The German market is the biggest in Europe. On the contrary to the UK market, it is quite conservative, so you should be more careful while entering it.
Depending on your product and budget you might consider the following options:
- To sell directly from your home market
This option can be fine if your target customers are rather open-minded and your product does not require too much effort and money to test.
- To sell via a local channel partner
It can be a reseller, a reference partner, a local business development agency, or a professional with a relevant network.
- To sell via a strategic partner
Ideally, a strategic partner could complement your product with their own and offer it to their customers. In some cases, it can even be your existing customers in Germany.
- To acquire a German company with a relevant customer base
It can be a local competitor or a company with complementary products but with the same customer profile.
- To set-up your own sales office in Germany
In this option, it is advisable to send somebody from your team to Germany to act as a bridgehead. Your key people from the German office should also visit your office to understand better the culture. This is especially crucial for US-based companies expanding in Europe.
Since German landlords prefer rather long-term rents, a flexible co-working space can be more appropriate.
In any case, it is beneficial that you have somebody internally or externally who is skilled with international expansion to Germany. This person will help you with identification and negotiation with Germany-based partners and might advise on the optimal approach. Please note that it is not only about the language skills but also about the understanding of German mentality and culture. The perception of the value proposition of your product can also depend on the culture.
Ideally, if you have your products and marketing materials localized into the German language. Despite the relatively high level of English skills in Germany, Germans prefer German to English. The scope of the localization can be potentially not 100%.
To test the German market before a bigger investment, you might consider:
- To gather market intelligence at relevant local events and from relevant associations
Events held in the German language might be the most eye-opening ones. Events that provide lists of attendees and are not too big or too cheap normally are the best to short-list.
Germany is the country of associations, so expect to find several local associations in your domain.
- To perform a small lead generation campaign
This is also a good way to learn about market requirements and to do user interviews.
- To analyze your competitors active in the German market
It can be local competitors and international ones. Pay attention to how they position themselves towards the German market. Read their news section to learn about relevant events, certifications, etc.
- To learn relevant regulations for your product in Germany
Compliance is the king in Germany. You can have a great product but if you fail to get all the necessary certifications, etc., you will not be able to drive revenue growth. Local business support organizations might be helpful to understand the relevant regulations.
- To browse your existing network for expertise advice
Filter your LinkedIn connections that are based in Germany, incl. your customers, investors, peer entrepreneurs, and reach out for a piece of advice, market feedback, and references, if appropriate.
The German market requires patience (expect a longer sales cycle) but rewards with a long-term and stable revenue stream.
Should you have any questions regarding entering the German market feel free to comment on this article, and I will try to respond.
PS. At www.scaleuphero.com we help internationally-oriented companies to enter and expand in Germany and other European markets. Our special focus is tech companies but we have experience in different industries.