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B2B Marketing for Manufacturing in the Digital AgeA JOINT ORACLE AND MAPI STUDY ON THE CURRENT STATE OF THE DIGITAL TRANSFORMATION OF MARKETING AT MANUFACTURING COMPANIES
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Customer Centricity is on the RiseBut are marketers in manufacturing doing what they can to embrace it?Much has been written about new market forces and the profound changes affecting buyer behaviors since the advent of the Internet, e-commerce, mobility, and social media. But for manufacturers, other factors—such as the ability to create ever-more sophisticated products in much less time than it would have taken 30 years ago—have also impacted the way these products are brought to market and the competitive landscape in which manufacturers hope for their products to strive.
But while engineering has been focused on continuous improvement for decades—through Kaizen, six sigma, and lean—marketing is now catching up, embracing all of these factors and giving rise to the concept of “Customer Centricity,” to put focus on their customers rather than just the unique qualities of their products and services. Manufacturers face unique challenges in the transformation to customer centricity, not the least of which is the fact that they are often somewhat shielded from end customers behind an indirect distribution channel.
The Oracle Marketing Cloud team of manufacturing industry marketing experts teamed up with researchers at MAPI (Manufacturers Alliance for Productivity and Innovation) to survey sales and marketing leaders at global MAPI-member manufacturing companies headquartered across North America. The study was aimed at understanding the current state of digital transformation and confirming that customer centricity was indeed motivating changes within the sector.
The survey was conducted in August 2014, and its 91 respondents represent a variety of manufacturing industries and sizes. More information about survey participants can be found in the appendix section of this document.
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Has Selling Become Complicated?Most sales experts have proclaimed the end of relationship selling in the B2B world. The “good old days” of making deals over three-martini lunches are apparently over, having been replaced by more sophisticated sales methodologies that acknowledge that buyers have immediate access to much more information and therefore tend to make more informed decisions overall.
Numerous studies have shown that the typical buyer will perform as much as 60 percent of activities related to decision making on their own prior to engaging with an actual salesperson. This obviously creates challenges for manufacturing salespeople, who want to control the message that gets out. However, it also creates new opportunities for marketers, who can play a larger role by intelligently guiding prospective customers through their buying journey, thereby increasing the odds of making a sale.
We thought a good measure of sales effectiveness would be to ask sales and marketing executives whether it takes more or fewer salespeople to achieve the same results as it did 10 years ago. Respondents were split on their answers, with only 32 percent indicating that they actually get more productivity out of salespeople today than 10 years ago.
While most manufacturers agreed on the major factors that effect their ability to sell, there were some interesting differences between those who felt they had more sales productivity and those who had less, most notably around outreach through electronic media.
Has sales become more complicated?
Less productivity
38%
More productivity
32%
No changes
32%
There was no consensus on whether it takes more or fewer salespeople to achieve the same results as it did 10 years ago.
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Why is this? In further discussions with the surveyed manufacturers, it became apparent that those who have embarked on a digital transformation journey (harnessing the benefits of new media and a modern way of engaging customers) have realized substantial productivity benefits.
According to Rusty Zay, Senior Vice President, Americas, with Tennant Company, a global equipment manufacturer:
0 20 40 60 80 1000 20 40 60 80 100
Agree Disagree
Less Productivity
Increased competition
Less loyal and more demanding buyers
Increased product sophistication
Increased difficulty in reaching potential buyers
More outreach through electronic media = less sales prospecting
Use of lead management tools require less people
0 20 40 60 80 1000 20 40 60 80 100
More Productivity
Increased competition
More outreach through electronic media = less sales prospecting
Increased product sophistication
Increased difficulty in reaching potential buyers
Use of lead management tools require less people
Less loyal and more demanding buyers
What affects your ability to sell?
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“We have set up a direct strategic account sales structure that has helped us convert on big deals.”
Michelle Dawson, Director of Market Research and Strategy from Saint-Gobain Abrasives, a global industrial materials company, has seen a need for more salespeople, and made the comment:
“There has been an increase of integrators, as opposed to just distributors, taking more control of the end user.”
The above is a reminder of a common reality for the manufacturing industry: third parties are most often involved in bringing a manufacturer’s products to market.
Partnering in the Digital AgeIn contrast to service-oriented organizations, which tend to have locations close to the customers they serve, manufacturers typically are located in proximity to their production plants. Oftentimes, they rely on complex distribution networks in order to bring their products to end customers. Wholesalers, distributors, retailers, and integrators can all play a role in creating demand and effectively moving inventory.
A manufacturer’s sales and marketing team historically focused most of its efforts on recruiting new partners, pushing them to take on larger inventory levels and providing support through brand awareness and an understanding of product features and market differentiators.
In today’s digital age, buyers have significantly more direct and immediate access to the manufacturer. Conversely, the manufacturer can also address buyers directly through such new media as search advertising, digital display advertising, social ads, and emails themselves. Meanwhile, intelligent devices (also referred to as the Internet of Things [IoT]) are introducing new possibilities in terms of allowing a conversation between
Is more collaboration needed?Require less support
9%
Require more collaboration
32%
No changes
22%
Said more collaboration is needed with channel partners than ever before.
Said channels require less support.
69%
9%
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the manufacturer and the customer. In doing so, it becomes clear that these new technologies are profoundly disruptive to current sales distribution models.
Add to this mix a whole new type of dialogue taking place on social media, in which prospective buyers, customers, channel partners, and the manufacturer, all participate. The greatest apprehension of manufacturers when faced with this new model is peaceful coexistence. It truly is a brave new world.
To get a clearer understanding of how these forces are affecting the industry, we next asked survey respondents: How has the rise of social media and digital engagement models impacted the supplier/ reseller/ customer relationship?
For the vast majority of those who sell products through indirect channels—a total of 69 percent—more collaboration than ever before is now required.
Given that nearly all sales and marketing leaders told us that they face increased competition, less loyal and more demanding buyers, increased product sophistication, and the need for more collaboration with channel partners, it was natural for us to assume that they have made changes to their sales distribution models. So we asked the following.
Have You Made Changes to Your Distribution Models and Are There More Changes on the Way?While 41 percent of respondents had made no changes to their ratio of direct vs. indirect sales, 40 percent had taken on more of the responsibility for direct sales, with the remainder moving towards an indirect model.
Has there been a shift towards more direct sales?
More indirect
19%
More direct
40%
No changes
41%
Shifted towards more direct sales.
Increased their indirect presence.
40%
19%
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Responses to other questions led us to believe that the cost and effort required to support channel partners are not an important factor in justifying changes to a more direct model. And among those who had gone the indirect route we also found a majority who felt that indirect partners required significantly more support today—more so than ever before.
Therefore, in the majority of cases, the cost of supporting channel partners was apparently not a factor in the decision to make changes to the distribution model.
In further discussions with sales and marketing leaders, we found that most of the changes had been dictated by global expansion. Whereas manufacturers would originally establish an indirect presence in emerging markets, they now sometimes prefer to establish a more direct presence that offers more control over demand generation and sales execution. In other cases, companies changed their business model so that less (or greater) emphasis is placed on certain product lines that would dictate direct or indirect sales models.
When asked if more changes are on the way we found some interesting statistics.
Companies that have started to use more indirect sales forces are intent on continuing to move away from direct sales, while those who have gone the direct route are either less intent on making changes or in some cases thinking of going back towards indirect.
In conclusion, indirect sales channels are here to stay. As Brian Berg, Manager of Upstream Marketing for The Timken Company, a global bearing manufacturer, told us:
“We see more direct contact with end users today than 10 years ago, which requires additional sellers. However, our intent is to still serve and sell to the end users via our distributor partners.”
It’s interesting to look at the kind of support that manufacturers offer their indirect sales channels today.
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0 20 40 60 80 100
Mostly use advertising—partners generate demand locally
Use form to capture leads for resellers
Create demand, nurture, and pass leads to partners
List partners on website and direct inquiries to them
Send partners printed materials
What kind of support is given to channel partners?
37%
47%
56%
63%
92%
0% 20% 40% 60% 80% 100%
Surprisingly, the use of printed materials is still very prevalent, with 92 percent of surveyed companies still producing printed content in order to support the sales process. However, more modern methods of support are also very prevalent and we were pleasantly surprised to see that a majority of manufacturers generate demand and pass leads to their resellers.
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Modern Tactics and the Modern Buyer’s JourneyNext, we wanted to assess how prevalent certain methods of engagement had become within the industry. Beyond the obvious use of a website, what types of content and engagement methods do B2B marketers find most valuable?
Downloadable and Gated Content
Give importance to downloadable and gated content.
Find it critical.
Somewhat important
20%
Critical
30%
Very important
43%
N/A or Not used
5%
Not very important
5%
93%
30%
What type of content do you find important?
Again, we were pleasantly surprised to see that the use of downloadable content was so prevalent, with almost a third of marketers considering it critical to their success. The use of this tactic can often be correlated to increases in product sophistication, which creates a need for spec sheets, whitepapers, and more comprehensive collaterals. It’s interesting, then, to contrast the above with the following:
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Printed Collateral
Mention the use of printed collateral to be critical.
7% say it’s not very important at all.
Somewhat important
35%
Critical
18%
Very important
38%
Not very important
7%N/A or Not used
2%
18%
While 93 percent of manufacturers admitted in a previous question that they support partners by producing printed collateral, only 18 percent deem it critical. Perhaps this is an area in which manufacturers can reduce their spend, and reallocate those funds towards higher-value activities.
In supporting channel partners and generating demand, what types of engagement are most critical? We’ve contrasted digital and traditional approaches on the next page.
What type of content do you find important?
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44%20%
11%
12%
20%43%
33%
Traditional Advertising
Attribute some importance to traditional advertising.
None find it critical.
56%
Digital Advertising
Cited digital advertising as being important.
6% find it critical.
82%
Live Events
Find live events to be very important or critical.
Only 10% find them unimportant or not applicable.
50%
Webinars
Think that webinars are very important.
1/4 of them deemed webinars as not important or not applicable.
12%
N/A or not used
Not at all important
Not very important
Somewhat important
Very important
Critical
7%
5%
6%6%
40%
39%
11%
7%
2%
1%
44%
20%
11%
13%
12%
What type of content do you find important?
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And speaking of getting closer to customers, social media—which in just a few years went from being dismissed as a passing fad to being met with fear and apprehension—is now regarded favorably by a majority of manufacturing marketers as a useful way of engaging customers and creating demand.
Content syndication (i.e. making use of third-party websites in order to disseminate digital content) is also broadly used, with almost two-thirds of respondents finding it important.
Social Media
Mention social media as being important.
5% find it to be critical.
Somewhat important
36%Critical
5%
Very important
20%
Not very important
30%
N/A or Not used
5%
61%
Not at allimportant
4%
Content Syndication
4% still feel it is critical.
27%
Not very important
21%Very important
21%
Somewhat important
27%N/A or Not used
20%
Not at allimportant
7%
Critical
4%
Either do not use content syndication or deemed it unimportant
What type of content do you find important?
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Direct Mail
Say direct mail is somewhat important to critical.
18% find it not at all important or not used.
43%
Not very important
39%
Very important
10%
Somewhat important
32%
N/A or Not used
7%
Not at allimportant
11%
Critical
1%
Content and modern engagement techniques play an increasingly important role in guiding the customer journey. However, they have not completely supplanted more traditional engagement methods. In reality, the two approaches are complementary. For example, many marketers use direct mail as a way to drive engagement to digital channels. Using a printed postcard directing a customer to a personalized URL microsite is a great way of obtaining information that will then allow you to engage with customers in a more personalized way through email and social media. Sending product samples at key points in the buying process can also be very effective. One automotive manufacturer mentioned that sending a part that otherwise cost very little to produce and ship created tremendous lift in conversion rates, even though the part on its own could not be used as is. For their engineering customers, having actual parts in their hands connects them with the brand and allows for a deeper level of engagement.
Speaking of engagement, beyond the use of the right medium for reaching prospective buyers, what is it about the content itself that will ultimately create engagement and yield optimal sales results?
Content in the Customer Centric WorldIn 1977 an article appeared in the Harvard Business Review that had the following observation about marketing and manufacturing:
“Marketing personnel in companies that manufacture industrial goods often complain about the activities and attitudes of their manufacturing counterparts with laments such as: ‘Why can’t they become market-oriented or customer-oriented?’ ‘Why are they so provincial?” The manufacturing people on the other hand, lament like
What type of content do you find important?
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this: ‘The marketing people have no understanding of costs, profits, plants or operations. They are just a bunch of dumb peddlers.’”1
To this day, many manufacturing marketers still relate to this observation. You can’t blame engineers for having a product-centric view of the world, given that they dedicate their careers to creating better products and continuously seeking to improve how they are manufactured.
However, new realities (such as an explosion in the number of competing brands, the hyperbolic increases in the speed of innovation, and the globally interconnected world) are conjuring up paradigm shifts in the way manufacturers engage with customers. Oftentimes, this is reflected in the nature of the content that is shared. In other words, not only have there been changes to how manufacturers engage with buyers, but the nature of the conversation has also been affected.
One manufacturer summarized this as follows:
“Although we seek to innovate in all aspects of what we do, the race to get the best feature, the best reliability, and the most unique products is a never-ending one. Each victory is only temporary. By the time we’ve convinced a few buyers that we have the best features or products, someone else has come along and can sometimes offer something comparable more cheaply. This is why we also need to turn our innovative focus to differentiating ourselves in how we help and support our customers, in how we make their lives easier in partnership with our brand.”
1 “Can Marketing and Manufacturing Coexist”: HBR Magazine, September 1977.
How well defined is your content strategy?
47%
Agree
43%
Slightly disagree
15%
Neutral
35%
Stronglydisagree
4%
Stronglyagree
4%
Stated that their content strategy followed established content and editorial guidelines.
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To follow up on this, we asked our manufacturing marketers questions about the nature, quantity, and quality of the content they produce, as a way to assess their ability to support the conversation with prospective buyers throughout their buying journey.
Fewer than half of the surveyed executives told us they have a content strategy that contains established content and editorial guidelines.
Do you have a variety of content covering the buyer’s journey?
40%
Agree
32%
Slightly disagree
25%
Neutral
27%
Stronglydisagree
15%
Stronglyagree
1%
Admitted that they did not have content tailored to every step of the journey.
Forty percent told us they don’t have content that’s tailored to supporting the buyer at every step of the buying journey, from awareness to triggering a buying decision.
One Chief Marketing Officer from a global energy equipment and services company admitted:
“We recognize that we need to map and create content to each stage on the buyer’s journey.... We just are immature in the development and mapping of the content.”
The ultimate measure of how customer centric manufacturers really are may be in the nature of the content that forms the foundation of those conversations with customers.
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When we asked what respondents focused on in their content, product features and specifications still top the list, but messages around brand differentiation are also key. Content around showcasing customer case studies and comparative statements against competitors are used as well, but definitely less prevalent.
While manufacturing marketers are well aware of the need to place the customer (and their relationship with the brand) ahead of product differentiation, they still struggle with producing and managing the content that allows them to do so.
The State of the UnionAre Manufacturing Organizations Well on Their Way to a Digital Transformation and Becoming More Customer Centric?
While previous data points have given us glimpses into the digital maturity level of manufacturing organizations, we ended the survey with more direct questions, asking executives to rate their own organization on key tactics and capabilities.
Given that self-assessments are subjective, we also asked how good respondents are at measuring performance and their knowledge of customers.
What is the focus of your content?
0 20 40 60 80 100
Product features and specs
Brand and distinctive advantage
Customers
Features vs. competitors
0% 20% 40% 60% 80% 100%10% 30% 50% 70% 90%
Strongly agree
Agree
Neutral Strongly disagree
Slightly disagree
17
0 20 40 60 80 100
How effective is your marketing organization at various tactics and capabilities?
Events
Sampling and trialing
Video
High-value content
0% 20% 40% 60% 80% 100%10% 30% 50% 70% 90%
Very effective
Somewhat effective Very ineffective
Somewhat ineffective
Digital media
Marketing automation and lead management
Social media
0 20 40 60 80 1000% 20% 40% 60% 80% 100%10% 30% 50% 70% 90%
Measuring channel performance
Marketing analytics
Customer intimacy
On knowledge and measurements
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Given that marketing plays a larger role today in most companies, and that collaboration with direct and indirect sales partners has never been more important, we asked our respondents to talk about the current state of the union between marketing and sales.
• Excellent collaboration: We’re doing everything we need to do and we see very little room for improvement.
• Good collaboration: We have many common processes and tools, meet regularly, review results, and make adjustments. But there is still room for improvement.
• Fair collaboration: We do have some processes and tools, but we don’t meet as often as we should to review metrics and make adjustments.
• Poor collaboration: We do talk, but we don’t have mutually aligned processes and tools. We don’t meet on a regular basis.
Only 1 company saw no room for improvement.
51%
Good
51%
Poor
5%
Fair
43%
Excellent
1%
Cited having many common processes and tools, meeting regularly, reviewing results, and making adjustments.
Just over half of respondents told us that they have good alignment between sales and marketing, with 43 percent having fair alignment. While these results aren’t surprising, it is disheartening that only one company has excellent alignment between these two critical functions.
Finally, we asked executives for their thoughts on the types of investments they could make that would yield the most positive results.
What is the level of alignment between sales and marketing?
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Investments in sales efficiency, improving content, implementing better lead management processes, getting to know customer profiles and behaviors, and getting measurable results, all come up at the very top of the list, with more than a third of executives expecting significant impact from improvements in these areas.
Many echoed the comments of Diane Slaughter, Director of Marketing for Cameron International, a global oil and gas equipment manufacturer, who said:
“We have major projects in process now to provide us with the advantages of an updated content-driven website, increased use of digital media, tracking of customer behavior, etc. Most importantly, we are working to collaborate around all of this information both internally across the organization and also externally with our customers and partners.”
0 20 40 60 80 100
Increased focus on sales efficiency
Improved content strategy
Better lead management processes
Customer profiles and behaviors
0% 20% 40% 60% 80% 100%10% 30% 50% 70% 90%
Marketing analytics tools
New website
Improved channel partner management
Increased use of digital media
Marketing automation tools
More in-person events
Increased use of social media
Acquiring more leads from third parties
What types of investments are likely to have positive impact?
Significant impact
Some impact No impact
A little impact
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ConclusionSome would argue that surveying members of MAPI, an organization dedicated to productivity and innovation, could yield slightly skewed results (i.e.: the fact that they participate in forums and discussions around the topics of innovation and productivity in sales and marketing could place them at a level of maturity above that of their peers). But the results of the survey are still significant, showing that not only are manufacturing sales and marketing executives sensitive to the changes affecting the buying environment in the last decade or two, but are making great progress in adapting and taking advantage of modern methods of customer engagement.
However, as their engineering counterparts have spent the last 30 years perfecting the art of continuous improvement through Kaizen, six sigma, and lean, sales and marketing executives now need to adopt better tools and processes, better understand customer behavior, and make more precise measurements in order to optimize the impact they have on their organization’s revenue and growth.
As sales and marketing leaders continue on this transformation, they should ask themselves—and ultimately their technology partners—some questions:
• Do we have tools that can store not only customer profile information but also customer behavior as they engage with our content across our website, our social media pages, and on our partner’s websites and social properties?
• Can we manage content in a way that can easily map it against buyer personas, the various stages of a customer journey, and the channels they are interacting in?
• Can information about visitors be leveraged to effectively guide their journey and provide relevant content across different channels such as email, display, mobile, web, social, and others? Does my marketing automation or lead management solution support this?
• Does my current marketing automation and lead management platform easily integrate with other sources of data within the enterprise? Can the marketer have a unified view of all the information about our customers that would allow them to orchestrate engagement across all channels?
• Are we leveraging social media in a way that makes it easier to collect additional insight about customer and competitor behaviors and ultimately inform our marketing strategy?
• Does my current technology platform allow for qualifying leads according to mutually agreed upon criteria around profile information, behavior, and engagement before passing them on to salespeople?
• Can salespeople get any insight into a buyer’s journey, such as the areas of our site they have visited, the content they have engaged with, and the events they have participated in, as a way of better informing the dialog they should be having?
• Are my marketers as productive as they can be? Are the tools and processes that they are using integrated in a way to share data in near real time and to avoid repetitive and unnecessary processes and the bottlenecks associated with poorly integrated products?
• Do we have the right tools to analyze the performance of our marketing tactics and continuously make improvements?
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AppendixMAPI and Oracle collaborated to create a series of survey questions to assess how marketing has evolved in B2B manufacturers in response to the digital age. The 25 questions were sent to members of MAPI’s Marketing and Sales Councils, and 91 executives replied. The average revenue of companies surveyed was $3.52 billion, with the breakdown of revenue below.
Demographic Data
25%
Under $500 million
From $500 million to $999 million
From $1 billion to $1.9 billion
From $2 billion to $3.9 billion
$10 billion or above
0 5 10 15 20 25
From $4 billion to $9.9 billion
15%
12%
22%
14%
12%
0% 5% 10% 15% 20% 25%
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TAKEAWAYS
1. Marketers in manufacturing have seen a rise in need for “Customer Centricity,” which aims to focus their attention on their customers rather than just the unique qualities of their products and services.
2. Manufacturers face challenges in the transformation to customer centricity, in part because they are often shielded from end customers behind an indirect distribution channel. They rely on complex distribution networks to bring their products to end customers, and sales and marketing have typically focused their efforts on recruiting new partners. Of the manufacturers surveyed that sell products through indirect channels, though, 69 percent said more collaboration was required now than ever before.
3. In the digital environment of today, buyers have more direct and immediate access to the manufacturer. Manufacturers can also address buyers more directly. This offers opportunities for new types of dialog, but also creates a need for peaceful coexistence and a cohesive message between each level of the distribution channel.
4. Shifts in the manufacturing environment have changed the way manufacturers engage with customers at all levels, right down to the type of content they share. Of the manufacturers surveyed, 47 percent said they have a content strategy that contains established content and editorial guidelines. Forty percent said they don’t have content tailored to support the entire buying journey.
5. Survey respondents are focusing future sales and marketing investments on sales efficiency, improving content, implementing better lead management processes, getting to know customer profiles and behaviors, and getting measurable results. Improvements in these areas were expected to create significant impacts.
23Copyright © 2014, Oracle and/or its affiliates. All rights reserved.
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About MAPIMAPI (Manufacturers Alliance for Productivity and Innovation) is the network that connects manufacturing leaders with powerful ideas to tackle difficult challenges. Executive education programs provide an opportunity for exec-utives to share best practices, discuss solutions to shared challenges, and become more effective leaders. By leveraging the experiences of their peers, members use MAPI to make their enterprises more competitive and increase their personal effectiveness through the use of live meetings and webinars, online discussion forums, and benchmark surveys.
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