What can Europe’s strongest exporter Germany bring to the entrepreneurial culture of the UK? Kärcher UK COO Mark Venner explains the Mittelstand formula
“Why do I work for Kärcher? I enjoy working for a family-owned business – but one with a lot of autonomy.”
Kärcher UK COO Mark Venner, who reports to group HQ in Germany, enjoys the best of two worlds: he acknowledges the long-term, sustainable approach of Kärcher Group that is so typical of the German “Mittelstand” – but is proud of what has been achieved here in the UK, where he is free to adopt a more risk-taking, entrepreneurial style.
It’s paying off. “Kärcher UK has risen up through the ranks in the past few years. We are now the fourth biggest entity within the group.”
But will Kärcher’s Anglo-German collaboration change post-Brexit? The deal with HQ is simple. Kärcher Group will back its UK business so long as they can return a profit. And that’s been no problem to date.
You don’t grow quicker than you can deliver
The Banbury-based domestic and commercial cleaning-machine maker generated revenues of £127m in the past financial year.
“Post-Brexit, we now have to deal with the currency impact,” he explains. “The strength of the Pound means everything we buy in from our parent company is already 10 per cent more expensive than it was in June 2016. Our German parent are not going to support us on that, we have to manage it locally. This leads us to take a more cautious view of our growth expectations out to 2020."
Some 60 per cent of the company’s products are produced in Germany, 35 per cent in Italy and the rest from outside Europe – none are manufactured in the UK. So Venner imports everything he sells to the UK and Ireland, as well as to the rest of the region in Australia, New Zealand and South Africa.
The answer? “You don’t grow quicker than you can deliver,” says Venner, whose plan is to focus for now on what he knows sells well in the local market. That, he says, will allow him to focus on helping his team of staff and distributors grow sales of those lines, and deliver that 2020 target.
An importnat component of Kärcher’s team is their network of 16 UK dealer-owned, dealer-operated Kärcher Centers, or “DODOs”.
DODOs might not sound dynamic but they’re part of a forensically honed business model built on sustainable growth. “They’re a vital part of our 2020 strategy. We’re two-thirds of the way through that plan. The goal was to create more dealerships specialising in Kärcher products, promoting the brand, and selling more of our professional and consumer range.”
Staff at Kärcher Centers undergo rigorous training. Dealer days at Kärcher’s Banbury Academy ensure they are expert in every street sweeper and window washer, and able to access cleverly targeted marketing materials developed by Kärcher’s in-house and agency team.
Marketing spend is one of the business areas where taking an informed risk has paid off. “Back in 2010 when the economy was in a bit of a slide, we decided to invest more in our brand, and to go on television with our domestic products. It’s made a big difference to customer recognition.” Aided awareness on some product categories has grown from around 40 per cent to 80 per cent in the recent years.
You’ve got to pick the winners that are most likely to grow the business
Head office traditions are only useful if they make good business sense - so the old logo was updated in favour of a digitally friendly, international version with bold and easy to read lettering. Prior to that the ubiquitous yellow colour was replaced with anthracite on the professional products to differentiate them as being designed specifically to suit the more rigorous demands of the professional user. “Also cleaning is mostly done behind the scenes. You want customers or visitors to come in and see a smart environment, not a cleaning machine.”
Kärcher has its own UK in-house marketing department and works with a number of external agencies, including Maxus and Shine. They tailor the UK materials and messaging to the UK audience and the products it prefers, ready for retailers and dealers to deploy.
“You’ve got to pick the winners that are most likely to grow the business. Once you’ve done that, you then can move on to develop other products. That’s how we’ve grown over the past few years. In the UK, we’re very strong in pressure washers.”
Kärcher Center Banbury launched in November 2016, one of over 600 sales, service and advice centres around the world designed to help customers discover and make best use of the complete range of Kärcher machines for domestic and commercial applications.
As well as DODOs, Kärcher works with the biggest retailers and resellers, selling to a variety of target markets.
“We train our dealers thoroughly because they’re representing Kärcher, and we will only grow if the customer walks out of their dealership feeling they’ve got value for money, and they’ve got someone they can trust to service and maintain that product.”
A polished dealership operation alone won’t clear Kärcher’s way to 2020. The products need to cut through to the customer, whether that’s a supermarket chain, hospital manager, local council or house-proud homeowner.
While Kärcher R&D takes place in Germany, that doesn’t stop the UK business shooting for improvement locally. The company was trucking tonnes of detergent to customers for use in their machines, but that detergent mix was 90 per cent water. The UK team introduced concentrated detergent pouches, cutting out the water to reduce bulk - an idea that was quickly rolled out across Kärcher worldwide.
“Also, within our region, we can trial things here in springtime - then roll it out in the Southern Hemisphere six months later – their spring, our UK autumn.”
Alfred Kärcher would say the aim of Kärcher has always been the management of water
Water is a big issue. Kärcher’s basic K2 home pressure washer alone delivers an impressive 360 litres per hour. That’s almost 80 gallons. “Alfred Kärcher would say that the aim of Kärcher has always been the management of water – how to better use our water resources through efficiency management and innovative applications,” says Venner.
“That’s been our underlying strategy.” It’s not just about how much water pressure washers use, he explains, but about where you take water from – most Kärcher pressure washers can draw water from standing sources like a water butt, so that they don’t have to deplete the treated mains supply, and Kärcher systems can support water recycling.
Careful caretakers from Aberdeen to Auckland will welcome Kärcher’s connected or “smart” devices. The Internet of Things has spread its web as far as floor scrubbers, so that programmes can be pre-set, parts and supplies advance-ordered and every cleaning machine’s whereabouts managed from afar. It’s a cost monitor’s dream.
“In fact, we encourage it,” says Venner. Setting products up with automatic management features is expensive. “Our task is to demonstrate to the customer the benefits of those features. That’s where it’s about our skills to properly sell that service, the benefits and savings.”
We can now diagnose faults remotely so our engineer always arrives on site equipped with the right spare part
Fleet cleaning systems include ECO!Manager, used by facilities managers to ensure cleaning standards remain high. “Each office is barcoded. You swipe the barcode to identify when the room was last cleaned - because you don’t have to clean an empty office every day. The productivity of the cleaning contractor is then stored in the system for the client to see, delivering savings and reducing waste.”
Supermarkets meanwhile want to make sure they get value from cleaning contractors, who usually carry out their services unsupervised at night. Monitoring via the cleaning machine allows facilities managers to keep track. “We can now diagnose faults remotely so our engineer always arrives on site equipped with the right spare part.”
As well as its traditional trademark yellow - one of Germany’s national colours – Kärcher’s recent research showed that the brand was strongly associated by UK customers with innovation. Kärcher employs over 900 staff in R&D and holds over 1,700 patents; 90 per cent of Kärcher products are less than five years old.
We need to be at the forefront, introducing different ways of buying – and selling
Kärcher’s UK outdoor consumer products are the familiar bank-holiday fare: pressure washers, hose reels and connectors. “But the big shift in the business over the past five years has been the introduction of our indoor range. We have had huge success with sales of our window vacuums in the UK. The Window Vac has achieved sales of over 3 million pieces in the UK alone. “Our vision is to be a much more customer-centric business, focusing on solving cleaning problems for all our customers – both domestic and commercial,” Venner says.
“Since Brexit, we have recognised that business users are sometimes cash-constrained, and may choose not to purchase a scrubber drier or sweeper outright," says Venner. "But they still have the requirement for clean, safe premises. With this in mind, we now offer, short and longer term hire or contract purchase on our machines. It’s a disruptive trend for us, we need to be at the forefront, introducing different ways of buying – and selling. We’ve have to offer the solutions on hire and service, and flexibility on financing.”
Getting the right product to the customer is one goal. But, Venner stresses, Kärcher will only win on achieving its 2020 targets through its people. “You can have all kinds of strategy. You can introduce new products, go out to new target markets. But you won’t succeed unless you have the right team in place, motivated and aligned to implement the strategy. Our people are vital.”
We need to see that return a little bit quicker than before. If it isn’t there, like all entrepreneurs, we need to move on fast
In the tradition of the German Mittelstand, Venner is cautious – but, as a UK entrepreneur, he’s optimistic. “Our growth has slowed last year because of uncertainty, the effects on consumer spending, disruptive trends and changes in our own distribution environment.”
“Where we were investing and investing - because the prosperity of the UK was fantastic - we now need to take a more cautious view.” But Venner won’t wait for too long. “We build a business case and look at the return. And now we need to see that return a little bit quicker than before. If it isn’t there, like all entrepreneurs, we need to move on fast.”
It’s all about sustainability - of the brand, of the product and of the people, he says. We’re a proud entrepreneurial business. We have our roots in Germany, but we continue to open up to new cultures and new ideas with consistency and openness.”