
“Certain slogans and adverts won’t work if you don’t pay attention to the cultural nuances.”
This is why it’s generally advised that you partner with someone local on the ground in your new region who not only understands the language but also understands how your messages will be perceived. They can act as a guide as to what is likely to resonate and what will miss the mark.
German vs English
One excuse (and mistake!) made by many expanding businesses is that ‘English is universal’.
And yes, lots of people can understand English. But that doesn’t mean you’re going to catch people’s attention in the same way as their native language.
English can’t just be used as a catch-all, or at least not if you want to make a big impact.
Gregor said:
“There are also buyers or C-levels who categorically reject English content and want it in German.”
“There are other things you should know for localisation in DACH, such as avoiding exaggerations in advertising messages. It needs a more conservative approach - more formal and less shot from the hip.”
Transparency and honesty
Companies investing in a new data provider expect a high level of transparency to have a sound basis for decision-making.
Gregor said:
"A certain honesty and direct communication is necessary: direct communication, high transparency and reliability about what a product or service can do."
The aim is usually to establish a long-term business relationship, where five to ten years are planned, and frequent provider changes aren’t envisaged.
Regionalising content within DACH
Even when expanding in DACH, sometimes you need to treat different parts of the region differently.
For example:
In Germany, you won’t find it as easy to be successful in the south with a sales team with a northern German accent or approach and vice versa.
Therefore it makes sense to use sales reps from specific places within DACH to target those areas.
What legal requirements must be observed?
In Germany, the GDPR is known to play an important role - but many international companies do not realise to what extent, as it’s stricter in Germany in comparison to other European countries.
For example, double opt-in is required to be able to send emails.
When concluding a contract, it’s also important not to underestimate what needs to be contractually covered under German consumer law, such as licence rights, certification rights and VAT.
Always seek legal advice when entering any European market, but especially in this instance as German legislation is rigid.
Which marketing channels are most effective in DACH?
When entering DACH, where should you place your bets when it comes to marketing channels?
Companies often start with smaller budgets and therefore rely on classic content creation and owned channels such as social media and paid content. These are generally effective and can be cheap.
But since the pandemic a few years ago, in-person connections have become increasingly important in DACH. That is why we recommend exploring partnerships and events.
Partnerships
Entering a market with a business partner is like arriving at a party where you don’t know anyone, but with a popular person who can make introductions.
They’re a direct sales partner or representative in the market who can give you more credibility, help you with networking, and ultimately get you a foot in the market faster.
There are pros and cons to this approach in DACH, however - because this isn’t yet a widely used tactic.
On one hand, because partnerships aren’t super common, it means there’s an opportunity to use a sales strategy that isn’t overdone or expected. On the other hand, it can be harder to find someone to partner.
But it’s well worth the effort to find a suitable business partner as it helps to build trust, and companies with an established partner automatically have a greater reach.
Events
Events are becoming increasingly relevant in DACH. Gregor said:
“Events are becoming more and more nested and more specialised, with congresses and ‘fireside chats’ - these then have fewer participants but more justification.”
In other regions, such as France and the UK, this concept of smaller events with industry experts is already well used, but in Germany, it is also on the increase.
This again feeds into the narrative of more targeted, thoughtful marketing versus more general, nationwide campaigns.
What drives customer loyalty in the DACH market?
If you’ve managed to gain a DACH prospect’s trust, don’t take it lightly or for granted! Trust is hard to earn, and prospects are generally loyal for the long term, as long as you serve them well.
Therefore, it’s essential to set up a German-speaking customer success team with a code of conduct - the right approach, transparency, and reliability must be in place.
Gregor said:
“We need to show our customers that we value them by investing in the right people in sufficient numbers to provide competent service - not just chatbots.”
“Although these are valuable tools, customers value expertise in the form of people as contacts, especially when entering the market.”
What do pricing strategies for products or services look like in DACH?
“Dumping prices” (the practice of a company selling goods in another country at prices lower than their normal value or below production costs, often to gain market share and harm domestic competitors) are not necessary in Germany, a strong economic nation, as it could actually lead to a negative image.
To determine the right prices, companies need to research whether there is a proof of concept, reference cases, and benchmark competitors.
Gregor said:
“For every product, there is a certain group of buyers within a certain market - these are affine technology users within this market. Placed case studies and references are then the justification for the price.”
Gregor also suggests another tip:
Work with agencies that specialise in pricing; hold a pricing workshop with your DACH ideal customer profile to determine the right price for the marketplace.
What common mistakes can be avoided when entering the DACH market?
Regulatory requirements such as the GDPR should never be underestimated. Because even if companies accept the risk of paying a fine if necessary, this likely won’t be the end of the matter.
This is because companies run the risk of ruining their reputation in the long term. This is because non-compliance is viewed so sternly that once a company has been seen to undervalue or under-prioritise it, customers will blacklist them.
Rolling out too quickly when entering the market can also backfire. Although the high speed accelerates the learning curve, the lack of market customisation is more likely to lead to acceptance problems.
Excessive speed can also lead to personnel bottlenecks more quickly, which can be perceived negatively, especially when building trust in the initial phase.
Gregor explained:
"The personal effect should never be minimised. You shouldn't rely on AI, because the aspect of commitment is only created between people."
Conclusion: What is important for GTM in DACH?
If you want to get started in the DACH market, you shouldn’t underestimate the importance of transparency in building trust with the target customer. This applies whether the topic is compliance or information on how the product or service specifically helps the target customer.
Companies that advertise lightning-fast solutions to problems and rely on an emotional appeal without providing facts and figures quickly arouse mistrust.
It’s essential to localise marketing campaigns so that they address relevant pain points and strike the right note.
A local customer success team that impresses with expertise, fast response times and personal contact is important for long-term success.
If you then manage to position yourself as a reliable and trustworthy partner and get your foot in the door with target companies, you can expect the business relationship to last for years.
