How to sell your SaaS in Germany
This article is meant to give you a peak into the challenges and opportunities that come with entering Europe’s biggest market. I explicitly focus on Germany, not DACH (Deutschland, Austria & Switzerland), as I have not experienced many commonalities between these markets despite of the language. Enjoy.
I. Language
Do ze Germans speak English?
Germany is not known to speak English very well — as such the ‘TH’ is almost effortlessly translated into a ‘Z’ in most cases. Nevertheless, the EF English Proficiency Index comparison reveals that Germans are actually quite sophisticated in English for a big nation with 82M inhabitants.
Your German counterpart in Sales is likely to be able to communicate in English, but will be reluctant to speak it, because it moves them into less secure territory for a negotiation. With a country of Germany’s size you can expect that there is surely a national competitor for your product (Berlin is a copy-cat capital) that would offer sales support in German.
Legal documents
Let’s assume that you do manage to convince almost every stakeholder along the way and you get to the Endgegner, legal. Chances are that internal policies will demand that all documentation is in German, which also entails that the legal back & forth will need to be done in German.
So, could I get around in English?
Tech-companies, not only Berlin but also Tech-companies in remote areas are likely to be able to speak well-enough English to enable a pitch in English. However, the German sales process is a structured and lengthy one. You will need to speak with more stakeholders than one and thus chances will increase that you’ll encounter that special someone that does not speak a word of English and managed to hide that well throughout their career. The latter will likely be the end to your sales journey.
Moral of the story
A half-hearted approach is likely to fail at one point, as Germans value the personal contact and frictionless processes, which entails speaking German.
If you want to enter the German market or even just test the market properly, you need to do it with a German-speaking sales team.
Titles & Formalities
Depending on who you are selling to and how well you know your counterpart, a certain conduct is required. Unlike in English, the German language allows to differentiate between ‘Du’ (Eng: You) and ‘Sie’ (Eng: You). The first is used in a personal setting and the latter in a professional setting or with people that you don’t know that well. Naturally, you create more polite distance between you and the buyer, which certainly feels safer when addressing a lead that you haven’t spoken to before. In most other situations, counterparts are be taken aback, when you cross the line and you are personal (You) from the get-go.
I myself use this unspoken rule to my advantage, by addressing leads with ‘Du’ directly to build up a stronger personal bond from the start.
I reduced my formal addressing solely to elderly ladies & gentlemen in conservative companies. If you are in a tech company or you are as old as me, I will address you with ‘Du’. This doesn’t seem relevant to you … at all? Well, by breaking down this first unnecessary lingual distance with my lead, I get better qualification calls, better reachability and higher closing rates.
II. Process
Germans are hard to get, but highly profitable
It is said that it is hard to make German friends, but once you have made it — you have them for a lifetime. That is a nice way of saying that they are a pain in the back to convince of your product, but are loyal in the long-run. This is especially interesting for SaaS, as most of your money is made beyond the initial contract period of a customer’s first subscription.
How hard is it to get Germans onboard?
In my experience German leads take up to 30% longer than other European leads and 80% longer than US leads to close. Also, the touch points per lead were nearly 80% higher for German leads.
This can be related back to the structured process that most purchasing managers go through in their buyer journey. A lot of time is spent in the research phase, where nearly all available options are mapped out and compared. This is either being done through online research or an request for information. The result is a very demanding and informed buyer that wants true value instead of sales fluffiness in calls. After having narrowed down the option to max. 3 parties the legal and compliance site will take over. A classic German phenomenon is the sign-off of your purchasing agreement by the works council (DE: Betriebsrat), which is a an elected board of employees that can veto and review decisions by the management. If you are pitching your product as ‘a cost-saver through automation and AI’, you will have a hard time convincing the jury that you don’t endanger employment.
In larger organisations, you will need to deal with procurement as the final villain, which is always incentivised to get a little bit off the bill. That is nothing new, however, also in smaller organisations with no procurement office, your counterpart will likely ask for a discount in the very last stage of the deal by asking ‘can you do something about the price’. I am mostly smiling and thinking to myself: “So you we have been speaking for 4 months, you have dismissed all other competition, we got the legal approval and now you want me to give you a discount?”. Needless to say that I am in a better position than the buyer in this situation, however, sometimes I like to give my prospective customer a feeling of achievement and i.e. extent a certain service on our hand that doesn’t impact our costs.
Do I need to appear in person?
Although, we have gotten to know Germany as a rather conservative market to sell to, it might be surprising to you that deals up to €50K Annual Recurring Revenue do not require a face-to-face meetings per se. This also means that your customer acquisition costs can be very low, despite the long sales cycle. If you have feet on the ground, a personal meeting surely won’t hurt, however, it is good to know that it is no deal-breaker.
III. Product requirements
“Can you fax that to me? Is your solution installed on-premise? We cannot use any other browser but Internet Explorer“ — 1998 statements heard in 2018.
German customers won’t be asking for impossible buzzword features during demos, they will rather ask for features that bridge the gap to the offline world, like printing functionalities. Although registered patent numbers are quiet high per capita, the IBM technological innovation acceptance index for Germany is very low in European comparison and on the same level as Russia in most parts.
It’s fair to say that Germany will probably make the ‘late majority’ stage in the technology adoption index. For international SaaS products that means that you can probably outgun German competition easily on feature richness, however, you’ll like get requests for features that might even seem to antiquated to be considered in your current roadmap.
What is a must-have tech requirement to do business in Germany?
It’s not so much a feature, but an architectual element of your SaaS product. Your data needs to be stored in Germany. You’ll get the question 100% of the time and half of your leads will want that data storage unit to be in Germany. I needed to understand the issue in full detail for the GDPR legislation that affects us all since May 2018, so I try to unravel why Germans care so much about their data.
Firstly, it needs to be said that the GDPR legislation was pushed for and is somewhat dictated by Germany in the European Union. It demands that all data of EU citizens is stored and handled in a compliant way, within the EU. Why does Germany care such much? One explanation could be Germany’s nightmare experiences made during the German Democratic Republic (East-Germany), which was marked by mass-surveillance by the state. This created a mistrust that lives strong in Germany, which still causes a strong opposition towards i.e. card payments (paying cash grants anonymity) or cameras on public places.
In theory, your servers could also be placed in any other European country, however, as the Germans are the only ones who seem to care about it — why not place you servers in Germany and tick that box from the start.
Do you have your servers in the US?
Good luck convincing Germans of the equally effective US-Privacy Shield. The latter has already been disallowed three times by the European Court, as it is merely a self-declaration form accepted by privately-run assessment companies.
Nils is a practitioner, not a content writer. SaaS.eu.com assists companies with European market entry through interim projects, consulting services and by building a vibrant knowledge-sharing community. Have you made different experiences in Germany or just want to chat? Send me a mail at nils@saas.eu.com.
I will continue to write about the various local particularities that you’d encounter in various European countries. Stay tuned.
