Driving top-line growth in Europe.
Investing for growth in Europe is a risky proposition. Europe is a massive market. The 28 EU countries collectively represent one of the world’s largest economies, generating ~$20 Trillion in GDP. The EU is the third largest population center after China and India. It is also one of the wealthiest parts of the world.
Opportunities abound, but how to access and manage these is not as straightforward as it might be in a large homogenous market like the U.S. Global leaders must acknowledge the importance of these challenges and the value of local market practices and insights. To mitigate investment risk, companies must take a more disciplined and focused approach to devise a cost-effective go-to-customer strategy. A purely global, top-down, ‘one size fits all’ model might be easier and cheaper, but it’s simply not reasonable across the disparate markets of Europe.
So does that mean the strategy requires a country-by-country approach? Yes and no. There is value in local insights for planning purposes. What is that value? And how do you strike the right balance between local coverage and global consistency?
Alexander Group conducted a study called “Europe: Driving Topline Growth” involving over 30 in-depth interviews with Europe Revenue Leaders. Answers to this sticky question were literally all over the map. Consider some of these perspectives and quotes from participants on the right planning approach:
It should be based on market maturity … “The degree of autonomy in the region really depends on the maturity of the market. In the early stages, we take a more dictatorial approach. But as the region matures we allow them more autonomy.”
It should be bottom-up … “The answer is a bottom-up approach, by country. The right competent managing director that knows the market — they should do the market analysis. It should be a requisite before you hire them.”
It depends…“At the country level I am making decisions for the markets I play in that it will be very different than what other countries do. What works in Spain is not necessarily good for Germany. What works in Holland is not good for France. Corporate lets us adapt the go to market or sales motions required by segment in country.”
Some combination…”We are trying to drive scale without destroying the localization, because obviously the country has the best knowledge on market specifics and what to do there.”
Plan globally, execute locally…“You can set global strategy, but to compete and win in local markets you must hire competent leadership and allow them room to maneuver.”
The last quote represents the center practice – plan globally, but allow regions and countries to flex their models based on local market needs. Local flexibility costs more and is more difficult to manage, but it also enables companies to grow, and avoid costly or embarrassing mistakes. How much flexibility is required? Too much flexibility results in local leaders creating “fiefdoms” and using the all too familiar “our market is different” excuse to avoid implementing anything coming down from Corporate.
Common sense tells us that top-line growth plays a critical role in value creation. Our recent study backs this up, which found revenue growth accounts for 58% of total shareholder return for top-performing companies in the long run. Revenue growth easily outperforms other value creation strategies including cost reduction, cash flow improvement and multiple expansion.
Relationship or Expertise?
The nature of the sale, or put another way, the degree of innovation and differentiation of the offering, matters. Selling mature, well-established products or services often relies more heavily on relationships, which might require the local presence of an account manager. But a new, innovative solution that customers simply must have may not require the same local touch. For example, the Italian clinical oncologist is willing to speak with the sales consultant from Paris because they have cutting-edge gene-sequencing equipment that operates 10x faster than the competition. This dynamic could significantly influence how much localization is needed, and by role. Study participants shared how specialist roles with high levels of expertise can cross borders more easily to speak to new solutions while a local account manager maintains the relationship.
Three Growth Levers for Europe
The study reached several conclusions, which we distilled into three levers for driving top-line growth in Europe:
Precision Selling. Driving top-line growth requires discipline and focus. This idea of precision selling has never been more applicable than it is today. Yes, buyers have more information. But sellers can be equipped with more information as well. Precision selling is about using data to carefully identify and target the right buyers with the right messages about the right offerings, at the right time. Rather than a peanut butter approach to do business in ‘as many countries as possible,’ experienced leaders advise picking a small number of markets to invest “an unfair share” of the resources in order to ensure a critical mass and success.
Strategic Partnering. When it comes to covering complex markets, Europe offers all the reasons for using partners: speed to market, mitigating risk, local market knowledge, flexibility, and value-added services. But rather than casting a wide net and signing up as many partners as possible, companies should take a disciplined focus to select and invest more with fewer partners that represent a stronger fit. In general, start with smaller, local partners who will ‘give you the time of day’ rather than the largest players who, although they have global reach, may not know companies’ target markets intimately and may be tougher to gain mindshare.
Centers of Excellence. Finally, not all resources need to be local. Certain resources and capabilities lend themselves to centralization and the creation of centers of excellence. Most companies are significantly underutilizing inside sales in Europe, which can be effectively centralized in locations like Dublin, London, Barcelona and Malaga. Technical and specialist roles can be deployed out of regional hubs and flex across geographies. Marketing and sales enablement resources can be a bit tricky but can also often work effectively from regional hubs.
Strategic Partnering
Partners are essential to growth when carefully selected and properly supported. The same discipline and focus direct models require for precision selling applies to indirect models as well. The study found three important lessons on partnering in Europe: 1) less is more, 2) start local and 3) enable to achieve scale.
Less is more: One might think it’s best to sign up as many partners as possible. More partners means more coverage, right? Instead, study participants stressed selecting partners that not only had the desired capabilities, but were also willing to invest in the future. Companies must be willing to make an investment, as well, to make the partnership work. Therefore, leaders must choose partners carefully to invest in the right ones. One participant shared, “A couple years ago we had over 100 partners. We scaled this down to 10, and we are investing heavily in these select few partners. We’ve seen our partner revenue double since we started 18 months ago.” It’s far better to invest well with a few partners than to invest poorly with a wide array of partners. Strategic partnering calls for continually rationalizing your partner base — targeting, recruiting, on-boarding, developing, managing and pruning partners to yield an effective indirect model.
Start local: Partner strategies among the study participants typically began with smaller, local partners and expanded from there. One participant shared, “Our first wave of partners were country-specific. Once we gained traction, we began to move up the chain to bigger multi-nationals.” The point is less about the size of the partner and more about the partner’s strength in the local target market. The risk with bigger partners is they may not have the local focus. Terms with smaller, local partners may be easier as well. Creating situations resembling local market exclusivity is a means of investing in the partner. “We can give them [partners] certain markets so they can say, ‘This is mine,’” one study participant shared. Smaller partners may also bring unique value. “We get a lot more traction building deeper, more specialized industry solutions by working with boutique partners,” said another participant. Strategic partnering means choosing to engage with fewer, smaller partners — an approach that is consistent with the idea of precision selling — taking a more disciplined and focused approach to your market coverage and learning as you go.
Select partners based on the desired value they bring – local knowledge and relationships and/or specialized expertise. Programs usually migrate from lower-left to upper-right in the 2×2 above.
Enable to achieve scale: Achieving scale to grow is one of the primary advantages of working with partners. But scale doesn’t happen by simply signing on more partners. Revenue leaders frequently underestimate the time and effort needed to make the partners successful. Revenue leaders prefer globally consistent and standardized channel partner programs, incentives and campaigns. But in Europe, market differences often call for channel leaders to exercise some leeway with collateral, training, support and even incentives in order to ensure the local partners can succeed. Balancing globally consistent programs with effective local execution presents a difficult task. One study participant shared an innovative channel partner program they call “Campaign-as-a-Service.” Rather than sending in channel marketing resources to help their partners (which doesn’t scale), they decided to give their partners a platform to run campaigns. They stripped out as much complexity as possible so partners need to do only two things: 1) define their target accounts and 2) drive the marketing events (in this case, webinars). The campaign-as-a-service did everything else (message, emails, tracking and follow up). The initial pilot delivered a 40 percent lower cost per marketing qualified lead (MQL).
Driving top-line growth in Europe poses a significant challenge for revenue leaders. Thankfully, Europe is quite channel-friendly — there are many organizations (country-specific, regional and global) ready to serve as partners. Partners offer several advantages: the ability to shift sales costs from fixed to variable, speed to market, market access, local market knowledge, specialized expertise and risk mitigation. All of these advantages apply when tackling the diverse and complex markets across Europe. Strategic partnering in Europe means choosing partners carefully and rationalizing partner ranks, which allows more investment in the right partners. It means ensuring partners bring local market knowledge and expertise. This usually entails starting with smaller local boutique partners. Finally, strategic partnering means enabling partners to succeed.
Centers of Excellence
The study also uncovered that three centers of excellence revenue leaders are leveraging to achieve efficiency and scale without compromising customer intimacy: inside sales centers, regional technical and specialist hubs and sales operations/enablement centers.
Pan-EMEA Inside Sales Centers
Two-thirds of the study participants have centralized inside sales in Europe to achieve cost efficiencies. The best inside sales call centers in Europe mimic a local presence – the call center resembles a mini United Nations where native German salespeople are calling on customers in Germany, native Italians are calling on Italians and so forth. Cities like Dublin, London and Barcelona boast a diverse workforce making it possible to serve a wide swath of markets across Europe all from one location with salespeople representing each target market. Less frequently mentioned cities included Prague, Paris, Amsterdam, Cork and Bucharest. Companies tend to locate sales-oriented call centers in the West. On the other hand, companies with centers focused on support and service roles tend to locate their centers in the East. One study participant stressed, “It’s critical that our talent not only speak the local language, but also speak the local culture.” The types of inside sales roles vary, including lead gen, presales, discrete or paired, direct and indirect, renewals, customer success and support. In many cases these roles support a local account manager or territory sales representative. Thus the sales coverage isn’t entirely centralized, but the local resources are selectively limited to a minimum number of local account managers and/or territory sales representatives and local field sales management.
Regional Specialist Hubs
Technical, vertical, product and solution specialist roles can be centralized in regional offices. Centralizing small teams has some of the same advantages as described above and encourages discretion to deploy specialists only when they are properly needed. Revenue leaders are experimenting with blended inside and field roles where specialists work remotely via phone and video conference calls on certain days in order to conduct more calls per day and ramp up productivity. Centralized specialist roles work because of the specific expertise or technical knowledge they possess. They bring expertise that augments the sales effort at specific points in the process. They can’t replace the local account manager. And in some cases, they can’t replace the presales engineer who has strong relationships with their technical customer counterparts. Some complex sales require heavier involvement and follow-up from specialist roles. But as traditional technology sales shift toward a more services-led or IT-as-a-Service model, the opportunity to regionalize specialist roles increases. “We can bend the boundaries a bit more easily with specialists. They can be centralized in a center of expertise” one participant shared, “but we always have to have an eye towards the customer and what they want or need.”
Centralized Sales Enablement
Where should companies position sales operations, field marketing and sales training? The study results were a little mixed on this topic. Many study participants spoke about the importance of having these resources, field marketing in particular, at the country level. This ensures that sales leaders not only effectively translate sales collateral but in some cases tailor or customize collateral to convey the proper message for the local buyer population. However, others shared staunch beliefs that the message should be globally consistent. To achieve global consistency, organizations could and should centralize support/enablement resources to cover needs across Europe or EMEA. The study did find the need to keep sales tools consistent across EMEA, if not everywhere. All participants agreed on the value of a common tool set, metrics and reporting capabilities for CRM, SPM, ICM or similar tools. At a minimum, companies need to centralize the resources that administer these tools. This centralization can extend to sales operations resources managing territories, quotas and compensation as well.
The countries of Europe represent a fascinating marketplace, filled with rich variety, history and local color. There is a wealth of opportunity. The challenge is getting close to the customer to experience this opportunity without breaking the bank. Given the complexities in Europe, there are two possibilities: take the complexity away and offer less choice or manage the complexity and deliver value. As one study participant stated, “Complexity appears in product and process — including how you sell. In most cases, you cannot take the complexity away. You have to make the complexity manageable.” Centers of excellence help reduce complexity from a management, process and tools standpoint.
Winning in Europe
To succeed in Europe, revenue leaders must first acknowledge the complexities of the markets within, and carefully consider the best go-to-customer approach. Too many leaders err in both their planning and execution of growth strategies in Europe because they miscalculate the degree of localization. In many cases they underestimate its importance. In other instances, they overestimate, and give too much flexibility to local leadership, adding unnecessary complexity and duplication.
Contact the Alexander Group to learn how we can help your organisation.
Sign Up
