During this episode of The Kula Ring, Jeff and Carman talk with Mike Powers, B2B E-Commerce & Digital Marketing Manager at Hill and Markes, Inc. They discuss the differences and similarities between the millennial B2B buyer and the baby boomer B2B buyer.
The New B2B Buyer is Here Transcript:
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 Podcast. My name is Jeff White. Joining me today is Carman Pirie, and we have with us Mike Powers from Hill & Markes, a distributor based out of Amsterdam, New York. Thanks very much for joining us.
Mike Powers: Absolutely. I’m glad to be on this podcast with you guys today. I’m looking forward to sharing our journey over the last couple of years of getting online.
Carman Pirie: Mike, yeah, welcome to The Kula Ring. It’s really good to be chatting with you. Let’s start there, I guess. Tell us a bit about your role at Hill & Markes, your time there, and the path that you’ve been on to date.
Mike: Absolutely. I’d love to. We are a 112-year-old wholesale distributor based in upstate New York. We’re about 20 miles west of Albany, and we service six hours west to Buffalo, New York. We service northward to Plattsburgh, to the Canadian border, and then south to just north of New York City, Westchester County. We have been successful in selling food service disposables, jan-san products, industrial packaging, and again for 112 years. It’s been an honor and a pleasure to be the e-commerce manager here at Hill & Markes to really bring this distributor online. I’m really excited to share our journey with you.
I started with Hill & Markes back in March of 2015. I recall quite vividly that, at that timeframe, everybody was talking about Google and Mobilegeddon, that it was imperative that you have to have a website that is going to be responsive designed. When I was going through the interview process here at Hill & Markes, it was quite evident that the existing platform was not going to be successful after that update. When I was hired by the team here at Hill & Markes, I went through a three-step criteria of selecting our vendor. I’d be more than happy to share that journey with you on this podcast.
Carman: We’re going to be at a loss for time, I can tell within two minutes of starting, because I know that … We’re not talking about e-commerce 101 here. You’ve been working on punchout integrations and I guess what many would consider to be a bit more advanced. I think you have a lot to offer our listeners on that front and on how you got there and the selection process as well. I think it’s going to be an interesting call.
I want to just touch base on this 112-year-old bit. It occurs to me that transforming the digital side of a 112-year-old business could be quite challenging from a number of fronts. The one that I always find with distributors that I’m curious to know more about is I guess any friction that they may experience internally around the sales relationships and migrating those … what is viewed sometimes as migrating relationships from a traditional offline handshake experience to something more digital. But that or any other barriers that you feel you’ve encountered, because 112 years is a long time and you’re not in business that long without developing some solid relationships along the way.
Jeff: It has a lot of inertia of its own.
Mike: Absolutely. Absolutely. You guys nailed it. There was absolute, when I first started and began this journey, there was resistance. Many of our sales reps that have been here 30, 40 years have well-established relationships with their vendors. However, there’s been a transition happening in the marketplace. Andy Hoar at Forrester a couple of years back, I would say right around the end of 2015, put out an article, said the death of the B2B salesperson. Basically, it said that order-takers, sales folks that were order-takers are no longer going to be of value to the customer because an e-commerce website should meet the needs of that user.
When I first began this journey, I did have sales reps say, “Listen. Nice to meet you. However, I want all my sales reps to continue to order through me.” It was imperative that not only was I supposed to invest in a platform and deploy a platform, excuse me, I need to make sure that I brought my salespeople and customer service team to a point where they saw the website and the platform as a sales tool, not a replacement of their job function.
Carman: That objection or concern from them, I still want all orders to go through me, that doesn’t surprise me at all. I guess the one thing I feel is sitting in the middle of this is that it’s frankly, for distributors, it’s often those relationships are held up as the reason why the channel ought to exist at all. In many cases, I’ve talked to distributors regularly who are concerned about the impact of marketplaces on their business, specifically Amazon business, but others. They’re concerned about the impact of those marketplaces that they will have on the business long-term, and they see that the relationships that they have in the markets they serve as being the key piece of glue that will ensure their continued existence. In some cases, I feel that they don’t even maybe feel that they need to invest that much in e-commerce as a result, that they can still get by on their relationships. I guess, talk to me about that.
Mike: Absolutely. Absolutely. It’s funny. There’s some validity about that, because what I’ve seen is we have well-tenured salespeople. And you know what? I don’t even label them as sales reps. I see them as consultative product managers, and that’s my description of them, because quite often I’m not seeing our customers going to Amazon Business and saying, “I would love to buy this product and I would love for you to come and demo it with our facilities management team next week so that we can try it out, feel it out, and then make a decision on it.”
I will tell you, especially in the jan-san part of our business, whether it’s refinishing a university during the summertime or a hospital that is interested in a floor cleaning machine, our salespeople know those products inside and out. The website will have the safety data sheets. They’ll have a video. They’ll have a lot of that rich information and specifications. But the value the sales rep delivers is that consultative expertise on the products. I don’t ever see that going away.
I see a hospital … There was a hospital in the Southern Tier or Hudson Valley of New York said, “You know, I cannot see my hospital making a move to Amazon Business yet because I know the driver at the distributor for 15, 20 years. He knows exactly the drop-offs at every single ship-to.” We know the delivery days, and our sales rep is always coming with new products and new ideas on the third Tuesday of the month to demo a product. She goes, “That’s very hard for me to shift that relationship to the marketplaces that are available, like a Amazon Business.” I do see our salespeople transitioning to really consultative product managers that know the products our customers want inside and out.
Carman: I think that’s going to be music to the ears of a lot of marketers, especially obviously the distributor marketers that want to really believe that there’s value that can be delivered there that can’t be easily replicated online. I’m going to say, Mike, I’m going to be willing to believe you there. I’m all in and I’m believing Mike in what he just said. But, and my “but” is this, what happens when that buyer changes? Because you just said that buyer values that because it’s the same person driving that truck for the last 15 years, 20 years, which means that buyer is retiring soon.
Mike: It is. Listen. The new B2B buyer is here. The millennial demographic in the work labor force has now surpassed baby boomers. You’re dead on. We have purchasing managers, procurement managers, facility managers that are retiring. We’re having those well-tenured sales reps, I believe two or three of them, that are retiring this year from Hill & Markes. We’re seeing that firsthand. And so it is imperative that the B2B buyer … Again, everyone talks about the millennial. The millennial, yes. They are digital natives. They have no problem using a mobile app on their personal device. But we also can see that the folks that are baby boomers are comfortable ordering online as well. Not as many as the millennials, and I don’t have the active figure, but most of them are shopping on Amazon or Walmart.com.
The B2B buyer, whether it’s a millennial or even some of the folks that have been with their businesses for quite some time, they are expecting a shopping experience. They’re expecting the sales rep to be able to deliver knowledge and expertise. But they’re expecting distributors to provide them an easy-to-use website for finding information such as a safety data sheet or the ability to say, “Hey. I want to compare three products side by side.” It’s imperative that distributors and manufacturers provide that easy-to-use experience for the new B2B buyer that’s here.
Carman: I think we should just …
Jeff: Stop it right there.
Carman: Yeah. We should just have another …
Jeff: You said all the good stuff.
Carman: We should have another podcast, really, right now about how millennials and baby boomers are the same but different, or what have you. Because that’s basically what you just said back to me in some way, is that they carry some digital expectations and experiences with them. But frankly, if you were a B2B buyer, a baby boomer that’s a B2B buyer, you’ve been in a technology-rich environment for 10 or 20 years now, so it’s not new to you either. Maybe in reverse, now I’ll put words in your mouth, but kind of maybe what you’re telling me too is that the millennials kind of like relationships too.
Mike: Yes. They do. You know what? It may not be face to face, gentlemen. But I’ll tell you right now, they feel comfortable sending a text to a sales rep and just verifying things, delivery dates or confirming a demo. Communication is communication, whether it’s going to be the face to face for a floor demonstration or a text to verify any other important information. We’re seeing that live chat on our website is a way that some of our customers love to place orders. E-mail and fax back in the day, but live chat and text are two ways that we’ve seen our customer base use to order from us.
Then also, going back to what I mentioned about the consultative selling approach, we are now seeing with our social platform, LinkedIn in particular, where our floor specialists are documenting a floor machine demo. They’re either doing a how-to, the top three features on a Tennant floor machine, or they’re taking a quick video of the on-site demo. We’re generating leads through our LinkedIn page where a buyer, a B2B buyer, is following a hashtag for floor equipment, comes across a LinkedIn post seeing us doing an on-site demo, and then sends a LinkedIn message to us saying, “We’re interested in that Tennant T350 that you’re demoing on your LinkedIn page. Can you provide us a quote?” It’s pretty fascinating the different ways that the B2B buyer is basically communicating with distributors now.
You’re listening to The Kula Ring, conversations on manufacturing marketing. Don’t forget to subscribe now at Kulapartners.com/thekularing.
Jeff: That’s fantastic. Really, you’re living the dream of using all of the social platforms to drive via content to the website to engage for a potential sale.
Carman: Many people would say that frankly that’s not going to happen. Nobody on LinkedIn cares about a floor cleaning machine.
Jeff: Of course, that’s not true at all.
Carman: Exactly. You heard it here first.
Jeff: Do you find, Mike, that the consultative sales process tends more to the bigger ticket items, like a floor machine, and that the bulk of the purchases from the e-comm platform are more incidental, or is it everything that’s selling at the same rate via the site?
Mike: No. That’s a good assessment. When it comes to the floor equipment for the universities and the hospital systems, especially with the larger accounts, you need to make sure you have a sales rep that is well-versed and has a product knowledge for a wide breadth of product, because some of these larger accounts could have … the customer could be purchasing three to 500 items, and it could be across different silos, food service and cleaning and janitorial. But I will say that, when it comes to even smaller accounts, we work with many restaurants and hospitality groups and ice cream. Ice cream in upstate New York is a seasonal business, but man, I will say, I believe New York State has probably the highest amount of ice cream shops of any state. These are users that they’re not big ticket items, but they are the turnover and the frequency of ordering is so high that, yes, the e-commerce website is a great tool for them, but they’re also engaging with the sales rep as well, just because it’s a seasonal business and it comes fast, and those orders are happening … they could be happening daily because of just the busyness of the business.
Carman: The love of ice cream as well as your business are at least moving forward.
Mike: I’ll tell you right now, the 96-degree weather, I’m not sure it’s helping the business right now for the last week, but everyone loves ice cream.
Carman: A couple of pieces I really wanted to get to here. I know that you’ve recently been working with Cornell University, I believe, on punchout integration. Can you talk to me a bit about that and what you’re up to there?
Mike: That’s one university that has many different suppliers. For the audience, punchout integration is the ability for a university that has many employees buying from many suppliers the ability for those users to simply log in with their Cornell credentials, access all of the suppliers via kind of a one-page Intranet where each supplier has a logo.
The feedback we’ve received from the university has been fantastic. They’ve loved the integration. What we’ve been able to do is basically create a sub-catalog of our website so that when someone selects the Hill & Markes logo they’re still getting all of the high-res, rich product images and detail information and the ability to compare a product. What’s in it for Cornell is that they’re controlling the users to, instead of having them go to all of the supplier websites, they can keep them focused on just the Intranet. For Hill & Markes, we’re investing in the data in making sure our products are enriched. That same enrichment is being displayed in out punchout catalog for Cornell.
Carman: At the conference where we first met, it just struck me that the conversations about punchout were … they fell into two camps: people that understood what it was and its import, and folks who were frankly learning about it for the first time. I like getting just the Coles Notes description of what you’re doing there, just to … because I know there will be people listening that haven’t encountered punchout in their day-to-day yet.
Jeff: I think, too, it also speaks to the requirement for a product information management system and having that really enriched content and ensuring that you’re doing that well. Talk to us for a moment about the benefits you’ve seen from really pushing the quality and quantity of content, in terms of your products.
Mike: That’s a great question, because I will say this. When we were going through the vendor selection process, the three things that were important to us was the responsive design website, the data enrichment services, and then lastly the punchout integration. When I went out to the marketplace in early 2015, the price point for B2B e-commerce was coming down because more and more manufacturers and distributors were investing in it. But I also realized many distributors lack a large IT presence within their four walls.
Mike: When we’re looking at our vendors, and the main reason we decided to go with our current vendor, which is Unilog based out of Philadelphia, is that their back-end platform had a built-in CMS, a built-in PIM, that allowed for us to, with any product taxonomy on our website, that we had the ability to control the product data in the PIM. When it came to the CMS, we were able to create our own custom landing pages, we were able to deploy a blog.
Mike: I will tell you this. We had one of the folks that works here ended up finishing the HubSpot certificate program, and she shot over to Boston. One of the first things she came back saying, “Mike, it’s really great to see that Unilog has integrated all of these different important features or functionalities, because there’s some vendors in the marketplace that you have an e-commerce platform but you need to reach out to a third party PIM provider, you have to reach out to somebody for a blog, whether it’s a WordPress blog to be integrated.” Some of the feedback I received was that the Unilog platform for a distributor like us that lacks many technical resources or a large e-commerce team, including developers or product managers, it was imperative that we had a platform that would give us the easy-to-use tools such as the PIM and CMS. That was one thing that led us down the path of selecting Unilog. We knew that we weren’t going to be able to work with all these different third-party providers. We needed to find a solution that had a three-in-one and really an omni-channel solution.
Carman: It is a struggle, I think, that a lot of distributors have and frankly manufacturing marketers have as well, depending on the size of their organizations. They often lack a robust IT support. Often, frankly, the marketing teams aren’t as technically savvy as maybe one might hope they would be. I think there are a lot of contributing factors to that around difficulty in recruitment and retention of digital staff and things of that nature. I’m curious about this experience that you’ve had in this digital transformation, if you will, on the manufacturing partners side, I guess. I’m assuming manufacturers are … well, not assume—I know that manufacturers are all at different places in their adoption of and investment in digital, and so that will change the extent to which they can partner with and support the distributor as they’re heading down that path. I guess what have been the differences, and I guess what would … if you could stand on a soapbox for a few minutes and tell manufacturing marketers what you might like from them, I’d be curious to hear.
Mike: Absolutely. Gentlemen, I’m not sure if you’re familiar with Modern Distribution Management, MDM.com. Last year, I believe it was, there was a quote that came out from a manufacturer. I believe it was one of the larger manufacturers in the marketplace. They said that, “At corporate, we are now viewing our distributor relationships quite differently. It is imperative that distributors make the investment or pivot in building an e-commerce platform for the customer base, because if a manufacturer’s not seeing that transformation they’re going to start investing in the relationships where distributors have made that investment, they’re now meeting the needs of the B2B buyer.”
I am firsthand seeing that … and we work with some of the larger manufacturers in the world, so the Rubbermaids, the 3M, Tennants, Diversey, Georgia Pacific, Kimberly-Clarks. In my own experience, I am seeing that these manufacturers are interested in finding out what is Hill & Markes’ strategy with this new website to convert users or customers into buyers. It’s going to be a very interesting … I’d like to say in the next couple years it’s going to be interesting to see how manufacturers work with their distributor partners when it comes to marketing, specifically digital marketing, because there are some manufacturers that are not familiar with Google Analytics or conversion rates and bounce rates. But those larger brands that I just mentioned to you, those folks now are building out digital teams. They’re interested in saying, “Hey. We would like to have a banner ad. We would like to have a landing page talking about building service contractors, and here’s our breadth of products, and we want to measure the conversion rates of these pages.”
The larger manufacturers are definitely now pivoting when it comes to marketing. They’re trying to work with distributors on the digital side. Some of the manufacturers that are in the beginning stages of that journey, they need to be aware that, what can they do when it comes to working with their distributor partners to capitalize on online traffic and conversion rates of those distributor websites? In closing, I definitely see in the next couple of years manufacturers are now getting more interested in what’s happening on that website. How are users … how much time are they spending on our products, and what’s the conversion rate? For sure that’s happening.
Carman: Look. I’d heard recently from an executive at Schneider Electric that … he said to a crowd of folks, and they were giving a talk, and he just said, “We’re doubling down and working with those distribution partners who are investing in digital.”
Carman: In that one little sentence, what she told me was, “Yeah. We have co-op marketing dollars. We have partnership support dollars and all of that that we invest in all of our distribution partners. But they’re not all created equal. We’re doubling down and understanding those ones that want to move in this way and do it quickly.” It just struck me, and you just hit the nail on the head around the differences. You have, on the one hand, you have Schneider Electric, clearly a very sophisticated and savvy organization with a sophisticated marketing team that understands what’s up. A distributor may well have to deal with them while at the same time dealing with another manufacturer who is just starting to dip their toe into it. It’s really it’s kind of like the Wild West, or something.
Jeff: But it’s not like distributors are really going to have an opportunity to just stick with the way that they’re going, either. The distributors that are saying, “Well, we’re just going to stick with the … We have these great relationships with our customers. We don’t want to run the risk of alienating them by creating new technology that they don’t understand.” They’re really operating with their hands behind their back and they’re eyes covered. They’re really not looking towards the future at all.
Mike: It’s so funny we’re having this conversation, because that has been one of the things that we had recently in our marketing meeting. We want to make sure that for 2019, how do we leverage the digital side of our business? One of the issues I see is, you’re absolutely right. There are some manufacturers, and then there’s some manufacturers that actually work with brokerage houses. A brokerage sales manager may represent multiple lines. When you start talking about digital and the ability to drive sales through a constant contact e-mail blast, or for the month of December we’re going to create a landing page and use social to create video content around it. You get a blank stare back.
It’s interesting to see, how does a larger manufacturer that understands digital, they’ve invested in digital teams, they have people on their team now that are driving the … almost the PNL of that side of the business. How does that side of the business work with the existing regional sales managers that have been working with Hill & Markes for 30 years that knows nothing about digital, understands doing trade shows and sales meetings and ride-along programs? I see that right now for manufacturers and distributors is, how is that going to … how are we going to translate the new age digital marketing into the old school or the way we’ve been doing business with manufacturers for decades?
Carman: Then, in the background of it all, you have, in some categories more than others of course, the threat that the manufacturer could simply just open up the channel directly and cut you out.
Mike: True. Which many of I think the larger folks are, whether it’s through Amazon Business, absolutely. Absolutely. We see that in the marketplace. We have to understand, many of them will say we need to … the distributor network has been very important to us. Many of our manufacturers, I’ll be honest with you, we have great relationships with our manufacturers. But I think there are some that are interested in the marketplace and what that could result for them. Even for us, gentlemen, looking at the Amazon Marketplace, in doing research and talking to other distributors, I have relationships and I’ve asked the question, has this been a positive thing for your business?
I’ve had one director of or vice president of marketing and sales, who is also spearheading the e-commerce project for their business, said, “Mike, for us it’s a little like day trading. Because of the price changes, the fluctuations, one minute we’re selling a product for three months and it’s doing great, and then, boom. One morning we wake up and it’s an Amazon Basic product and they’re selling it directly, and they’re always beating us in price.” It’s a very disruptive time in the marketplace because there’s many ways the end user can find the product.
We had one example of somebody that requested a floor machine demo. While the demo is happening, the sales rep’s saying that one of the people that was there for the demo was on Google searching by the name of the machine and seeing if there’s better pricing out there. I will say, manufacturers in most cases have made sure to protect their distributor partners. If it’s a new customer that has worked with Hill & Markes directly and we provided the demo and they’re trying to reach out and purchase that item elsewhere, we’re getting credit for the one that has started that relationship. But it is. It is. It’s difficult. It’s very disruptive. The marketplace is … it’s pretty wild.
Carman: It strikes me when you’re having the conversation about trying to get credit for a sale that happened elsewhere.
Mike: I know. I know.
Carman: I feel like you’re already behind the eightball then.
Mike: That’s the other thing about the distributor model. If you talk to many distributors, many of them are part of networks of distributors. One of 55 distributors that are … we’re part of network services. We have distributor partners all across the country. Back in the day, that was a great way to make sure that we have this massive buying group. But what happens when an end user is going to Amazon instead of the distributor, the local distributor? We have great partners, distributor partners, in our network services relationship. When an end user is going to Amazon and then bouncing back to the distributor, and then it’s … we need to be prepared.
That’s where I think it segues to the point that our salespeople, our customer service team, that consultative sales approach, that product knowledge, we need to be able to lead with that expertise because it can’t be about price and product, because you’ll find products may be cheaper elsewhere. But when it comes to the knowhow and the product knowledge that our people have, both from the inside’s customer service team and the sales rep, that’s what our customers really at the end of the day, whether you’re a millennial or somebody that’s been doing it for 30 years, you really want that product knowledge as well.
Carman: Mike, this has been a fantastic conversation. I’ve really enjoyed your insight. I’m sad we have to begin to bring it to a close here. But I guess just as we wrap up, I get a sense that you’ve come a long way over the last three years or so in evolving the Hill & Markes platform. But I can tell in your voice that it’s not done. I guess, as we sign off here, I’d be curious to hear a bit about what are you most excited about in the next year or so? What are you seeing around the corner? There’s lots of disruption, and we know that. But we also know that with that comes opportunity.
Mike: Absolutely. Again, gentlemen, I really appreciate the time. I’m glad you reached out to have me share our story. I’m sure that there’s many manufacturing distributors on this call or listening to this podcast that could be at the same point we are or about to take the journey. As I mentioned before at the beginning of the call, food service disposables is a large silo of our business. What I’m most excited about is that I truly believe for the hospitality, the food service, the ice cream stands, the restaurants, that we will become a mobile first distributor for those users. What I mean by that is a sous chef that is going into the meat cooler in the basement is no longer going to take a piece of paper and a pencil to take their par levels. We envision this chef using a Hill & Markes mobile app to basically scan the barcodes within the meat cooler and, by the time they leave two or three steps out of that meat cooler, that they have an order prepped and ready to go via the Hill & Markes mobile app. That is one project that I’m extremely excited to have go live at the beginning of 2019.
Jeff: That’s a fantastic next step.
Carman: It’s an interesting next part to the story, since as you started your work with them you were mentioning it was really the Mobilegeddon, as you said, with Google that was the initial thing that you were brought in to address. More mobile is, I suppose in some ways isn’t surprising. But it’s nice to see where it’s going.
Jeff: I like to see, too, that you started with the web platform, which is a more universal platform, and then move to an app that can be supported and integrated with that, rather than what a lot of people try and do, especially because they think apps are more sexy than the website, is they don’t look at getting their web house in order before they begin to go down the road of developing an app that won’t have any support.
Mike: Right. By the way, that brings up another issue too is customer adoption. The customer adoption, we needed to get the buy-in of our existing customer base with the web platform, because they’re sitting at a desk at a university, hospital, at a elementary school. You’ve got to realize that the web portion of it, the desktop for customer adoption, it was vital. It was imperative that we were to get the customer adoption on the website or on the desktop before the mobile app. I’m happy to say we’re at around 25% of our total revenue is going through our e-commerce platform. I’m looking at 30% on the horizon, and that’s a big goal for us. Yes. It is. The web is important. The desktop version of our website is important. But the mobile app’s going to be something I think for years to come is going to be just the way of just conducting business. Everyone’s going to have the phone to order in a mobile app. Everyone’s doing it with banking nowadays.
Carman: Exactly right. Mike, I look forward to watching the progress. Thanks so much for joining us today.
Mike: Absolutely. Thank you.
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