German Chickens and Eggs: Adapting Global Strategies in the German Market

8 October 2003— With the regional economy still flat, opportunities for growth in IT services in Germany remain few and far between, according to participants at ITSMA Europe's late September marketing roundtable in Frankfurt. Amid the search for new sources of growth and profitability, marketers and sales professionals in Germany are wrestling with a host of difficult issues surrounding channel and partner strategies, sales competence, and marketing investment.

Most roundtable participants represented global companies and so were working with globally-driven segmentation or go-to-market strategies focused on specific industry sectors in the German region. At a country level, the global messages are often too bland to interest buyers. As a result, sales and marketing teams use key account management and relationship marketing initiatives to ensure that top clients and prospects receive sufficiently tailored messages around their local business issues. This approach can lead to controversy over the relative roles of sales and marketing personnel at an account level. But it also means that marketing must be much more commercially focused, staying close to the service business managers and working with sales to deliver the pipeline required to achieve growth.

While the top 100 accounts are typically the province of the direct marketing and sales teams, companies often leave the mid-sized and smaller companies within the region to channel partners. The problem is that client satisfaction often becomes an issue, and the complexities of working through local partners to ensure delivery of consistent and differentiated service is a particular challenge.

Roundtable participants readily acknowledged that getting local partners and channel members fully on board takes time and can be difficult. One firm that has managed this task well is SAP, which has a clear value proposition built for both clients and partners. No doubt that SAP's mandate to leave 90% of implementation and other services revenue to partners makes it much easier to get partners on board! Nevertheless, the lesson of having a clear value proposition for both clients and partners remains valid.

For local marketers, deciding on the key messages to broadcast to German buyers and influencers has been quite difficult. While marketing budgets have been reduced, confused and overly complex marketing messages have appeared as companies try to throw all their key go-to-market messaging into one single campaign, leaving buyers confused or simply switched off. Agreeing upon a successful hierarchy of value propositions, moving from the overriding brand proposition down to single account or service propositions is the key challenge, along with using the right media to communicate each one.

With enterprise resource planning (ERP) projects now running at an estimated success rate of only 30-35% in Germany, it is no wonder that buyers are increasingly sceptical about perceived value of new technology investments. This situation has greatly affected profitability and the deals in general. Not only are buyers asking for heavy discounts and selecting low-cost providers in preference to longstanding suppliers or those with recognised brands—clients are using break clauses in long-term deals to re-contract, leaving suppliers unable to make any profit from their projects.

Within such a difficult market, it is perhaps not surprising that many salespeople, especially those moving from a traditionally technical- and product-focused role into a services or solutions selling world, are finding it tough. Many simply still don’t have the skills to engage senior executives from a client organisation in dialogue focused on solving their business issues. Further, while marketing can provide tools such as targeted value propositions and return on investment calculators, and even training on client issues and the company’s solutions, as long as sales incentives are still built around product sales—even at the country manager level—the other initiatives will not work.

Perhaps the most difficult issue in Germany today lies in a chicken-and-egg type dilemma. Until the local sales and marketing teams have generated sufficient demand to justify carrying delivery expertise (and overhead) at the local level, they have to sell with the fear that their promises cannot actually be delivered. For many salespeople, this means putting their own personal reputations on the line as well as the reputations of their companies. At the same time, no company in today’s climate will risk building delivery capability in a region before there is enough demand to cover costs.

Ultimately, according to roundtable participants, the biggest challenge is focus: creating and increasing focus on the most important opportunities and on communicating value to those you most need to influence internally and externally.

—Bev Burgess, info@itsma.com

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ITSMA specializes in helping companies market and sell services and solutions more effectively. As a membership organization, we provide research, consulting, and training to the world's leading technology, communications, and professional services providers to generate increased demand, strengthen customer relationships, and improve brand differentiation. ITSMA is based near Boston, and has offices in London and Tokyo. Learn more at www.itsma.com.