Being a Value-Added Product in a Commodity WorldBeing a Value-Added Product in a Commodity World

Being a Value-Added Product in a Commodity World Transcript:

Announcer: You’re listening to The Kula Ring, a podcast made for manufacturing marketers. Here are Carman Pirie and Jeff White.

Jeff White: Welcome to The Kula Ring, a podcast for manufacturing marketers brought to you by Kula Partners. My name is Jeff White. Joining me today is Carman Pirie. Carman, how you doing, sir?

Carman Pirie: I’m doing well. How are you doing?

Jeff White: I’m doing great. Yes. Looking forward to a lot of recordings today. Yeah, we’re in the studio.

Carman Pirie: Yeah, it’s one of those records, that kind of recording days. That’s good. This is, I think this is the first, though. So, you know, we should. We shouldn’t be, you know, sounding particularly raspy or anything. 

Jeff White: Not yet. 

Carman Pirie: If our, if our questions seem particularly bad or that our brains aren’t working well, it’s only going to get worse.

Jeff White: We’ve had enough espresso. Hopefully to curb that potential. And, you know, we can take up smoking between now and the next one to really get the rasping underway.

Carman Pirie: I am on it.

Jeff White: But I am looking forward to, to our guest today. It’s an interesting topic and one we haven’t really covered on the show before, but we have encountered with a few clients in the past.

Carman Pirie: Yeah, and it’s just a common challenge in the manufacturing space. But it’s one people don’t like to talk about at parties, they think there’s something.

Jeff White: I don’t know what party you’re going to.

Carman Pirie:  You know, I mean, it’s a you know, it’s you know, it takes a bit of so. So guys, I guess what we’re talking about today is kind of the challenge of commoditization. And, you know, to talk about it means you have to, almost, there at least needs to be an admission that there is a commoditization in the space, I find. It’s interesting to see how some people won’t even go there like they won’t even allow themselves to imagine that that’s what they’re encountering. So heaven forbid we actually begin to solve the, solve the problem. But today’s guest is hook, line and sinker into this. 

Jeff White: And really interested in working towards. 

Carman Pirie: Yeah, so let’s jump in. 

Jeff White: Sure, so joining us today is Matthew Seymour. Matthew is the VP of marketing at Hyperion Materials and Technologies. Welcome to The Kula Ring, Matt.

Matthew Seymour: Hey, guys. Glad to be here. Glad to be here early in your day. 

Jeff White: It only gets worse. 

Carman Pirie: Yeah, exactly. It’s like the surgeon’s first patient or something.

Jeff White: I don’t know if you want to be the first.

Carman Pirie: I don’t know. I mean, of the day, not first ever. You know, we want to come to this fresh.  Matt, tell us a bit about yourself and Hyperion, if you would.

Matthew Seymour: So. So I’m. I’m Matt Seymour, the VP of marketing at Hyperion Materials and Technologies. I am, I am a marketer at heart, but I’ve always been in the industrial space, so that’s why I love this podcast so much. It really hits that, that topic. Hyperion Materials and Technologies, is an industrial manufacturer of hard and super hard materials generally for tooling production line specialty components, primarily diamond and cemented Carbide. So when you, when you go, when you get your drill, that’s a diamond tipped drill or a carbide drill for cutting through hard materials. That’s the type of thing that we make. Although more for the industrial tooling and industrial manufacturing market. Not, not, not really the home market. Right. And Hyperion comes from General Electric, who is the company that invented the, the artificial diamond for industrial use. So we have a long history of that. So to the topic of commoditization, this was not a commodity 40, 50 years ago when it was invented and we still don’t think it’s a commodity, but the market starts to see it in a more commoditized view.

Carman Pirie: You know, let’s say, I mean if that’s happening to something that’s as cool sounding as like, you know, diamond cutting things, right? It’s like, I don’t know. I mean, I love that. I remember when I worked at at the Electric Utility and we had a one of our hydroelectric dams was under some kind of interesting kind of cement swelling conditions that were not anticipated and there had to be a specialty diamond saw that is basically taking thin slices out of the dam or keeping the dam, to reduce the pressure while still keeping it there, which, you know, frankly, sounds like the furthest thing from a commodity. It sounds just really cool. But as I appreciate what you said, they’re mad around. It’s not like it actually is a pure play commodity, but the market is seeing it in a more commodity.

Matthew Seymour: And I think you’ve framed it the right way there because that saw itself is definitely not a commodity, But the diamond that goes into that saw there, there are a lot of suppliers of that diamond and a lot of suppliers who are trying to to make it seem like, hey, all, Diamond is the same. And that’s just really not the case.

Jeff White: When, when you come at it from that perspective, you know, one of your competitors or suppliers who are you know, they’re trying to make it seem like a commodity, one would assume, because their product is not necessarily at the same level, say, as Hyperions, for example, You know, how how do you tell the story about how you don’t necessarily envision it in that way?

Matthew Seymour: Yeah, that’s, that’s really the core of what we have to do, right. And it’s all about having that, that value messaging right? You know, there’s always the quantitative side of the value messaging and making sure that, that sales teams have easy visibility to the customer in terms of that quantitative value. I mean, when we talk about, when we talk about that, that sourcing example, you need to make sure that store doesn’t dull so you can get those small pieces of, of concrete out of, out of the dam where the swelling is. And you can get to those quantitative numbers through really good testing. But the truth of the matter is those are hard to communicate. So it really needs to be a combination of quantitative measures and qualitative justifiers and really being able to build up those justifiers as an organization. Things related to customer service related to additional value propositions like supply chain security. I think those become really core messages as you’re, as you’re talking about your product line in comparison to two other product lines.

Carman Pirie: That’s a really nice and concise way of talking about that, that notion of quantitative value messaging, yes, you have to do it kind of sometimes hard to, hard to get that information and even sometimes harder to communicate qualitative justifying it really kind of gives us. So what? And as well, I’m guessing in some ways opens up the appetite to be able to digest the quantitative value messaging.

Matthew Seymour: Yeah, and, and the quantitative value messaging, the challenge of it is, is there’s always you have to have really tight data behind it. And if your data is, even if your data is tight, your competitors data might not be tight, but they may be trying to say the same things from a quantitative perspective because your customers can’t always digest that data in an effective way. So having those qualitative justifiers really allows you to take that to the next level. And despite them being qualitative, they’re still solid and firm when you talk about things like supply chain, customer experience, ease of doing business, ease of engagement, responsiveness, all of these things, while traditionally industrial companies focus on the values of their product, some of these broader values of the company can really help drive home the value of the quantitative side as well.

Jeff White: I really you know, we see that a lot, especially in, you know, kind of high technology industrial applications where, you know, there’s a lot of competition speeds and feeds, I think is, you know, you hear that a lot. Certainly in in I.T. and tech, you know, but the softer side of that is interesting because, you know, it removing the commoditization through the lens of the relationship and the stability of the product offering is a really interesting way to kind of distance yourself from somebody just comparing, well, this one is supposed to last as long as that one, and it’s just as you know, has just as much hardness as as theirs but maybe they can’t get it and keep it in stock.

Matthew Seymour: Exactly. It’s that, it’s that message of well, they’re saying the same thing that you’re saying about, about the product itself. And even if technically not, true perception becomes reality in that case. And, and keeping it in stock, I mean, that, that’s a, that’s a perfect one with, with the demands and especially post-COVID. Right. post-COVID post the supply chain issues that people had with, with COVID and with China. Supply chain and being able to keep it in stock is really, really critical. And that’s whether the product comes from, from the U.S., whether it comes from Europe, whether it comes from Asia, you’re still having the item in stock is sometimes more important than an extra, you know, three days of runtime on a product.

Jeff White: Do you think that advantage goes away once we’ve kind of gotten past the maybe we’ll never get past the supply chain issues but you know do you think that, reliance on, on supply chain stability becomes less of a selling feature once people get a bit more stability throughout the global economy?

Matthew Seymour: I think that there will be at, at a at a point some distance from it, but it’s going to be something that still lingers in people’s memories. I think okay COVID is certainly going to be something that we remember how it impacted our businesses for the next 10 to 20 years. And companies have gotten more competitive and things like the supply chain topic by relocating some of their supply chain to more accessible locations, but I think will also come to a balance point of companies trying to level out their inventory. Again, two companies built up a lot of stock during this period so that they weren’t impacted by supply chain issues. So as they start to lower those stocks down, I think we’re going to, to hit that risk point again where the message helps reaffirm their decision to lower stock, knowing that they have a partner with a more stable supply chain.

Carman Pirie: Wondering as you think about this quality of justifying messaging side of side of your messaging strategy, do you know, I mean, the supply chain is kind of an interesting one that kind of pull on a little bit because it it’s speaking to a kind of a market condition, you know, that will ebb and flow in importance over time. So I would assume in your messaging, you may put it in the window or take it out of the window a little bit, you know, over time. Depending on the extent to which it’s a priority in the market. But then there are other qualitative justifications, I’m assuming, that are, as you mentioned earlier, maybe a little bit more tied to corporate values, long term corporate positioning, heritage of the firm, etc., things that are a little bit more, if you will, part of the DNA and not just something we choose to talk about because it’s advantageous right now. Do you think about that split consciously or is it just kind of what happens to be working?

Matthew Seymour: I’ll be honest, I would say I probably, probably don’t think about that split consciously. But, but that split is, is really clearly there. I mean, I look at a company like mine, which is Hyperion Materials and Technologies. We are also a technology company, even though we sell metal and diamond. Right. And being able to lean on that heritage of a company, that experience in in in developing new product, even if the customer sees that product today as as being somewhat interchangeable with others, having justifiers like a history of technological development, sustainability. And I think sustainability continues to be an important key message really heavily in, in Europe right now, but also in, in the Americas and in Asia, being able to be a supportive partner in, in recycling and creating that kind of that circular life cycle of, of the product. All of these things as as an industrial manufacturer are are important to our customer and our customers customers.

Carman Pirie: Beyond the messaging. Matt, I’m wondering how else this battle against commoditization happens to come to life in your world.

Matthew Seymour: I think, I think there were, are really two other major places. One of them is, is in first party data and really making sure that as a company we don’t just understand our customers, but we understand our non customers to people buying products like ours. But, but not yet buying from us. I think having a well cleaned, well-managed and well developed set of first party data really helps a company to understand who it is that are the commodity buyers and who it is that aren’t the commodity buyers. And it’s not as simple as this. Industry tends to buy it as a commodity, and this industry tends to, tends to look at the value add. Some of this is a really on a person by person, company by company basis, which is one of those places where it’s really critical that marketing works with sales to understand these potential customers, engage with them, document effectively in the CRM what non customers are buying on so that you can tailor messages to even convert some of those customers that are those non customers that are commodity buyers to act more like the value added buyers that are in the same industry or the same target segment that you’ve built out.

Carman Pirie: This is, I’m kind of being reminded of what happens a lot of manufacturing marketing where you have people that sell big like large equipment purchases and they have a split difference in their and their target base. People who are exclusively focused on CapEx. And so it’s, it’s got to be the lowest cost of acquisition of that. Capital expenditure has to be as low as possible. And then there’s kind of total cost of ownership buyers and they’re very different beasts, very different procurement animals. They think about just what they value is different as organizations. And you’re right, it doesn’t always just break down around, Oh, well, this industry is just chock full of, of total cost of ownership style buyers that are more sophisticated, etc..

And this industry is chock full of something else. So it always is a mix and almost a company by company level. And it doesn’t make that first party data really is the secret sauce, isn’t it? But you have to have the discipline and the, the budget to do it, like you have to care about it.

Jeff White: There’s a technology play there. Yeah. In order to manage that.

Matthew Seymour: Yeah. And, and Carman to that, that point you, if you have your first party data correct, then you might even be able to find that one total cost of ownership influencer at a company that, that generally buys based on, based on the initial investment. And if you can get that guy on your side, you can make those inroads, especially if you have really good examples within that first party data of how you drove a lower upfront cost before the total cost of ownership within that same segment. Right? Using the segment to model and then really dig in and target drives, drives real value for this kind of sales to marketing connection or marketing to sales connection, really, marketing being able to help make that connection to make it easier for your sales guys to get in the door. But, but you guys are right, there is a huge discipline issue that you have and making sure that all of this data is maintained on a regular basis, making sure that your systems are able to hold that data. But if you get the system set up right and train and train the teams right, you can really get some incredible insights that help you find the right buyers at your potential customers.

Carman Pirie: All right. Well, that you said there were two. First part of the data was number one. So that was really cool. Let’s go into number two.

Matthew Seymour: Number two is being easy to do business with. I think when when you’re looking at commodity type buyers and and even if those commodity type buyers are not your target market being able to be a substitution for them when they have, for example, a supply chain problem when they run out of stock in their regular supplier, just can’t get to them fast enough. Being able to be an easy substitution for that kind of first time buy maybe they’ve never bought from you. They’re looking for product X and you have product X dot two, something that’s close enough for their, for their application and they just need to get that. It can’t be hard for them to do business with you, right? It can’t be that they have to go through a long period of validation as, as a new customer. They need to be that, that customer that can just engage by a couple, a couple pieces of product. It’s got to endure and you’re good to go because then they get that first taste of your product. They start to see that differentiation where you really have that, that added value. So being easy to do business with, being easy to acquire that first sale at a new customer who might not be normally within your expected target group is critical.

Jeff White: How do you do that? Because I mean, obviously sales is involved in that, marketing’s involved in that. But things start to change when you, you know, you got to put somebody in your ERP and understand them up that way. Like how, how do you onboard someone in a way that makes them go, wow, that was really easy. Like we should buy more from these people.

Matthew Seymour: It’s, it’s tough. I, I wish I wish I could give your listeners a really clear answer to that one. But I think it’s one of the critical challenges of, of us as, as business to business marketers trying to, trying to steal share from, from, from commodity commodity vendors. I think you know, you look at a company like, like Amazon, in fact a lot of companies where they have an e-commerce platform and, and it’s a relatively simple or straightforward e-commerce platform. So making, making that, that journey for the customer on their own through the products as simple as possible allowing a guest type checkout with the credit card makes just a huge difference on a first on a first transaction. But you still have to get all of their information acquired at that point because you’re going to be shipping a product to them. But if you can, if you can simplify that very first transaction, you set up the sales team for success and engagement in following up with that customer afterwards. And maybe that customer doesn’t become a regular customer of yours, but if you’ve given them such a simple way to make an into a first time transaction, then maybe they always come back to you as their secondary supplier of choice and, and being in that position. And for somebody who would not normally select your product is really an excellent place to be in.  Additionally, if the reason they’re coming to you is because of the ease of getting, getting your product. You us as a not not us, but any value added customer can can make a little additional margin on that because now you’re selling the product to them with that very clear additional value up the supply chain, it becomes not just a justifier, but it is the decision making process for that person when they’re coming to you.

Carman Pirie: Mm. I think this is really, you know, people think we experience it all the time as consumers, of course. I mean if you’re a cola drinker and you like Coke and you’re at the restaurant or whatever in the order company and we have Pepsi, they want Pepsi, you know, we have one or the other. And at that time when somebody tries, you experience that as a consumer, but you always think about it as a manufacturing marketer and that notion of, okay, kind of in similar ways, what are we doing to get that, that substitution trial? Well, it’s about making that first order easy and being easy to do business with, and that’s really great advice. Matt, do you put more, do you apply some level of kind of marketing effort into the, the early onboarding or what happens in those first phases of being a customer? So when they’re first receiving the product or what have you, is there, it seems to me that that might be a pretty interesting opportunity.

Matthew Seymour: I think that is an interesting opportunity. I will say that’s not something I’ve been deeply involved in. We’ve done over, over my career inbox marketing, for example. So when the customer first receives their, their product, they get some sort of additional message to go with it. Also, a great way to help consumables or or corollary, complimentary products that, that might go with something. But you’re absolutely right that that first kind of engagement between the customer and their newly purchased product, they’re newly connected vendor, really does become, become critical. Early in my career, I was a telemarketer. And as a telemarketer, one of the best things that you can do is you have a positive conversation with a customer, with a potential customer, you send them a LinkedIn connection. Of course, this is industrial business to business. Most of, most of these people have LinkedIn and, and then the next time you talk to them, you have that initial connection that they actually know you. You’re not just a phone, a number, a name on the phone or a voice on the phone. And I think that’s the same thing for the, the product after, after that first sale. You’re not just the product. You need to find a way to become the company that, that supports them. And, I once worked for, for Disney. And one of the things that, that they told us as, as, as new cast members there is that you’re not competing just against just against the other amusement parks in the area. Right? You’re competing against every cash register that a person comes up against. When our phone team is competing against every experience that the person has, calling customer service on the phone. And I think thinking that way helps set you apart. I mean, that’s why Apple’s box opening is such an experience, right? It gives you that connection to the product even before you see the product for the first time. I think that’s a place a lot of industrial marketers could, could learn and focus from.

Carman Pirie: Yeah, it’s a, it’s a really interesting bit of instruction here around what part of the customer journey to focus on where to apply the marketing horsepower and to beat commoditization. And it’s been a really fascinating conversation. Many I’m kind of, I hesitate to end the conversation, but we do have to do that at some point. I wonder, is any kind of parting advice for our listeners who may be dealing with this same challenge? Anything that maybe has you excited for the coming year is a new way of dealing with this challenge potentially.

Matthew Seymour: I actually think that you guys framed it well at the beginning, right? People don’t talk about it. People don’t talk about it because they don’t want to admit that their product is commoditizing. But you could admit that the market is it, has, has a commoditization factor without admitting that your product is commoditizing. And because I will say our product is, is not a commodity, most of, of, of your listeners, their product, even if they’re in a commoditizing market, their product is not a commodity. Their product, our product is a value added product. And it’s critical that we make sure as marketers that we let the market know about it. But you also have to be able to comfortably recognize you’re competing in a different environment than if you’re competing against other value added sellers and I think as long as we as marketers and going into that going into next year, start thinking about how we talk about it internally, it’s going to help us drive our marketing message and focus that marketing message that helps our sales teams grow, helps our revenue grow and helps our margins.

Carman Pirie: Fantastic. Matt, thank you for joining The Kula Ring. It’s been wonderful to have you on the show.

Matthew Seymour: Thank you, guys.

Jeff White: Thank you.

Announcer: Thanks for listening to The Kula Ring with Carman Pirie and Jeff White. Don’t miss a single manufacturing marketing insight. Subscribe now at kulapartners.com/thekularing That’s K-U-L-A partners.com/thekularing.