Ziv Navoth: Expanding your business in Europe represents a great opportunity—if you do it right. All it takes is learning from the mistakes of others and avoiding these seven deadly sins:
1. Assume that "Europe" is one market with one strategy to fit
"Do y’all speak European over there?" No, this isn’t a joke – it’s an actual, honest question one of my clients was asked during a teleconference with her US peers. Granted this sort of ignorance is rare, Americans often assume Europe is just one big country. Nothing could be further from the truth.
Europe has no less than 49 countries, with 25 of them making up the European Union. Each country has its own language, its own culture and, you guessed it, its own way of doing business. Do commonalities exist? Of course. But you’re better off not making assumptions. Listen to the local market first and then decide whether your strategy needs to be localized or not.
2. Use American case studies to win European customers
Ask any marketing manager and they’ll tell you that a publicly referenceable customer is worth their weight in gold. European markets give as much weight to a customer case study as American companies do. As long as they know the customer, that is.
“It makes no sense to issue a UK press release about a deal you just closed with Wells Fargo or Target,” claims Federica Monsone of A3 Communications, a UK-based firm who handles PR for numerous US companies. “These names simply don’t mean anything to local decision makers.”
Are they irrelevant? Certainly not. Any large customer win is a confirmation that your company is heading in the right direction. But if you really want to make inroads into Europe, find local customers who are happy to publicise the deal they signed with you, even if it means giving them additional concessions in a negotiation.
3. Equate life/work balance with laziness
Europeans are famous (or infamous, depending on which side of the Atlantic you are) for balancing life and work. Though no one has proven that this balance results in lower productivity, many American companies still find it hard to understand why there’s no one in the Italian office at 6pm on a Tuesday evening or why the Madrid office takes off two hours for lunch. The easiest explanation American companies often come up with is that Europeans simply don’t work as long as their American counterparts do. While that may be true, what really counts is not how long you work, but how smart you work.
You also have to take into consideration that most Europeans like to develop a relationship with you before they jump into business. If things move slower than you’d like in the early days, it’s not because the people involved are lazy–they just want to make sure you are there for the long run.
If you want to measure how your European operation comes up against your US one, measure what comes out of the hours people spend at work, not the hours themselves.
4. Chuck the Channel
While the European market can present them with significant revenue opportunities, few US companies can afford to sell directly in Europe. The time and costs involved in setting up a direct sales organisation are prohibitive and finding the experienced talent takes time. So it’s no wonder that most US companies initially opt to sell their products through a network of distributors, resellers or systems integrators.
Building up a sales channel costs less and involves fewer risks than going direct. But it does require one long-term investment: building trust. Too many American companies, however, fall into the same trap: Aggressive revenue targets and short-term profit margins increase the temptation to take a deal directly, circumventing the channel altogether. When that happens, the game is often over.
“It can take a whole year to build trust, but only a second to lose it,” says Maciej Kolodziejczak, an expert on helping US tech companies expand into Eastern Europe. “Local customers trust the local channel a lot more than they trust an American company. If you let the channel invest its time and money to educate the market, only to take the good deals directly, you’ll be left without a channel and without a market…”.
5. Mistake folklore for facts
“You can’t fire people in France”
“Germans don’t like to use credit cards”
“The British aren’t entrepreneurial”
Most American executives hear these comments frequently as they expand into Europe. But how do you know whether a statement is a real representation of local challenges, or simply an excuse? How can you tell the difference between fact and folklore?
The simple answer is that, well, there is no simple answer. French labour laws are still rigid, many Germans do prefer to pay cash, and in the past, starting up a business in the UK was a real challenge. The key to finding out whether something is a global excuse or a local challenge is to seek multiple data points. Ask a colleague from another firm operating in Europe to tell you how their experience was, ask a local PR agency, speak to a local lawyer. But best of all, speak to your local team, be clear about your objectives and help them find a solution that works despite any local challenges they might come up against.
6. Hire a single agency for the whole region
The confusion and complexities involved in entering the European market might lead you to believe that you’re better off hiring a single marketing, PR or legal firm for the whole region. But more often than not, you’re better off starting with smaller, local agencies.
Why? To begin with, you’ll be working directly with the people managing the agency. Unless you’ve got a six figure PR budget, chances are you won’t get that level of attention from a pan-European agency. Going with a pan-European agency also assumes that the quality of their teams is similar across Europe. In reality, that’s rarely the case.
How do you find the best local agencies to work with? Copy from the best: Research which service providers companies like yours are using, make a list of the top five firms in each region and ask them to submit proposals on how they can help build your business. If coordinating these agencies begins to take more and more of your time, consider hiring a European marketing expert to coordinate them all. This way you can enjoy the best of all worlds – have a single point of contact in the region and work with the best local talent available.
7. Never visit, never invite
If you’re doing business in Europe you have to be ready to communicate with your people. Frequently. This doesn’t mean scheduling a four-hour conference call when it’s 9pm in London, but it does mean touching base with all of your offices on a weekly basis. More importantly, if you want your European operations to feel an integral part of the business, get on a plane and visit them.
Communication is a two way street. Invite your European team to HQ offsite meetings and listen to their feedback. Too often, Europeans are asked for their opinions and input after the strategy has already been set. Needless to say, this ends up frustrating the local team and is actually more harmful than not soliciting their opinion in the first place.
Expanding your business into Europe can be challenging, frustrating and expensive… if you don’t learn from the mistakes of others. But done correctly, entering Europe can not only boost your bottom line, it can also turn your company into a smarter, more resilient one.