How To Successfully Expand Into Germany
A veteran Country Manager’s comprehensive handbook.
“What do I need to know in order to launch my start-up in Germany?”, “Do I need to open an office in Berlin?”, “Should I hire a country manager?”. I have been asked all these questions and many more countless times by entrepreneurs. With a population 80-million strong, the largest GDP of the Eurozone and a thriving network of blue chips, SMEs and tech companies, Germany is certainly the most attractive market in the EU. However, for many foreign start-ups, entering the market has been proven to be notoriously difficult.
As Country Manager Germany, Switzerland, and Austria at Trainline, Europe’s leading independent app for rail & bus, I had the opportunity to experience first-hand what it takes to start from scratch and successfully grow sales into the millions in Germany.
This post is a collection of actionable advice and tips I pieced together over the years. It will help you prepare, launch and sustainably grow in Germany while avoiding many common pitfalls. It’s relevant for founders, country managers, business developers or really anybody looking into launching in Germany. Auf geht’s!
1) Hire a native speaker
When preparing a German launch, it is tempting to ask somebody from your team that happens to be more or less fluent to take over: translating the product, drafting press releases, answering the first customer requests, talking to potential local partners… While this might feel like a sound and relatively cheap short-term plan, it will create growth debt. You will eventually have to pay it back, with interest.
The very foundation of a successful launch is to hire a native speaker with a deep understanding of the culture, the dynamics that power your industry and who knows how to hustle. Depending on your organizational structure, this can be a country manager or a business development manager. In my experience, country managers generally have more impact they essentially help start-ups to shift their scope from its home market to international expansion. We’ll get back to this later.
Hiring a country manager can be tricky as profiles are scarce, especially if you don’t want to open an office in Germany right away. A good way to find interesting profiles is to tap your local German communities and attend their events. Otherwise, LinkedIn is certainly the fastest way to source good profiles. As for all scarce profiles, chances are big that your top candidate already has a job, so budget that in when you plan for the position.
2) Localize your product
One of the first tasks of your newly-hired country manager will be to localize the product. Localizing is not limited to translating, it’s the full process of adapting a product to a new market.
Translations: German is notoriously hard to learn and pronunciation can be a tongue-breaker. With incredibly long words and idiosyncratic sentence structure, the product needs to be designed flexibly to accommodate these specificities.
The following sentence (or string) illustrates why:
“Han Solo sent a purchase request expiring on the 03.04.2019 at 09:23”
If we look under the hood, how does this translate into code? You basically have two options: flexible or concatenated strings.
Flexible string: {requesterName} sent a purchase request expiring on the <b>%A %d %B at %H:%M</b>.
Concatenated string: ui.requesterName + ui.purchaseRequest + ui.expiryTime
With the flexible string, translators will easily be able to change the order in the sentence and adapt it to German (or other languages). Concatenated strings offer little to no flexibility and make changes very difficult, especially when the same strings are used in various parts of the product. You don’t want to maintain a product that has 20+ languages and concatenated strings.
If we go back to our example, the German translation would look something like the one below. Notice how, unlike in the English version, there is text after the %Hh%M variable.
{requesterName} hat eine Kaufanfrage die vor <b>%A %d %B um %Hh%M</b> bestätigt werden muss
Keep in mind that translations change continuously as you ship new code, so there will be no shortage of work. I strongly suggest doing this part in-house in order to deliver high-quality work and have a common tone of voice across all your languages. I will touch on this topic a bit later in the post.
Formats & Typography:
- Time: hh:mm (e.g. 20:10)
- Currency: either “xx €” or “xx EUR”, notice the space between the price and currency symbol.
- Quotation Marks: „This is a german quote“
- Date format: dd.mm.yy. If you want to add a day, write it either in full or using the first two letters.
There are many libraries (like ICU4U) that allow you to implement date formatting at scale.
Tone of Voice: In order to strike a balance between sympathy and formalism, I suggest using addressing clients with “Sie” while using their first name.
Hallo Ralf, vielen Dank für Ihre Nachricht.
Hi Ralf, Thank you for your message.
It is better to avoid both “du” or a more formal “Frau/Herr Lastname”.
Privacy & Compliance: German customers are known to be extremely cautious when it comes to their personal information. Before sharing anything with you, they will (rightfully) check if you have put the mandatory safeguards in place:
- Impressum: can be translated as legal information and is a mandatory page that contains information about your company (name, address, phone number, etc), or Anbieterkennzeichnungspflichten as we like to call it in German. If you don’t have one while operating in Germany, you risk a fine of up to 50.000€. Trust me, there are people that will screen your site looking for these kinds of loopholes.
- Privacy policy / T&Cs: Not a German specificity per se, but both have to be translated.
- Abmahnungen: A common practice among disgruntled German customers is to threaten businesses by sending warning letters, or Abmahnungen, to regulators, consumer protection agencies, banks or really any authority. Don’t take these lightly, make sure you are not in breach and answer politely to cool things down.
Payments: One of the biggest misconceptions about Germany is payments: cash is still king. I stopped counting the restaurants that still refuse to take credit card payments, especially in trendy Berlin. The reason behind this behavior is up for debate, but a popular theory suggests that it finds its roots in the Weimar Republic hyperinflation crisis. Don’t run the risk, always bring cash when visiting.
When shopping online, German customers are also a world on their own. Names like SEPA DD, SOFORT, Giropay may be unknown abroad, but they are common in Germany. Apart from credit cards, which ones do you need?
- Paypal: Became hugely popular in the early 2000s, largely by piggybacking on Ebay’s stellar success in Germany. It still makes up a decent chunk (approximately 15%) of German online transactions. Must have.
- Sofort/Giropay/Paydirekt: Bank transfers that are integrated into the product via a Webview, clients are redirected to their banks Sofort/Giropay/Paydirekt page. Cheaper than Paypal for the merchant, popular with clients, they also have relatively low chargeback/fraud rates. Don’t bother adding all of them, one is enough. Paydirekt seems to become stronger these days as they have all the data from Sparkassen (local bank networks). Must have.
- On Account: Clients pay after they’ve received their goods. Only relevant for physical delivery, and hugely popular. Must have (for physical goods).
- Sepa DD (or Lastschrift): A mandate that allows merchants to collect payments in EUR. Chargebacks up to 13 months (you read that correctly). Popular with the more senior clients, its market share is slowly declining. Avoid.
- Vorkasse: Clients purchase products and have x days (usually 7) to transfer the monies. Goods are sent out after payment is received. Same as on account. Avoid.
- There is a long tail of other payment methods, but they are not relevant/necessary. A good proxy is to check what your local competition offers and try to match it. Work with a global PSP (Adyen, Stripe) right away in order to easily enable these payment methods.
FAQ: In order to quickly get off the ground, translate and adapt the top 10 most viewed articles of your existing FAQs. Be concise, add GIF ’s where possible (Giphy Capture does this beautifully), and build out the pages as you gather additional customer feedback.
Trust: When browsing German websites, you will often see a fleet of badges, labels or certifications proudly displayed. Extremely popular with merchants, they can be divided into two categories:
- Review collectors: Players like Ekomi and Trusted Shops allow merchants to collect feedback from their clients and compute an average score which will is visible on their website. They also certify businesses during a (very) short verification. I see two benefits: you can add a widget to your website in order to highlight good reviews, and your grade stars can be added as a SERP to both Google search results and ads. Search results/ads with stars generally get more clicks as they take up more space/attract eyeballs. Product integration is pretty straightforward. Works in all languages so definitely worth considering.
- Certification Services: TÜV (Technischer Überwachungsverein) is a household name in Germany, and popular with high-tech industries like mechanical engineering. These companies inspect your processes, make on-site visits and deliver badges or certification norms like ISO. They also certify online-platforms. The hefty price tag (fixed fee + yearly contribution) isn’t justified by the value that you get as an online business. You can safely pass on that one.
Talk to your customers
While you are actively localizing your product, it is key to gather as much client feedback as possible. How? By doing customer support!
When I joined Trainline (at times Captain Train), we didn’t yet have dedicated german customer support. One of my first tasks was to find somebody competent for the job. As explained above, finding native speakers abroad (Paris in this case) can be challenging, so I spent 5 months doing a big chunk of the German customer support alone.
It was, without a doubt, the most useful crash course I ever took! Every day, customers would send us suggestions, issues, complaints. I spent a lot of time engaging with them, asking about their expectations, how we could improve the product, what they liked about our competition. I was basically doing customer research at no extra cost while taking care of customers. This is also a great way to secure positive reviews from happy customers in the App Stores, don’t be shy to ask!
Running a one-man show in customer support while trying to launch a new country is obviously not sustainable ad infinitum. Make sure to start a hiring process for the customer support team as soon as possible, and bring in the right people before you cannot take care of it yourself anymore. Hire an ace writer with impeccable grammatical skills as the first team member, as he/she needs to set a high standard for the future German customer support team.
3) Evangelize your company
As a head of an emerging market, your country will not be the priority, at least not in the early days of your efforts - and that’s ok. Hence, it’s paramount that you become an evangelist for your market. Most importantly, you need to educate your co-workers about Germany. Once you feel comfortable in your job and have understood the market, set up a company-wide presentation.
These are the topics that you should cover:
- General facts about Germany (political system, economic drivers, our awesome national football team).
- Online market.
- Your market (go deep on this one).
- Competitive landscape.
- Where you stand today in Germany (talk about the journey, the team).
- Your strategy for winning in the market.
- Next big steps.
Next, make sure new-joiners also get this information. We have a very strong training culture for new hires at Captain Train: over their first few weeks, new hires were taken through the intricacies and specificities of the rail market, mostly focusing on France. By adding a Germany-specific session (and later extending is to DACH), I made sure everybody would be up to speed as soon as they are onboard.
These steps will allow you to shift to organization attention to your market and ease your job on everything else ranging from product to marketing.
4) Enter the market
A step-by-step guide on launching your product in Germany.
Phase 1: Learn.
- Start in the HQ and get deeply acquainted with your team, the product, the company culture and build internal relationships
- There are big chances that literally nobody knows you in Germany - you will start from square one. Learn about your market by reading all you can, talk to your peers in other start-ups and start evangelizing internally. Once you feel confident that you have a good picture, do the company-wide presentation that we talked about earlier.
Work on your marketing mix by starting with performance marketing.
- SEO: The sooner you start increasing your domain authority and keyword coverage the better, pay off will be asynchronous. Screen your competitor's websites for keywords (Searchmetrics or Similarweb can help) and pick the 5 most promising ones. You want to hit the sweet spot between a large amount of search volume and low competition. Once you found these keywords, start producing content. Websites like Upwork can help you quickly source and test candidates.
- SEM: use the work you did for SEO and start with a few ad groups (4 is generally a good place to start/easy to measure). Again, work with freelance experts in order to quickly get basic campaigns working, write good copy and tailor the messaging. Favor freelancers that already worked in your industry, this will save you a lot of explaining.
Phase 2: Pack your things and go to Germany.
- As a true federation, Germany is decentralized — choosing an office location can be tricky. Companies, Press, Politicians, and other stakeholders are scattered all over the country. If you are a pure tech/b2c product, go to Berlin, with Munich coming as a close second. If you’re focusing on finance, Frankfurt could be a good call. Choose based on your industry, the stakeholders you want to be close to and talent.
- Rent a desk in a co-working space, attend meetups and get to know the local ecosystem. Ideally, bring the most important stakeholders of your company with you so that they can see and experience what the market looks like themselves. Leverage the rented space by organizing meetups and bring in customers for in-depth research.
- If your product is still not available in Germany, soft launch it! Do a lot of user testing. In my case, I regularly went to train stations and did on-site testing, which was extremely efficient. Also, ask them about your competitors. Go back to HQ with a shopping list of feature requests.
- Hire a PR agency that knows your industry and has a strong network. Go for big boutique agencies in order to get the best value for money (with bigger agencies, you’ll just be another small client). Having a good account manager is key, try to go for the head of the agency. Retainers are generally lower than in the UK or France, so don’t overspend. Make sure that the notice period is as short as possible in order to be able to quickly adjust if things go south.
Phase 3: Launch.
- Have your PR agency organize your launch event. Make sure the right stakeholders are invited (journalists, influencers, other relevant start-ups, and early clients). Invite your CEO and other key people from your organization. During the event, put the product in the hands of everybody. This is far more likely to net you coverage than just talking about it.
- Make sure to become a fixture in the local start-up scene by holding regular talks, meetups and giving talks. Your PR agency can support you on this, but most opportunities will come from your own network.
- Partnerships can be great a way to generate interest without spending a dime. However, they are time-consuming and don’t scale. If you want to go down this path, focus on ones that can move the needle and forget about smaller ones.
Phase 4: Ramp up.
- If you start to see some traction, start building your team out, starting with customer support and marketing. Push for a country-driven product organization — having a dedicated product manager and tech resources will simplify your life a lot.
- You also might want to consider opening a local office. Since it will be extremely complex to hire top-notch talent at scale abroad, you might as well jump the gun now and move to Germany. Again, renting desks in a co-working can be a quick and relatively cheap way to start.
- Setting up a German company might also become a topic. I know as a fact that in industries where politics play a large part, stakeholders prefer dealing with local companies than foreign ones, so don’t discount this option too quickly. It might also be required if you plan to become something like a certified travel agency.
- If you want to up your marketing game, you might consider new offline channels. Outdoor advertising: Germany has 15 cities with over 500.000 inhabitants. If you want to generate real awareness, you will need to have deep pockets. As performance cannot be tracked, consider this as a branding initiative. TV could also be an option: ads are more expensive than in France or Italy. Media agencies generally offer a mix of top-notch slots and cable channels. An interesting and cheaper alternative can be to sponsor a popular show that is related to your business.
Bonus: Austria and Switzerland
As you expand your start-up across other territories, you might start looking at other German-speaking countries, and more specifically Austria and Switzerland. The good news is that after having properly done Germany, you won’t need a ton of country-specific initiatives before launching in these markets! Hence, becoming country manager DACH is the logical move.
- Austria: Strategically located between central and eastern Europe, Austria is a market that you don’t want to pass on. The cost of adapting your product for it will be low as purchasing habits are close to what can be found in Germany. Good news is that most users have credit cards, so you won’t need any country-specific payment methods.
- Switzerland: With one of the highest GDP-per-capita in the world, Switzerland is an extremely attractive market. One of the challenges is that it has three official languages — Italian, French, and German. While the latter is the most spoken, you will need all three of them to properly address local customers. Be very careful when adapting your copy, there are a lot of country-specific expressions and words. For example, Swiss don’t talk about Bahntickets (train tickets) but Billette. Make sure you get these right by screening what your local competition does. You also might want to look into postfinance, a local bank transfer payment method.
Closing thoughts
As with all start-up advice, the best is to always take things with a grain of salt — this is my personal experience, not a handbook that will work in every context and for every start-up. I worked mainly on launching B2C e-commerce startups, it could be completely different for B2B companies. Do your own experiments, innovate and don’t be shy to ask for advice along the way!
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