When American Companies Expand to Europe

I’ve spent years advising American companies that wanted to expand into Europe. They came with their brand and their marketing system, everything optimised for the American consumer. Everyone thinks that what worked in the US should work here just the same. The same campaigns with the sprawling Black Friday discount battles and an emotionality that nobody in Europe understands. One to one.

But Europe is different. An American marketer or sales guy has the manageable cultural variables in his home market under control. The gaps are covered up by a strong and stable appetite for consumption. Europeans haven’t yet agreed on a common language or a shared culture. European diversity is a paradise for a curious tourist, but a nightmare for marketing and sales departments. Every country works differently. Not only genders are diverse, but also laws and of course consumer habits. What works in France is a non-starter in Germany. There is little you can just push from one market into the next.

My first task is always to explain exactly this, in detail and entertainingly, because there are nice anecdotes to go with it. But the decisions were usually already made before anyone had really looked at Europe. Budgets were set, and my consulting was not supposed to question their assumptions but move straight into implementation. Dollar signs were already in their eyes. Similar population size and measurably solid purchasing power were the relevant numbers. The only topic was how to get around those pesky taxes, which in Europe can be not just high but quite complex.

The pattern was always the same. The picture in their heads was converted directly, via generously projected sales figures and EBITDA, into fantastic net profits. The full bouquet. Every objection was pessimism. That’s how they see it. Big, bigger, cowboy. Anything that contradicted the picture was treated as irrelevant. First thinking, then deciding didn’t happen. It would have put the basic assumption into question. Of course nobody wanted that.

The business was running, and now we’ll grab the Europeans. Free scaling, that’s how they understood it. The complexity and the costs that come with it were ignored, because they would have spoiled the picture. Many had to expand, because revenues in the US were extremely synthetic. If you turn off or reduce a marketing channel, it punishes you immediately. Revenue drops, but fixed costs remain. So going across the pond is only logical as a territorial expansion at lower cost, since the setup work is already done. They didn’t know that this way of thinking was fundamentally wrong.

They tried it with control, over relationships with retailers, over prices, over marketing channels, and it got out of hand the way it had got out of hand in the US too. Every consumer is buyable, regardless of the price.

I tried it with reasoning and logic, with simple strategies everyone could agree on. And they really did listen. Where they listened, it worked very well. Where the willingness to learn was less developed, less so. What struck me: decision makers listen. Specialists don’t like moving out of their US cosmos and don’t dare step onto foreign ground.

I’ve learned one thing from this. The quality of a decision depends of course on the quality of your data, but even more on whether you are willing to fundamentally question your own assumptions when new facts come in. Data always confirms what you want to see, if you look at it from only one perspective and ignore the others.

Today I’m more sensitive about it. I pull the numbers apart first, to create a basis for conversation. The client’s own system data is augmented with European market data. For that, I’ve built an ontological system that structures the data and outputs it by case. Then comes the evaluation of whether it works, never without data, but always with the complete set.