How B2B Manufacturers Can Avoid Channel ConflictHow B2B Manufacturers Can Avoid Channel Conflict

How B2B Manufacturers Can Avoid Channel Conflict 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 and joining me today is Carman Pirie. Carman, how are you doing, sir? 

Carman Pirie: I’m doing fantastic. It’s good to be chatting with you today. 

Jeff White: Yeah. Yeah. Looking forward to our conversation. 

Carman Pirie: Today’s guest is going to help us navigate digital transformation while hopefully avoiding channel conflict, and I know that that’s a subject that comes up often as people look to change how they go to market, and I’m excited for today’s guest. 

Jeff White: Yeah. I think it’s a pretty common thing, especially in the manufacturing space, when you have distribution models and other things like that. There are a lot of people with a lot on the line when it comes to actually getting the products out there. 

Carman Pirie: Indeed. Well, look, without further ado, let’s introduce the guest. 

Jeff White: Indeed. So, joining us today is Kevin O’Boyle. Kevin is the Director of Marketing and Digital Business Solutions with InterMetro Industries. Welcome to The Kula Ring, Kevin. 

Kevin O’Boyle: Hey. Happy to be here. 

Carman Pirie: Kevin, it’s a real pleasure to have you on the show. Why don’t we just get underway with a bit of an introduction to Metro and your role there?

Kevin O’Boyle: All right, so Metro has been around for 90 years. We are a diversified manufacturer of storage and distribution products used in foodservice, healthcare, and commercial industries, predominantly restaurants, hospitals, and labs. So, we started off, our name, so the name Metro is synonymous with wire shelving, so if you’ve ever seen wire shelving in a restaurant, or in a garage somewhere, that was invented by our company back in the ‘50s, and we still sell a lot of that stuff today, so we’re like the Kleenex of wire shelving. But over the years, we diversified and broadened out, and we sell many other products in those vertical markets that we serve. 

And just a little bit about me, so it’s funny, I joked years ago that marketing would be the last skill or profession I would ever be in. I was an electrical engineer by training. I went to business school. I majored in finance and strategy. But I guess in manufacturing companies, a lot of us ex-engineers end up in other roles. So, I’ve been in this marketing role for around five years now, and I’m really enjoying it. With digital and digital transformation, digital marketing, how that’s taken off, it’s been a very fun role for me to kind of mesh the kind of diverse skillsets that I bring to the position. 

Jeff White: I think we could do an entire episode of interviews with marketers who are formerly engineers. 

Carman Pirie: Or at least didn’t intend to be in marketing. I mean, Kevin, if it makes you feel any better, my background is in finance and natural resource economics, so I don’t think I intended to be in marketing, either. I’ve been in it my whole life. 

Kevin O’Boyle: I’m very fortunate to have good creative people on my team, you know? You can’t put an engineer in charge of the marketing department unless there are some actual good creative people behind the scenes doing the marketing work that needs to be done. 

Carman Pirie: Nice. Look, let’s jump into the work that you’ve been doing because I know that you’ve been leading the organization through a digital transformation agenda, and in doing so, endeavouring not to create channel conflict along the way. So, I guess first things first, why don’t we explain the channel environment that you’re dealing with and what we’re endeavouring to navigate as this transformation is underway? 

Kevin O’Boyle: Sure. Happy to. So, it’s good to talk about our business just to put some… Every business is different. Every channel and every industry is different, so it’s good to put some of that stuff into context. Part of what makes things complicated for our business is [that] we have a small retail segment. It’s shelving, right? So, shelving can kind of be anywhere, be anything, so it just ends up there because people just want to use it to store things, but it’s not the core of our business. The core of our business is commercial-grade shelving. 

So, our foodservice and commercial businesses are almost entirely channel-based, but in healthcare, we do sell direct to hospitals, and we have our own sales force that goes and calls on those people. Whereas in the other markets, we have a sales force. They’re sometimes working with end users, helping them figure out what they need, and then pulling that demand through the channel or working with the channel to develop marketing programs and educating them so that they could sell to our end users. But with ecommerce, any decisions that you make affect all markets equally, so that’s another challenge. There are different business models that we need to support, so that’s the first thing to put into context. 

If we were just a healthcare business, it would be kind of vanilla. We’d be able just to sort of do what other people do, set up a website, put some SKUs on there, and then let people take orders. But what’s important is that our distribution partners in the foodservice and commercial parts of our business are very valuable in the buyer’s journey in what they do. And really, our product doesn’t get to the end user without those people. And I just think it’s important to understand who’s doing a lot of the work in making the sale happen, so a lot of our stuff is sold in big projects when a new lab is being outfitted, or when a restaurant is being remodelled or built. I was at one of our dealers a couple [of] weeks ago, right before all this happened. This was a small restaurant, mind you, it was over 100,000 different sellable items that had to be specified and ordered to build a restaurant. So, their aggregation at a project level is massive, the work that they do, so maintaining our partnership with these people is core and vital to our business. 

Carman Pirie: So, you’ve been working to evolve an ecomm presence. I think it just launched as of this recording just a few days ago, so how have you bent to the task of creating that ecomm presence, understanding that the channel partners and the importance of it? How has it changed what you’ve done? 

Kevin O’Boyle: So, going back several years, when we were starting to lay the framework for what we would do, the question came up about what are we going to do with the traffic that’s on our website? Because there are people that are on there and they want to buy a product. We’re blessed with this brand name that’s been around for so long, and it’s synonymous with shelving, so there’s just this organic demand that just gets generated because of the name of our company. 

But that being said, again, when you look at the buyer’s journey, it’s like that channel is really vital to what the business is today and how it is we go to market. So, when your business isn’t mature in thinking through these issues, you can… At least in our case, we got hyper-focused on the transaction, what we would do there. Once we did enough research and we ideated on it enough, we realized it was the least important thing, rather than the most important thing. And we started looking at other benchmark companies that are out there, companies that are B2B, and very innovative, with strong brands, and what are they doing with their experience. Once you started laying out all the components of a comprehensive ecommerce strategy, those things that drive conflict are… and for a lot of businesses like ours, maybe the least important thing you should be doing. Especially with the rise in marketplaces and what people are doing, and where they prefer to buy. 

The importance of your own website from the standpoint of a transaction, it’s probably decreasing. I could be wrong there, but that’s just kind of my opinion, that each company’s, each manufacturer’s website is going be the place for you to provide highly enriched content, to educate users, and make sure that they know the right tool for the job. But that’s not where they want to buy. If there’s a project, there is some service that they need that a dealer provides. If they’re doing replenishment or just simple demand items, then there’s a marketplace or an ecommerce dealer that’s probably gonna suit that need really well. To think that you’re gonna steal demand in one of those two buying cases off those people for a transaction on your site, versus making sure they have the information that they need. 

Once we kind of realized that, it helped us put some of the building blocks in place to start building a roadmap in the proper way. 

Carman Pirie: That’s really… It’s interesting. I don’t know that I’ve spoken with a marketer who has so readily accepted that perhaps marketplaces are where that business is going to go, and they can’t capture that with their ecomm presence. I’m not sure if I agree or disagree with you. I’m just simply saying I don’t know that I’ve heard somebody say it quite like that before. 

Kevin O’Boyle: So, I’ll try to unpack that then, because again, this is our take. This is our take on this, but there’s so much other good work you can do. Because what’s the end user trying to do? The end user is trying to find one of my products and buy it somewhere. But they also might want to buy my product with a bunch of other products that they need at the same time. How many usernames and passwords does that person want to have? How many different sites do they want to have accounts on where their credit card information is stored? Will I ever have the distribution presence? Yeah, I have several distribution—will I ever really have the distribution presence of an Amazon, or some of these other large, vertical-specific dealers that are out there? 

But the idea is… ecommerce has several components to it beyond the transaction. One component is how do I use digital transformation to enable my own sales reps, to make them more efficient, to give them digital tools to sell better, to generate more demand, to capture more demand, to convert more demand? How do I enable my existing sales channels with digital content to better market to end users and sell my products to end users? How do I get better content on ecommerce dealer sites to help them grow sales of my products on their sites? Just looking at the ecosystem more broadly and thinking about where you invest your dollars, and because again, we love our channel. They’re super important partners to us. They’re a super important part of the value creation. We aren’t interested in trying to compete against them, you know? 

Because once you choose to transact, and then there’s the whole pricing discussion that we can maybe get into, like then it’s the transaction and the price that drive conflict. Everything else can be complimentary and growth-oriented. 

Jeff White: So, given all of that, where does the Metro ecommerce platform fit overall in your go-to-market strategy? Where are you choosing to play there and are you maybe holding back some of the fulfillment with the ecomm platform and allowing the channel partners to provide that? 

Kevin O’Boyle: Yeah, sure. So, before answering that question, when we looked at what lots of other companies did, so right now on our site, you can put products in a cart, but you can’t buy from that cart. That cart can generate a quote request. Which is an improvement over a basic lead management process. With a basic lead form from a tool like HubSpot or Marketo, you put something in the comments, the form routes to a sales rep and the sales rep follows up with that person. That’s the way a lot of us just use our lead form process in lead management. 

At least today, they can go through a full ecommerce shopping experience, they could put their products in a cart, and then they can request a quote of that cart. I’ve got a few steps down where the SKUs and the quantities are specified, it’s automatically routed with a PDF to my sales rep, and my sales rep can decide at that point who is the right dealer or partner to bring into this transaction with the end user. And what’s the right pricing that that person needs? And they could work with the dealer and the end user to kind of get to that right scenario. 

Today, where we’re at is what I’m calling a quote cart phase, so prior to this version, our website did not have any SKUs on it at all, which was a massive undertaking for us. We have 30,000 sellable items. We only have 7,000 of those online right now, but the effort to get 7,000 images, descriptions, et cetera, gathered and in a digital-ready state was a large undertaking, so we’re going to continue to improve and grow. 

So, I’ll say we went and benchmarked what we thought were great experiences from great brands. One of the first ones we fell in love with was RIDGID Tool, and what was really unique about them is they delivered like three different transaction models on one site platform depending on kind of what the product was and what the segment was. So, RIDGID Tool has stuff that’s sold at Lowe’s and Home Depot, sort of their commodity, basic tool stuff, and if you select one of those products through the site, the site’s actually branded differently. It’s branded orange and they were directing you through a how-to buy a software program to that SKU on Lowe’s or Home Depot to go and buy it. 

Then they have their commercial division, their professional tools, the site was branded red, and for that, they took you through a more complex “Where To Buy” workflow. So, the way that they avoided channel conflict is to offer up several options, both brick and mortar dealers and online dealers, and then based on your preference as a user, they help you quickly search, and there’s a couple of tools that do this. One of them is like PriceSpider, one is Numerator, and they help you search through quickly whether you want to shop online and finish that transaction or get some kind of consultative service at a local brick and mortar dealer. STIHL USA Chainsaws, they do something very similar as RIDGID. And then we looked like, “Well, where does that go long term?” We also looked at Sony Cameras, like something a little more consumery, so they do compete directly with Best Buy and other distributors that they have, because the camera that’s sold on Sony is the same camera that’s sold on Best Buy, and they’re all selling it for the same price. 

Consumer is a little different than B2B, but they still use that same “Where To Buy” process online, because hey, maybe they don’t want to buy. Maybe they want to get it from Best Buy, so in case they want to go and do an exchange or get it serviced, or whatever, I prefer to buy from them rather than directly from the manufacturer. Bosch Tool, so this claim too, it was a Bosch Tool, it was said in a conference by them that they don’t view their own site, like it’s a small fraction of their sales, but it is not the strategic component of sales. It’s there for convenience for the people that want the trust of just buying directly from the manufacturer, so that was one that we thought was very applicable and suited our business, and we’ve been kind of operating under that same mantra. 

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Jeff White: I don’t want to lose sight of something you said there, because it really does speak to the almost Herculean effort that’s required in order to bring a site of tens of thousands of SKUs to life for ecommerce, and you said you managed to get 7,000 SKUs up out of 30,000. What was the process for doing that? Did you manage all of it internally? And how difficult was it? Because I just think that there’s a dose of reality for any manufacturer looking to move into an ecommerce platform when it comes to actually gathering that content for your SKUs and making sure that it’s all fully available and of a quality that you would anticipate from the manufacturer. So, what went into that? 

Kevin O’Boyle: That demand was… It started to be pulled out of us from some of our ecommerce partners, where they wanted to put our SKUs on their site, and they give you these massive spreadsheets that have 200 columns of data on them. One of the pieces of advice I’ll see if you’re a manufacturer, like look heavily at investing in a product information management tool, something like a Salsify or equivalent. It’s really going to help you manage that whole process and streamline how you ultimately distribute this content. But your question was about making it, so sorry for doing the Salsify plug there. 

Jeff White: No, I appreciate that. 

Kevin O’Boyle: Right, so we created the studio, white-walled studio to do some of the photography. We prioritized our SKUs based on sales volume and we assigned a person to it almost full time because there was so much data that needed to be gathered and cleaned up, the coordination of we had to get the product sent from the factory, sent up here, staged, photography, picking the right photos, organizing them all into the PIM, categorizing them, everything else. It’s been a three-year undertaking to get from zero to 7,000 for us with one person almost dedicated full time to it. 

Carman Pirie: So, just so you’re aware, Jeff is going to use this for any time that people want 7,000 SKUs from scratch in like three months put up on an ecomm site, this is why Jeff just completely plugged this question in here, Kevin. 

Jeff White: Just tee that right up. 

Carman Pirie: But three years is astonishing, but it doesn’t surprise me. It’s a bigger effort than almost anybody estimates. 

Kevin O’Boyle: The other challenge, too, is a lot of manufacturers like us have products that are highly configurable, and we all have these complex configurators and everything else, so what do you do in that case? A lot of those products aren’t necessarily designed or set up for an ecommerce site, so then… But it’s a wonderful exercise. Then you go back and work with your product management team. So, you know, what really are the center of bell curve configurations that should be standardized, shot, imaged, et cetera, that can become a part of the normal catalogue that doesn’t have to go through the cumbersome configuration program. 

Carman Pirie: And I think it’s fantastic advice for people to start now with the PIM before you worry about standing up ecomm, because you’ve got some work ahead of you. 

Kevin O’Boyle: Oh, absolutely, because again, it’s the strategy… So, for us, like the PIM and what’s in the PIM, it has to serve more than just the website. Ecommerce sites have their own catalogues baked into them, but that same information has to go to 20 other places. 

Carman Pirie: Of course.

Kevin O’Boyle: It was so important to get it in there. If we’d have done all that work to put it in our own catalogue, it just would not have brought value to what we’d done. I will say we waited before we pulled the trigger on it, too. We managed the process manually in Excel for as long as we could, just to kind of avoid some of that cost, but once it got to a scale, we’re like, “Okay, now is the time.” It gave us time to invest and make sure we were doing the right thing, because at the beginning when we were at less than 1,000 SKUs, why should I spend that much money on a tool until it’s really ready and at the scale to start doing what it is we need it to do? 

Carman Pirie: Understood. I’m curious because you’ve talked about moving away from the transactions being the place of importance and moving to kind of product information, educating the customer, et cetera. And I’m certainly picking up what you’re putting down. I like some of the examples, RIDGID Tools and others that you’ve mentioned. I’m curious, this obviously has changed how you have framed up your KPIs for your initial ecomm launch, so how are you measuring the success of the site? Because of course you don’t have that very bottom of funnel ecomm measurement called sales right now, so how are you doing it? 

Kevin O’Boyle: I’m using the quote request cart amounts as my measure of success. You know, so obviously, so there was some leakage from that number, but at least I could track over time what is the volume of quotes that I’m generating through the cart? Prior, when it’s just a comment box, I don’t know the amount that’s there. I don’t know if they want one, or if they want 100, and which product it is, and all that kind of stuff, and it really caused problems for my sales team, because they’d be getting orders for like replacement parts at the same time as projects that are five or six figures, you know? 

Now I can segment it and triage it based on the amount, and I can measure based on amount because before, I’m assuming regular average order values. Now, I can actually quantify or measure it and try to grow it over time. The site does have the accessories built in, like a very easy to manage add, so I do hope that people will increase the bundle value by using the accessories there. It’s a proxy metric for revenue, I think it’s still a revenue metric, nonetheless. 

Carman Pirie: Will you be able to close the loop eventually with those quote requests? Is there a linkage back at some point if somebody does transact the channel partner? 

Kevin O’Boyle: Yeah. It’s a really cool tool, so the platform we went with was BigCommerce. It has a marketplace of other little apps that plug into it. This particular app is called Quote Ninja, and it does allow you that if you want to then turn that quote back into an order, you can do that through the piece of software, so you could discount it and then process it. I mean, so where we’re at today is just… I mean, I think eventually we will transact, but we’re always gonna transact in a dealer-friendly way, so that where to buy tool, like by PriceSpider that RIDGID Tool uses, we might do something like that in the near future. 

Carman Pirie: I think that’s a great point, and absolutely useful for listeners. Thank you for highlighting the toolset there. I think that will be helpful for people to go and research. It kind of begs the question as I hear you speak of this, and you’ve certainly… You’re quite a ways down this transformation path, but you certainly seem to be looking ahead, as well. So, I guess with all the benefit of hindsight based upon where you’re at today, is there anything thus far that you’d either say you’ve got wrong or you underestimated? Anything you wish you’d have done differently at this stage? 

Kevin O’Boyle: We’re a very conservative company, so I think we’ve moved pretty slow. We’ve been very careful. I guess one of the things I’d say that has been well is that our CEO is heavily, heavily involved at every stage of the game. I’m lucky that I have a CEO who very much understands, and appreciates, and drives marketing, and if you don’t have that as you’re going, and if he’s not in your corner pushing all of this, you’re gonna have a hard time. So, I guess, so the one thing, have your CEO on board. If not, then I would have ran into trouble at several points. 

The trouble for me, I think I’ll have a better answer for you in about a year. We’ve had a lot of success with the digital marketing efforts that we’ve done, and so doing that stuff first was really good. You could work on digital marketing, you could work on ecommerce, you could work on sales enablement. One of the first major technology projects was the sales enablement project, where we were trying to build a sales portal for our sales reps, so they can get access to a lot of this information real-time, mobile, make them more efficient, help them sell better, and we tried to build it ourselves. So, we had an offshore web team that would help us, and we had a static site that was kind of built on Drupal, where it didn’t need to be great.

And the mistake we made was not realizing how much good off-the-shelf stuff is out there. You don’t need to invent anything anymore. I forget what the quote is. It’s about elegant integration today, not invention, and we tried to invent our own sales rep portal, which ended up being a huge failure, and we’ve actually already deep-sixed it after all the time, and money, and effort that was spent on it. It taught the marketing team how to manage technology projects and a lot of what not to do. It taught us that we needed to think very critically about our partners as we go after something more serious, like the website. And to do a lot more of buy and not build. 

[The majority] of what people do today should be customized. There are so many platforms out there that can be integrated so readily, it’s a buy and integrate, not build anymore. 

Carman Pirie: I think that’s really great advice and thank you for being so honest. Not everybody would say, “Yeah, you know, we did this one thing over here, spent a bunch of money on it, and it completely flopped.” But I love the fact that you quickly converted that into a lesson about actually teaching the marketing team how to manage technology projects, because there’s a lot more of those to come. 

Kevin O’Boyle: Yeah. 

Carman Pirie: And it sounds like there was a lot of valuable learnings along the way. And certainly, it seems like they’ve come to fruition in this ecomm project. 

Kevin O’Boyle: The other thing I’ll say, I imagine three or five years from now, because you know, we’re being very entrepreneurial right now. We’re trying to move really fast. The architecture behind the data strategy might not be as mapped out as well as it should be, so like future Kevin might be really mad at 2020 Kevin that… But it’s a matter of budget, and trying to move fast, and trying to learn really quickly. There’s a lot of really good integration platforms out there. We haven’t been able to kind of justify the investment in one yet, but we do use Zapier, which is an incredible, affordable, little tiny, like I’m going to call it a starter integration platform as a service (Paas) that we’re getting tremendous value out of today. 

We’ll be at the scale pretty soon where something more robust, like anybody who’s on Salesforce, uses something like Jitterbit, or MuleSoft, or something like that, and we’re just not there. We’re the baby steps with that. 

Jeff White: I love the thought and what you said there about it’s not about inventing things, it’s about elegant integration, and I couldn’t agree more. There really are a ton of these tools and the trouble and the benefit is that there are literally hundreds of great martech tools that we can all take advantage of, and none of them talk to each other natively, so we have to find ways to make them do that in a way that makes our jobs as marketers easier, while also giving the data and information that we need in order to be able to justify the investments we’re making. I think that’s right on the money. 

Carman Pirie: Kevin, I want to thank you for sharing your insights and knowledge with us today. I think it’s been a fantastic glimpse into the evolution of the online presence at Metro and thank you for sharing. 

Kevin O’Boyle: Thanks, guys. It was a blast. A ton of fun. 

Jeff White: Thanks a lot. 

Carman Pirie: All the best. 

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