In my experience, companies tend to struggle with managing sales programs in Europe far more than they do in North America. There is certainly no simple answer as to how to build a European sales team but acknowledging the challenges and understanding the variables will certainly make the process more straightforward.
I’ve attempted to categorize the issues into these four broad areas:
- Distributor model
- Taxes and legislation
In order to break into new markets, the first step will often be to decide between setting up a local direct sales force or opting for a distributor approach. Many companies will opt for an indirect sales model, leveraging existing teams and infrastructures in distributor or agent agreements to understand and penetrate the market without the practical challenges and costs of building a fresh sales team. A potential consequence is that the parent organization may choose to buy out said distributor and integrate the sales team with the side-effect of inheriting legacy sales practices. Choosing a distributor approach may provide a short term geographic growth in sales but it is important to consider the desired long-term strategy when working with with Distributors (See Seven Rules of International Distribution by David Arnold). The distributor model also necessitates a very different sales incentive plan approach (See Designing an Appropriate and Effective Channel Manager Sales Incentive Plan by Rob Bentley).
This could easily be the most significant barrier to sales model success and consistency across Europe and the usual measures of efficiency (average deal size, sales cycle, hours to close etc.) will have to be re calibrated to accommodate cultural and practical differences. Certain regions across Europe have a very different perception of selling and indeed being sold to, than others. Southern Europe and the Nordics in particular often balk at suggestions of highly-geared plans, significant pay-at-risk, aggressive sales management etc. Attempting to replicate a sales incentive model that has worked in North America and the UK, may seem like the logical and simple approach but will often deter seasoned local sales people that view relationships with customers as something to be earned over time (As Donald Kiern discusses in Looking to enter the European Market? Do your homework).
As a local non-western sales rep once said to me: “Business does not happen every day”.
Territory allocation and alignment is a common step in reviewing and improving sales force effectiveness but is made more difficult in Europe. In North America, territories can be set out based on their potential, shifting zip codes between them as necessary in order to maintain reasonably equitable sales potential.
In Europe, this is often set in stone and borders reflect not only physical boundaries but cultural and linguistic ones too. The US is a large single market with sufficient opportunity size to be carved up into sales territories. Without the critical mass to allocate sales territories within individual countries, geographic convenience and traditional country groupings e.g. (Benelux and Nordics) take precedence which can result in European territories with significantly different sales potentials. Once again, this will mean a re-calibration of the usual measures of success that should be applied.
Taxes and legislation
Finally it is important not to underestimate the administrative and practical obstacles presented by operating across multiple borders. Despite significant alignment across EU countries, there remain differences that need to be considered when setting up or evaluating the effectiveness of a sales plan. This may include (but certainly not be limited to): local versions of sales plan documentation that take into account local labor laws, taxation of incentives, benefit treatment, and pension eligibility. In setting up a direct sales team this will mean support services that can understand and build the sales force with while accommodating these variables.
In some countries, the works council plays a big part in shaping final plan design, often taking a far more egalitarian stance than many sales leaders would be comfortable with. Having local HR and Finance representatives with local knowledge can make the process a lot smoother.
So there we have it – a lot to think about and all of these factors and more must be mapped out in a long-term strategy to ensure European success.