All Posts By

Radboud

Growth opportunities in Germany: how corona is putting everything into overdrive

Corona’s impact on brands and e-commerce in Germany is unprecedented. The pandemic has caused the shift from offline to online shopping to gain enormous momentum. Achim Berg, partner at McKinsey: “We’ve seen a transition that would have normally taken six years in only eight months.”

What does this rapid change mean for your brand when operating in Germany? How can these growth opportunities benefit you? And which strategy ultimately yields the best results? In this article, I will share our findings and learnings with you.

How consumer behavior has changed in Germany

Firstly, let’s zoom in on the change in consumer behavior. What changes are most noticeable? Research by Google uncovers three major changes in the German market. The results may not surprise you, but it’s important to take a closer look at them.

  1. Online shopping has become the new norm.
  2. German consumers do more online research. People have more free time and use it for digital window shopping.
  3. Consumers have become more conscious about their shopping. Sustainability and buying local have become important aspects.

The same research by Google offers us another important insight: more than ever, media consumption is centered around mobile, social and video. This is nothing new of course, yet the growth of online media consumption is impressive:

  • 29% watch more streaming media; impactful from an advertiser’s perspective since these are channels that don’t offer advertising opportunities.
  • 49% spend more time on mobile devices.
  • 25% watch more online videos, for example on YouTube.

The most important finding however is this:

German consumers have thoroughly embraced online shopping 

  • 87% of Germans are happy about the transition to online shopping.
  • 62% of Germans will continue to shop online, even after the corona crisis ends.
  • 24% of Germans buy online as much as possible, even products they previously bought offline.

Macro developments

Zooming out, we notice four major developments.

  1. People spend more time online (more frequent and longer).
  2. More people have started to buy online. Even the late majority and laggards are now following suit.
  3. People buy more of the same products online.
  4. People increasingly buy different, new products online. A good example is Auping, for whom we now sell beds online in Germany.

The online piece of the pie has clearly become much bigger and more attractive. At the same time, online marketing has grown increasingly complex as everyone tries to get in on the action. It’s against this backdrop that we as FSG say that now is the time to invest more in online marketing.

Rapid investment

We notice that e-commerce organizations are speeding up investment in their (mobile first!) platform, CRM, fulfillment and value added services. Personalization, marketing and automation are also part of that effort. As a result, these things will become hygiene factors rather than distinguishing features within a few short years. Since standing out from the crowd is vital for growing your brand, we pose the following question:

How do you distinguish yourself?

What strategy makes your brand excel and yields the best results? At FSG, we advise brands in the German market place the following:

  1. Invest in digital brand awareness, now

Firstly, investing in digital brand awareness now will lower your cost per acquisition down the line. By down the line we mean the moment your campaign needs to generate a spike in sales, for example surrounding a product launch or during an event such as Black Friday.

  1. Create an overarching 360 degree campaign

Real online sale success doesn’t come from a singular focus on product campaigns. You need to invest in overarching 360 degree campaigns with a relevant theme.

  1. Extend the customer journey

This might seem counterintuitive, since most companies strive to spend their media budget as efficiently as possible. However, this is a smart investment. The more online moments of contact a consumer has with your brand, the more top of mind your brand will be, increasing the willingness to buy. We can clearly see this in the data of our clients. Check out the example further on.

  1. Content, content, content!

This shouldn’t need explaining. Content is king in the online world, so invest in good quality, localized content.

Taking these four points of advice to heart will likely cause a short-term dip in your ROI. Not surprising, since you’ll need to invest. In the long run however, your yields will go up. As your piece of the online pie gets bigger, the same will happen to your gross profit margins.

Allow me to demonstrate this with a campaign we did for Paula’s Choice in Germany.

Campaign example: Paula’s Choice

To maximize the ‘corona’ growth opportunities during the Glamour Shopping Week (a large online event in Germany) we developed a 360 degree campaign for the cosmetics brand Paula’s Choice. This campaign started eight weeks before the event with an overarching theme, anti-aging in this case, which we tied to the launch of a new product.

During the first stage of the campaign, we used expensive acquisition channels including top influencers and communities, YouTube and TikTok. Additionally, we set up collaborations with key online players like Niche-Beauty and Breuninger.

Through these channels, we started to fill the funnel way before the peak of the campaign.

Results

The campaign almost doubled the revenue compared to last year’s campaign. But the most striking result? The large majority of revenue growth and new customers came from prospects who had touch points to the campaign through five or more channels.

This is why we recommend to extend the customer journey. You create more touch points with your brand and this will pay off during the peak of the campaign.

Doubling the revenue required raising the media budget by over 200%. Now you might wonder: why do you consider that a success? Well, it is. And as strange as it may sound, we have corona to thank for it. Because the lockdown has drastically increased the online pie over the last year. This allowed us to realize a 75% increase of the gross profit margin for Paula’s Choice. And in the end, that’s what it’s all about.

Benefit from growth opportunities in Germany?

Is your brand operating on the German market? And would you like to benefit from the growth potential the corona crisis offers? Reach out to Radboud Langenhorst and discover a world of opportunities.

Email: radboud@fsgberlin.com

Telephone: +49159045228055

Brand localization in Germany: why community management is vital

If you really want to grow as an e-commerce performer in Germany, you need to gain brand recognition. Significant sales are simply not possible without branding. However, launching brand campaigns in Germany can be extremely expensive. At FSG we therefore prefer to opt for a brand localization strategy with community management as the main boost. This way you kill two birds with one stone: you generate reach and user generated content.

Community management as a driving force of brand localization

We will discuss how we FSG uses community management for brand localization in a moment. First, a word about brand localization itself, also known as localization or localized branding. We see that newcomers to the German market sometimes think too casually about this. When in fact the secret of successful cross-border e-commerce lies precisely in brand localization. It lies in branding that is tailored to the local market and local consumers.

It takes more than just translating your brand message into German to do that. Brand localization is all about creating a brand experience that resonates with the local culture and lifestyle of the target audience. But also about finding your own unique place among all those, who have already established their brands.

In this regard, authenticity, credibility and relevance are extremely important. This calls for good local content. And that’s often where the crucial point lies. After all, how do you get good local content, which contributes to your branding, if Germany is not your home market? This is where community management comes in.

The insider community: the secret weapon

In order to satisfy the demand for good local content, we like to work with so-called insider communities. An insider community is an exclusive group of influencers and enthusiasts who are committed to the brand.

Here at FSG, we make contractual agreements with every member of the insider community. This includes not only the influencers, but also the fans, who are in fact just consumers. We want to be able to make use of the content they produce. This is the main reason why we are starting such a community in the first place.

An example: Paula’s Choice

One of the brands where we work like this is the skincare brand Paula’s Choice. An excellent example of a brand that creates brand ambassadors. In May 2018, together with community marketing agency Protein, we started building an insider community for Paula’s Choice. We have made some wonderful achievements as a result of it.

The Paula’s Choice insider community provides the brand with a lot of great “German” user generated content, in addition to reach and valuable customer insights. This includes photos and videos that we can use for other channels, such as the webshop, newsletters and social media.

The Insider Community Pyramid

So how do you create an insider community and how does it look like exactly? Let’s dive into it a little deeper. The insider community is built just like a pyramid and consists of 3 levels: high-level, mid-level and entry-level brand ambassadors.

High-level brand ambassadors

The top of the pyramid consists of 1-2 major influencers, with whom the brand enters into a long-term, commercial partnership. In case of Paula’s Choice, these are influencers with more than 6 million followers.

Mid-level brand ambassadors

Beneath the tip is a layer with 20-30 micro influencers. They have anywhere from 5,000 to 50,000 followers, are a good fit for the brand and like to identify with the bigger influencers. Micro-influencers receive free products and sometimes financial compensation.

Entry-level brand ambassadors

The bottom layer consists of 50-100 die hard fans. They are customers, consumers who are passionate about the brand and like to be part of the community. In other words, they are real brand ambassadors. These fans do not receive free products or compensation, but an occasional discount. For these fans, being involved with the brand is the biggest reward.

Insider community versus social media fanbase

The insider community is unrelated to the number of followers on social media. Unlike the fan base on social media channels, we deliberately keep the insider community small. There are several reasons for this.

First of all we keep it small, for authenticity and credibility reasons. If you start admitting just anyone, it quickly leads to a situation where there is no longer an insider community. This is particularly important for the approved fans in the bottom layer of the pyramid. At Paula’s Choice, we started with 100 entry-level fans in 2018 and now we have about 150, so definitely no thousands.

Another reason for keeping the community exclusive has a practical aspect. Very quickly, a lot of contracts are involved. In addition to this, managing a community is extremely time-consuming because of the large amount of personal contact involved. To give you a better impression: Just for Paula’s Choice we have an influencer marketer and a community manager working full-time on the community in our office.

Community management in action

The main goal of an insider community is to increase the brand awareness. Therefore, we focus the community strongly on creating content in which the values and proposition of the brand are visible. We also sometimes create this content ourselves, in collaboration with the community.

What does that look like in reality?

We organize all kinds of events that involve the entire community as much as possible. For Paula’s Choice, for example, we held special workshops and an interview session with the founder, Paula Begoun. We also do exclusive product launches, surveys, small “Tupperware”-type events at the homes of fans and activities around Glamour Shopping Week, one of the biggest shopping events in Germany.

We are constantly trying to find a topic that will allow us to involve the entire community in our campaigns.

Content production involving the community

A great example is the “Beauty begins with truth” campaign, which by the way was shot with a professional production team. For this production, we had fans tell us all about their skin problems and the role Paula’s Choice played in overcoming those problems. This generated wonderful authentic content, which we then used in our blog and our PR channels.

 

Great results

Ultimately, e-commerce is about sales. Even for us. Here at FSG, we work on a commission basis, so we’re committed to making branding and community management contribute to revenue growth to the maximum degree.

Speaking of sales growth. You might be curious as to what our approach has brought Paula’s Choice. Of course, we can’t give you all the numbers, but we see a clear correlation between sales and community. Since we started the community for Paula’s Choice, sales have increased by 10% annually. We notice it immediately when we are a little less active in the community.

“Worth” of mouth conversions

The result of good brand localization is the sum of its parts. Insider community management, social media, PR and content marketing go hand in hand and not everything can be tracked directly. Especially if you work with fans (customers) and also use print media.

This is why we created a new KPI: “worth” of mouth conversion. This refers to the turnover generated by new customers who used a so-called branded search or direct type-in. This involves filtering for customers who have not been in contact with the brand via other channels in the 28 days preceding the purchase. In short, these are customers who hear of a brand through impressions, recommendations, reading an article or blog post, etc. and decide to make a purchase. So a direct result of an increased positive brand awareness.

In the end, this is the ultimate proof that localized branding and community management are crucial for successful e-commerce.

Want to learn more about community management, insider communities or brand localization?

Want to know more about community management, insider communities or brand localization? Please reach out to Radboud Langenhorst.

E-mail: radboud@fsgberlin.com

Telefoon: +49159045228055