Doing business with Germany or German-speaking countries in general can be special. Are you unsure of how to tackle the German markets? In this article, we want to ensure you understand your (future) German customers and highlight a few tricks on how to succeed in these countries.
What You Should Know About German-speaking Markets
Usually, you call all German-speaking countries in Europe the DACH region. DACH in this context stands for D = Germany (Deutschland), A = Austria and CH = Switzerland (from Latin: Confoederatio Helvetica).
If you or your company decide to do business in this region, it’s very important to understand a few basics about how German-speaking companies and the people operate.
A few facts: In terms of area, Germany extends over approx. 357,000 square kilometers, followed by Austria (84,000) and Switzerland in last place (41,000).
Concerning population distribution, Germany is also leading with about 83 million people living in the Federal Republic. Austria has 8.8 million inhabitants, while Switzerland follows with 8.5 million. Although COVID19 had an impact on all three countries, their economies are among the strongest in Europe.
Being one of Europe’s driving economic forces, it might be clever to start reaching out to Germany first. Its economy represents 4.54 % of the global economy and alongside the UK and France, Germany is the main player in the European market. Furthermore, it is the biggest country in terms of area and population as we’ve already seen.
Small and medium-sized companies (called “Mittelstand” in Germany) make up most of Germany’s economic system. A lot of business used to be done on-site or locally, which made customers relationships very personal.
Usually, a “Mittelstand” company employs between 10 and 500 people with an annual turnover of more or less €50 million. Estimations say there are about 3.7 million Mittelstand-companies in Germany that produce around about 35 to 45 % of the gross domestic product. Many Mittelstand companies have their focus on professional services, industry, transport, manufacturing, commerce and skilled trades. Furthermore, many are located in service industries such as technology, construction, retailing and the hotel and restaurant business.
Mittelstand? What’s that? Here’s an example:
Founded in 1761, Faber-Castell is one of the oldest industrial companies in the world. It is still a family-owned business – across 8 generations! Faber-Castell is one of the world's leading manufacturers of high-quality products for writing, painting and creative design, which built the brand’s excellent global reputation. The company produces more than 2 billion lead and colored pencils per year.
Another aspect you might find interesting: The VAT rate in Germany is 19% (reduced rate to 7% on certain goods or products ). It can be lower in your country, go check it out! It’s 20% in the UK for example. If you want to use the lower VAT rate to your benefit, you’re able to register voluntarily for VAT in Germany!
The biggest difference between Switzerland and the other two DACH countries is that they're neither part of the EU nor the European Economic Area. Still, Switzerland continues to build up a strong economy, earning their place in the European market.
Being a country with four official languages (German, French, Italian and Romansh), Switzerland is used to international exchanges. In many sources, you will find that business culture in Switzerland is rather strict, formal and conservative. Swiss people are said to be polite and straight-forward, which makes them ideal business partners.
Most people in Switzerland work in the service sector, which made up 76.5% of the Swiss economy in 2018. This number is followed by the remaining 15% who work in the manufacturing and production industries .
Austria also has also a very strong economy – among the EU as well as worldwide. It is ranked as the 23rd richest country by the World Bank GDP per capita rankings. Regarding import and export regulations – the DACH area is very connected in their trade as well. Austria imports most of it goods from Germany, with Italy in second place, followed by China, Switzerland and the Czech Republic.
The strongest sector in Austria is food and luxury commodities, followed by mechanical engineering and steel construction. One-fourth of the jobs in the country are located in Vienna. The capital also produces almost one-third of the gross national product.
Most Austrian people work in the service sector, while much less have a job in manufacturing. Only a small percentage works in argriculture (see image). The most significant industries in Austria include construction, automotive, food, tourism, steel and many more.
Traditional Businesses & Start-Ups in DACH You Should Know
As we’ve noted in the previous sections, Germans and people from Austria or Switzerland are in favor of precision and perfection. If they can improve something – a process, a product or alike – it's of interest to them.
Still, Germany for example is a little stuck in tradition. Although many industries have been modernized, many struggled to move to technology-driven solutions during the pandemic. Working from home was possible for many, yet not that common.
Also, the startup scene is very active in Germany and DACH with coverage on national TV shows like “Die Höhle der Löwen” (the German version of “Shark Tank” or “Dragon’s Den”). However, certain sectors did not really grow as much as you might think. Let’s take look at some industries to show you what we mean.
Example 1: Traditional Industries
Rather traditional industries in the DACH region are, for example, engineering businesses or the automotive sector. Furthermore, transportation, retail and logistics are considered more conservative. Even if you might not define yourself as “conservative” or “traditional”, keep in mind that some of the most succesul companies in Germany belong to these industries.
In Switzerland, many big players take part in the commodity trade (e.g. Glencore International, Vitol, Trafigura, Cargill International). Other successful Swiss companies have their business in chemistry and food (e.g. Roche, Novartis). Industries in Austria that follow a more conservative path can be found in the bank and insurance sector (e.g. Erste Group, Raiffeisen Bank, Bawag Group, Vienna Insurance).
Example 2: Startups
In contrast to the old-fashioned ways and traditional companies, startups are flourishing in the DACH region! Even though these new businesses vary concerning the sectors they operate in, they have one thing in common: They are innovative and use modern technology.
We collected some German-speaking startups you should remember:
N26: The Berlin-based online banking app makes it possible for their customers to use their bank account via their smartphone. Its current worth is currently estimated at over three billion euros. The founders Valentin Stalf and Maximilian Tayenthal are from Vienna though.
Nyris: Nyris works with Artificial Intelligence to recognize and interpret colors, patterns and shapes on a smartphone picture. The Dusseldorf based company lists Daimler, Metro and Lufthansa as their customers and also convinced Microsoft and Google to work with them.
Zeitgold: Zeitgold is an innovative FinTech startup from Berlin that specializes in automating the accounting processes of small businesses! They now offer their clients a digital all-round solution. Axa, Deutsche Bank and many more have already invested in this startup.
Wingtra: Wingtra develops vertical takeoff and landing (VTOL) drones for surveying purposes. The company’s drones are used in over 70 countries on all continents. Industries such as mining, construction, research, agriculture, urban and regional planning benefit from their solution.
Cutiss: This life sciences startup produces large areas of customized human skin grafts. Cutiss’ product called denovoSkin™ is a safe, effective and accessible therapy for children and adults suffering from large-scale burns or scalds. These human skin grafts are expected to leave minimal scarring after surgery.
Piavita: Founded in 2016 the Med Tech startup aims to develop digital solutions that transform veterinary medicine. Piavita combines sensors, Big Data and AI to create a platform for remote monitoring of sick and convalescent horses. They use a hardware-assisted software solution for a completely non-invasive approach to monitor vital signs.
Sphock: Sphock is a flea market app developed in Vienna in 2012. Users can post items free of charge and sell them according to their own price expectations. After three years, Sphock quickly grew to several million members and the startup was able to hire 45 employees. In 2015, the company was valued at 200 million euros.
Bitpanda: In 2014, Bitpanda was developed in Vienna as a trading platform for beginners. Low trading costs and simple learning academy for complete beginners convinced their customers. Currently, more than one million active users are active are registered. In the future, the Vienna-based startup plans to add more currencies to acquire even more users.
Runtastic: With its breakthrough in 2011, half of Runtastic was bought by the then Axel Springer AG for 22 million euros. The expansion to the USA, Asia and Brazil followed as a next step. This success attracted sporting goods manufacturer adidas, which acquired the entire startup for 220 million. Today, Runtastic is part of the adidas app.
Did you know...
...that Germany is the UK's largest European trading partner?
Germany accounted for 13.4% of UK goods imports and 10.7% of goods exports in Q1 2020. According to the data from the Office of National Statistics, Germany sold more cars to the UK than any other country (in 2019) [George Farthing 2020]
Cultural Do’s and Don’ts When Doing Business with DACH Companies
In terms of quality, punctuality, dress code, and business behavior, Austria, Germany and Switzerland are very similar. Doing business with German-speaking partners means being a little more traditional and sometimes a bit more conservative, depending on the company and the industry, of course.
With some companies – mainly start-ups – the business attitude can vary. Young entrepreneurs in DACH as well as all over the planet develop their own sense of “doing business”, which can shift the traditional ways.
Still, we want to give you some general business basics that can be applied to the majority of companies in DACH. You will definitely recognize differences in the following areas:
- Small Talk
- Dress Code
First of all: Private life and business are usually separated in traditional business in DACH! Although it might get a little more relaxed here and there, the majority of people will not be talking about private topics in the workplace straight away.
So, what are topics you can talk about with your German-speaking business partners without seeming rude? Food or sports are always a safe option if you want to chitchat about something funny yet polite. You should usually try not to get too personal when you first meet someone.
When it comes to greeting a person, it is very common to shake hands (at least in times before COVID...). After a meeting or at a trade fair, you can exchange business cards. Furthermore, it is not common to bring gifts when meeting a business partner – that's typically only done during the Holiday Season (Christmas mostly) or between close colleagues.
What else do you need to consider then if you think about doing business with DACH companies?
First of all: Be punctual and professional! In Germany, Austria and Switzerland it is considered very disrespectful to show up late. Have you ever wondered why there are so many Swiss watch brands? Well, now you know. Make sure you arrive on time or even a little bit earlier!
FYI: Remember to say your first and last name when calling someone in DACH! They want to know who is calling them! Additionally, it is not very common to call someone by his/her first name. Refer to them as “Mr Schmidt or Mrs Meyer”. Swiss people are even more picky with language and will be more likely to say “Auf Wiedersehen” (= Goodbye) and “Guten Tag” (= Good day). In Germany, a “Hello” is usually absolutely fine.
Professionalism is another point you should keep in mind. Dress accordingly whenever you meet with business partners from the DACH region. Another aspect where German-speaking companies stay professional is during negotiations and decision-making. When getting down to business, focus on your topic, discuss the pros and cons (don’t withhold information!) and keep an open body language. This is not the time for jokes or sarcasm – your DACH partners could severely misunderstand this!
However, this all boils down to respecting culture, keep in mind that non-traditional approaches may also generate unexpected outcomes.
First Steps for Your B2B Success in DACH
Yes, it might be true that German-speaking business partners are more likely to be skeptical in contrast to business partners from the US for example. Still, they will be interested if you point out their apparent need for your product.
As we’ve already seen, there are more traditional businesses as well as innovative young startups. It all depends on your product or service, which companies you can address and how you do it. Cultural aspects play a role – but the spirit of the company you want to speak to is equally, if not, more important, if you want to close a deal.
If you want to make sure, your team does not make hideous mistakes while calling businesses in Germany, here are some key rules you can stick to:
1. Give your team “culture classes”
What worked in school, will surely help at work. If you’re not 100% sure how to tackle the Germans, get help from experts. There are a bunch of webinars or trainers, who will gladly assist you to build your offer for DACH. Don’t be afraid to ask for help and try new things!
Even asking your community on social media can be of great help on this topic. In a post, you can transparently ask what you want to know about businesses in a certain country – and your community will deliver tips and tricks as well as some contacts that will help you succeed in the long run.
2. Don’t get too personal at the beginning
Maybe you’ve already seen the person you want to call on social media and know that she is a mother of two girls. Usually, that would be your “light” topic to chat about in the beginning. Many German-speaking customers or prospects could find it weird though if you ask them about private things in a first call. The emphasis is on many, not ALL. If you feel a connection with the person on the phone – then go ahead! Still, as a rule of thumb: Business comes first, private topics begin after a real business connection has been established.
3. Germans are used to sales calls
No matter if you are dealing with a company from the “Mittelstand” or a small startup – Germans and people in the DACH region are used to being approached for business via phone calls. For many, cold calling is still the good, old way to sell.
That’s why many companies invest in sales trainers and courses for their sales staff: They want them to be convincing in calls – with their voice, their mindset, everything. Don’t be afraid of the “cold” Germans, they will speak to you for sure! It is common, to do one call first and check out if someone is interested in your product.
Another option for your first approach is social selling via LinkedIn or other platforms. Here it is very important to pitch your product/service efficiently and effectively. Afterwards, many people may want to have further information via email, followed by another call after some days or a week.
If you can really add value to their everyday business life, people will listen to you. Calling means authenticity and direct communication to your future customers – never forget that when you’re too afraid to call DACH companies.
4. Try to establish a connection
Yes, even though, we don’t enjoy small talk as much as UK or US business people might, we do want that connection. Engagement is the key to connection. Ensure your future DACH customers consume your content – via your blog, podcast, social media, newsletters and so on. Awaken their interest!
Invest in highly valuable content as well as ads. In the end, if you can establish yourself and your company as subject-matter experts, talking to prospects won’t be a big deal. Connect with prospects on social media, comment on their posts, write content designed for them. The connection will come as you go with the flow. Try to make it “natural”, without seeming needy.
Our Tip: It is always helpful to check out social accounts of your future business partners – they can reveal how they like to do business.
5. Quality “Made in Germany”
Make sure your product or service meets high quality standards! People from Germany, Austria or Switzerland will be very picky when it comes to quality and standards. German countries, for example, are especially proud of their “made in Germany” and will look for quality seals of approval, certificates, badges or any other kind of symbol that speaks to your reputation and can assure them they’re not buying from a low-quality brand.
GDPR: Is Cold Calling Illegal in German-Speaking Countries?
First of all: No, it is not completely illegal. Still, there are some obstacles and you cannot just randomly call a company you think might be interested in your product.
The regulations regarding data protection and security are set out in the GDPR – the General Data Protection Regulation (in German: DSGVO = Datenschutz-Grundverordnung). The GDPR is valid for all EU member states and regulates the processing of personal data. But concerning cold calls, the UWG (Act against unfair competition, in German: Gesetz gegen den unlauteren Wettbewerb) applies. Both laws must be taken into consideration before taking any steps into the German market.
Watch out for different laws in Switzerland or Austria! In Austria cold-calling is considered illegal as there is no such thing as presumed consent. Switzerland is quite similar to Germany. If you want to know more, check out this article.
You must differentiate between storing and processing data from prospects vs. calling them or contacting in any other way. The GDPR only refers to storing and processing data, while the UWG regulates contacting companies or people. The rules and regulations of paragraph 7 tell you, in what way you can get in touch with potential customers. The medium with which you contact a company is important in this matter!
Furthermore, DACH companies are usually concerned about their privacy – you won’t find a CEO’s phone number or any kind of private phone number of an employee on the company’s website.
In principle, paragraph 7, section 2 of the UWG requires consent for telephone contact, but also leaves open the possibility of "presumed consent" if we’re talking about B2B contacts. This section is ultimately what every cold call is based on.
The law requires you to understand the needs of the potential customers beforehand. You should be able to identify who profits from your product and not phone off an arbitrarily compiled list.
The strict regulations of the UWG seem to be a blessing for those receiving thousands of emails a day. But that only applies to the supposed recipient. If you work in sales, tough regulations make your everyday business even more challenging.
In general, emails of an advertising nature (e.g Marketing Automation) require the express permission of the recipient via double opt-in, which basically rules out initial contact via e-mail.
Therefore, you may have to reckon with warning letters, if you decide to go with emails. In general, the less promotional and more personal the wording of an email, the lower the risk of a warning. Do not disguise or hide the sender under any circumstances, but always include your company and contact details correctly.
Most social networks only allow you to contact another user with a personal message after they have accepted your contact request. With this request you get, so to speak, the consent to contact the user. In the request, you can usually already communicate your reason for contact, which makes it easier for the person to make a decision.
While you can expect business inquiries on business networks such as XING or LinkedIn, greater caution is required with more private providers such as Facebook. Unless the person concerned also operates a profile on such a platform that is clearly marked as commercial, with the possibility of contact.
If you write actual letters to potential customers, there is no privacy breach! Only if they have attached a sign such as “no advertising” on their letterbox!
As a rule of thumb, you can say:
- B2C cold calling/mailing/texting is NOT allowed unless the person has given his/her permission.
- B2B cold calling is allowed when you assume your product or service is relevant and of legitimate interest to the potential customer
How Can You Identify Presumed Consent?
You have to ask yourself beforehand where your product might be helpful and who benefits from it! And this is how you prove “presumed consent”:
Document your decision to contact a certain company or person based on the product and therefore the demand of your potential customer. Doing so, you can choose a suitable person to contact in the targeted company, choose a beneficial use-case and last but not least: look for trigger events that signal a potential need at the company to make your outreach relevant.
Ask yourself: Is my product/service particularly suitable for certain industries?
- e.g. present agricultural vehicles to farmers
Certain Times & Dates
Ask yourself: Is my product/service something that companies use at regular intervals?
- e.g. tax consultants for the preparation of annual financial statements
Certain People & Positions or Departments
Ask yourself: Is my product/service only used by certain groups of people?
- e.g. software tools for personnel administration advertised to HR employees
Ask yourself: Is my product/service demanded on certain occasions?
- e.g. call for tenders or business signals
Social Media also gives you hints if someone is looking for new business contacts and interesting products. If you see someone commenting or posting about a problem you have a solution for, take a picture as proof! Or maybe you can see that they are already using a similar product or you have a mutual business partner.
FYI: Whatsapp is not considered a good medium to contact someone in the DACH market. The App is mainly used for private contacts, so it could be considered very odd if you reached out to someone in this way!
In general, you can say: If someone has ordered something from you in the past or established a reasonable relationship, e.g., had a quote calculated, chances are good that there is a legitimate interest for further processing of the data.
How to Successfully Call DACH Companies
There is one buzzword we want to throw at you straight ahead: Telephone calls! (Okay, it’s two words, sorry). It’s the easiest way to make contact, get direct feedback, make quick decisions and get to know someone’s personality – so efficient!
Jokes aside, Austrians, Germans and Swiss people need security, trust and quality. DACH companies might feel alarmed when they see foreign phone numbers! It might be better to setup a VoIP phone number that looks like you’re calling from the country you’re targeting. Your call-to-connect rates will improves.
As a matter of fact, German-speaking business contacts are usually very polite – they won’t just hang up, when they notice you’re a sales rep. They will still try to help you as much as they can. Still, the “send me an email” is often the code for “not interested” in DACH as well.
Another thing: Phone numbers starting like this: +4915x, +4916x, +4917x show you that someone is calling you from a mobile phone in Germany.
FYI: Phone Area Codes & Internet Abbreviation
Area code Germany: +49 /.de
Area code Switzerland: +41 /.ch
Area code Austria: +43 /.at
Time Zone: Central European Time/Mitteleuropäische Zeit (CET/MEZ)
Let’s talk about a few cold-calling techniques you need to consider to sell successfully over the phone. Here are some tips inspired by Jordan Platten:
1) Overcome your fear
Yep, phone calls especially when you are trying to sell something can be pretty intimidating! But always remember: What could possibly go wrong? They could say “no”. And that’s it. Rejection is a natural part of cold-calling or selling in general and something you will get used to.
If you want, you can write down all the potential objections you’re afraid the person on the phone might say. Afterwards, think about an answer. Visualizing your fears makes them less intimidating and you’ll feel prepared!
2) Get confident
Once you feel prepared, you’ll feel confident about calling someone. Make sure, you know your product and get some coaching on your voice in advance if you like – then you’ll have nothing to lose. All you get, is more experience on how people react to you and your product. You will fail, but that’s normal and absolutely fine. Learn to embrace your mistakes and bad calls; it’ll make you even more confident.
3) Prepare your calls
Get information about the business and the person you are going to call. Social media is always a good idea to consult in advance! Do your research! Make sure your lead generation process gives as much information as possible on a prospect. It will make your calls a lot easier.
Doing the call make sure you’ll have the environment that suits you best. Maybe you need a quiet room, a hands-free (try to get a headset!) set-up and breaks to get fresh air.
4) Think about a sales script
With a script, we don’t mean a sheet of paper that you can read off. It’s more about a framework for your call. A script will help you understand the psychology behind every sentence, the goals and the emotions you want to trigger in the other person. Your script should therefore include an introduction, your product pitch and the reason of your call.
5) Don’t put too much pressure on your first call
Please stop thinking you HAVE TO close a deal on your first call or your first outreach to a prospect. People love to buy, but they don’t like to be sold, which is why you need patience. Stay interested in their problems and goals, so you have a reason to call them again.
But enough about writing, how about having a look at a typical cold-call?
Do You Need to Speak German to Close Deals?
In order to be successful in the German-speaking business world, you have to master the language barrier as well. Yes, we know, this seems tough, but it’s necessary. Try to be respectful for their culture and make customers feel comfortable. Unfortunately, most of them don’t feel comfortable speaking English.
Lost in Translation? This is how you politely ask to switch to English: “Können wir bitte Englisch sprechen? Mein Deutsch ist nicht so gut” (= Could we please speak in English? My German is not that good)
On average, 34% of German natives speak fluent English. Employees and managers in the business environment must know English, you think? Well...a study found out that about 65.5% of people in the business environment have little or no knowledge of English. Of course, top managers or heads of certain departments are on average more proficient than employees, but still – it's an important factor.
The question remains: What are your options? Will you hope to call people who feel comfortable with English? Will you hire someone with knowledge of German? Or a native speaker?
We highly recommend the last suggestion. Why? Well, you do not only get someone who’s fluent in the target language, but also someone who grew up in the country you’re targeting. It’s the same vice-versa: If an Austrian sales rep calls a prospect from Australia, there will be a little culture clash in terms of customs and the way they understand business. Always keep that in mind!
Don’t forget the language gap.
Conclusion – The Rules for B2B in DACH
As we’ve seen, the DACH region is a little different. Its rules, regulations and habits differ from those in English speaking countries, but that’s not what should keep you from exploring these markets!
There is a lot of potential, no matter what your product or service is! Your target audience is busy in the automotive or retail business? There are plenty of big fish in Germany, Austria and Switzerland! Or you might prefer young, fresh minds as partners for your tech-products? A lot of high-end startups with great potential are waiting for you!
Make sure, you get enough insights on the GDPR as well as business behavior in DACH. Invest in training and coaching and don’t hesitate to hire qualified people as sales or account managers – otherwise your product might never reach European customers due to the lack of understanding. Yes, Switzerland, Austria and Germany might be a little more traditional, but still good business partners with a great sense for quality. Give it a try!
Checklist: Are You Ready to Expand to DACH?
Not sure whether you're ready to expand to DACH? Our checklist will give you all the answers!
Any questions regarding your expansion to DACH? Our DACH experts
will be glad to help you!