Marketing in Europe: A perspective from the Netherlands

Telemarketing & Call Center Solutions, Jan 1996 by Tehrani, Nadji

Europe. From across the sea it seems to beckon, a fine old jewel waiting to be plucked by crafty marketers from the New World. But just as adventurers who came to plunder the New World centuries ago learned, transatlantic trade can be fabulously profitable -- or a quick path to financial disaster. At the invitation of Dante P. Bellisari, director of marketing at PTT Telecom Netherlands US Inc., to attend a press tour sponsored by PTT Telecom Nederland of the facilities of Royal PTT Nederland NV (in Dutch, Koninklijke PTT Nederland, or KPN), I recently traveled to The Netherlands. And I have returned with charts to map the route for the American entrepreneur to find the gold that successful marketing in the burgeoning European market can bring.

Currently comprising 15 member nations (Germany, France, Italy, The Netherlands, Belgium, Luxembourg, Britain, Ireland, Denmark, Greece, Spain, Portugal, Sweden, Austria and Finland, with the recently democratic countries of the former Soviet Bloc expressing a desire to join in the near future), the European Union (E. U.) holds great promise for investment. The following figures, provided by The Netherlands Chamber of Commerce in The United States, Inc., provide a glimpse of the scope of the European market:

*Nearly 400 million E. U. citizens produce a Gross Domestic Product of $6.5 trillion, making the European Union the world's largest consumer market and the world's largest trader.

*The European Union is the best U.S. customer, accounting for nearly one-quarter of total U.S. exports.

*The United States is the largest investor in the European Union, where it has invested nearly $200 billion, representing almost 50 percent of all U.S. investments in the world.(1)

Europe is ripe for the establishment of call centers. One primary factor is its high cost of direct mail. The Netherlands Chamber of Commerce documents the following comparisons of direct-mail marketing in Europe in contrast to the U.S.:

"List rental costs are up to 100 percent higher, printing up to 50 percent higher, and lettershop costs up to 50 percent higher

than the U.S.

as well. Moreover, Third Class Bulk Mail Rates are unavailable in Europe. . . . The list opportunities within Europe, although gradually improving in terms of volumes, variety and segmentation capabilities compared to the United States, still look pretty dismal. Even today, in Europe the ability to select named individuals is not guaranteed. The message here is that single-stage direct mailing is unlikely to be the most effective method of customer acquisition."(2)

The high cost of direct mail is just one reason telemarketing is attractive. Another is the relatively high unemployment rate in Europe. As telemarketing is a labor-intensive industry, city and national governments are offering incentives to bring in call centers. The situation is analogous to the American Midwest a decade ago, when farmers were losing their farms and manufacturers were heading to sunnier climes with cheaper labor. As was seen in the Midwest, telemarketing is a rapid-growth industry that absorbs the unemployed and pumps cash back into local economies.

The high unemployment rate in Europe leaves a large labor pool of prospects eager for telemarketing positions. The very close proximity of nations combined with the superior educational systems of most European nations also produces a highly educated, multilingual workforce. The rate of pay is about the same as in the U.S., but benefits are much higher, e.g., 20 vacation days per year.

Perhaps the major drawback to telemarketing in Europe is the entrenched feeling of nationalism in each country, which makes Europe not one unified marketplace, but many. The French are loath to buy from the Belgians, the Belgians from the English, the English from the Spanish, etc. Such nationalistic attitudes, along with the fact that there are different laws and regulations in each country, make it necessary to find a partner in each country.

KPN Exemplifies Business In Holland

When you think of Holland, do you envision the quiet of an interior by Vermeer or de Hootch, van Leeuwenhoek at his microscope or Huygens at his telescope, or do you see Erasmus in his study in Rotterdam? Perhaps you think of tulips and windmills, or the cheeses of Gouda and Edam. These are the typical images of Holland, but what is often overlooked is Hollands's liberal climate which is tolerant of new ideas and a work ethic that made the small nation a world trading power. When you think of business in The Netherlands, you need to remember the technology of the windmill that reclaimed land from the sea, the fierce speculation on tulips on which fortunes were made and lost, and the fact that Rotterdam is now the major distribution center of Europe. A great example of The Netherlands' current business climate is Koninklijke PTT Nederland (KPN), which was the focus of my tour.

Following in the footsteps of the prosperous, sturdy burhers of Hals, the nearly 200-year-old KPN was privatized in 1988. Mr. Cornelis "Cees" Griffioen, a member of the Board of Management at KPN, explained the changes brought on by the transition from a government agency to a private one. With privatization came the questions: "Can we stand on our own feet? Can we remain profitable?" Answering these questions brought a strategy that is market-driven and shows entrepreneurial behavior, but has investment and human resources overtones. The new management policy stresses decentralization, management targets and accountability: promotes strong delegation of responsibility: and is results-oriented. Also with privatization came a financial strategy that moved from budget constraints to a profit-oriented, return-driven policy with a eye on the cost of capital. One way KPN does that is by funding growth from depreciation. (With privatization, KPN went from paying no taxes to being the largest taxpayer in the country.)