US SaaS Companies: Get Your DACH Expansion Right

The Software as a Service market is currently growing by 18% each year. By the end of 2021, 99% of organisations will be using one or more SaaS solutions.

With North America accounting for over half the global Software market, it is estimated the global SaaS market is worth $272.49 billion. With fast native growth, many of these US companies embark on global growth, entering new markets in the EMEA, MENA and APAC.

Europe is the default first stop for U.S. companies for good reason: a well-run SaaS company at IPO delivers about 30 per cent of its global revenue from the region.

When choosing the first country to expand into, the UK is the obvious choice due to its language and landscape. Germany is often the next choice.

Germany has the largest population at 83.2 million, 18.6% of the total EU population. It boasts the largest consumer market in Europe, both in terms of population and purchasing power. Hundreds of US SaaS companies have successfully expanded into the region, including Coupa, Slack and Zendesk.

The mistake some companies make is using a cookie-cutter approach. They believe that their success can be repeated in different countries just as easily, using the same methods of marketing, sales and strategy. This is likely to lead to failure in the region, costing your company valuable resources and setting your growth back.

Cultural Barriers when it comes to hiring

It can be tempting to send someone from your US team to be the first person on the ground in Germany; however, localising your marketing and sales efforts is the key to success when expanding into a new region. Not only do native and local people know the markets they’re going to be working with, but they can also communicate in their language, allowing them to develop relationships faster and more successfully.  

Even the best products and solutions don’t take off on their own. Getting the first person on the ground is perhaps the most important aspect of expanding into a new region such as Germany. Senior hires, such as a VP of Sales, not only need to have extensive experience in sales but also need experience in hiring and building a team, as well as having an entrepreneurial mindset.

Your first person on the ground in any region should be from that region. Although getting the first senior hire right is critical, 46% of companies end up replacing that person within two years. Why?

Start-ups rely on curated talent networks – their ‘little black book’ of high performers who have delivered in the past. If you don’t originally hire someone from the region you’re expanding into, creating the network, and therefore growing, will take you a lot longer.

Be prepared to adapt to the culture in different countries, cities and locations from everything from recruitment to benefits.

When trying to find the right people for your new region, use an executive search firm that knows the region and has had a successful track record of hiring in the region.

Finding the right executive search firm is also essential.

Why?

1.       Adverts won’t work. Unless you have marketed in the region before, German talent is unlikely to know who you are and is, therefore, unlikely to apply for a position with you.  You need an executive search firm that can position you in the market and see your vision for growth, which they can then share with potential candidates.

2.       Your US internal recruiters are in a different time zone. Most US SaaS companies are based on the West Coast, meaning there is a 9-hour time difference between there and Germany. This will make it extremely difficult to streamline your recruitment process, meaning you could miss out on great talent.

3.       Talent in Germany is bombarded with InMail’s from external recruiters looking to build teams in the region. Unless you have already proven success in the region, you’re more likely to have increased success if you choose an executive search firm you trust and that has the network to reach out to.

Using your US-based HR team and internal recruiters is unlikely to lead to success.

Employment benefits

Getting great people on board is difficult in any country; however, understanding the benefits competitors in the region are offering and implementing them (or better ones), can position you more attractively to great talent. Whether it’s flexible working, annual bonuses or unlimited holidays your competitors are offering, you won’t get great people on board if your competitors are more attractive.

The cost of an unsuccessful expansion into any region can set a company back extensively. If you plan on expanding your SaaS company into Germany or any other region, contact Oakstone today.

• Successful record of assisting US companies to expand into Germany and the rest of EMEA

• Over 200 German roles delivered against

• German sales teams built for Tealium, Coupa, PROS Inc. and Icertis.