Germany Your Next Market
In recent years, Germany has become a very attractive market for numerous foreign mailers representing many industries (mail order, publishing, financial services, charities, etc.) and this is reflected by the high number of new entrants, particularly from the United States. These include Lands' End, Peruvian Connection, ELG European Lottery Guild, HCI Direct and Vartec Telecom.
So, What Makes Germany so Attractive?
Market size: With more than 38 million households and 82 million inhabitants, Germany is the largest country within Europe and has the largest market of potential buyers.
Standard of living: Without a doubt, Germans enjoy one of the highest standards of living in Europe. The average GDP per capita in 2001 was $26,200.
Direct marketing activity: Germany has a well-developed direct marketing industry. In 2001, total direct marketing expenditures reached EUR 21.2 billion (US$22.7 billion) and the largest share—EUR 7.1 billion (US$7.6 billion)—was spent on personalized direct mail.
Mailings per household: German households receive an average of two pieces of direct mail per week—a significant volume outside the United States. This number increases to three pieces for active mail-order households, and heavy users of direct mail may receive as many as five mailings or catalogs per week.
Organizations that are serious about developing Germany as a "stand-alone" market, will have the greatest chance of success if they tailor all their activities to suit the specific market situation. When planning an expansion to Germany, the following areas are worth careful consideration.
Although credit card membership has boomed in the last five years, this method of payment has yet to establish itself in many situations, including mail order. The preferred method of paying for goods and services (95 percent of all transactions) remains bank transfer (Überweisung), usually within 14 days of delivery. This method of accepting payment may be considered risky by U.S. mailers, but it is a commonly used payment option in Germany and does not generate high levels of bad debt. Credit card payment is increasingly offered, but currently only serves as an additional payment alternative.
Cash-on-delivery is another method, but predominantly is used in the low-ticket end of the market, where personal credit-worthiness could be an issue. Payment by personal check is virtually unheard of for mail-order transactions.
Choice of Suppliers
Local suppliers know the German market inside out and are therefore valuable partners for companies expanding into Germany. Suppliers experienced in working for foreign clients will be aware of potential pitfalls. A number of suppliers have established special international client teams to meet the need for local marketing expertise.
English vs. German
In many cases, it will be necessary to mail in the German language. It is too much to expect someone to order products and services in a language other than their mother tongue. A different language creates a barrier between mailer and recipient, and this is not the aim when entering a new market!
Consider working with a German direct marketing agency that will not merely translate an existing domestic market mailing or catalog, but rather highlight the adaptations necessary to make a mail piece compatible with the local market.
Lists and Data Sources
Rental lists play an important role in the majority of customer acquisition strategies, and the business-to-consumer market offers more than 2,000 lists and data sources. These are similar to lists and data sources in the United States. They include:
>mail-order buyer and prospect lists from both niche and mass market operators;
>magazine subscriber lists;
>compiled files with micro-geographical data on a cluster basis with response modeling;
>lifestyle databases generated from consumer questionnaires; and
>opt-in e-mail lists.
The German population is smaller than that of the United States, so German lists naturally have smaller universes; the standard U.S. 30-day hotline selections are therefore only available (or worthwhile) on very large lists. However, mailers should not be put off by this—list rental is big business and list brokerage is alive and kicking.
In contrast to the United States, e-mail marketing is still in its infancy.
Germany often is negatively associated with data protection, but the best advice is not to believe everything you hear! The German direct marketing industry flourishes within the law. Your local specialist will help you navigate the legal dos and don'ts of direct marketing in Germany.
There are a number of key factors to consider before embarking on a German campaign, but all these can be mastered successfully with the right partner. Numerous foreign mailers have taken this step. So what's stopping you from doing the same?
Helen Deacon is director, International, for German-based Arnold, Demmerer & Partner, where she heads its International Team that supports numerous U.S. mailers with new customer acquisition activities in Germany. She can be reached at firstname.lastname@example.org.