Four reasons manufacturers & distributors must play the digital long game

When people think about digital innovation today they often think of the consumer market. While most of the press goes to all the great products hitting the market, social media, and the rise of the digital native, there is a quiet revolution going on in manufacturing and distribution. I think the recent commercial by GE about a programmer getting hired by GE really nails the current thinking.  After the initial congratulations and presenting a cake, the programmer’s friends don’t understand that he will be doing very cutting edge work. And that’s what many people believe.

Often thought of as laggards in the digital space, manufacturers and distributors are making large investments in moving their operations, marketing, sales, and hiring spending towards digital innovation. A recent study published by Gartner’s Mike Burkett detailed the survey findings from C-Level executives in manufacturing and distribution about their investment focus for 2016. The results were fascinating. No longer looking to drive cost cutting, these executives were focused on growth. Investments in Customer Segmentation, Marketing Automation, and Analytics were in the top five categories along with traditional focus on Product & Process improvements. We believe the key for successful transformation to a more digital approach is to focus on gaining the long term advantage in the market rather than only focusing on short term wins.

In our conversations with manufacturing and distribution executives we see four trends that are helping to drive this acceleration to digital maturity:

1. “The Disrupters are coming! The Disrupters are coming!” – Just like Paul Revere warned about the British marching on Lexington and Concord, C-level executives are being warned about the rise of Amazon in the B2B space. When looking at their own sales process, these executives understand that they come up short when thinking about the longer term way that customers will complete their sales journey. From searching for information to ease of purchase to faster fulfillment, the B2B market across multiple product areas is being disrupted faster than anyone initially had believed was possible. While many companies are playing catch up, several are trying to leap past the next iteration by the large scale eCommerce companies to make purchasing, fulfillment, and support from their companies easier and more customer friendly through technology improvements.

2. “I’ll do it myself.” -  The average B2B buyer is 57% through the purchase journey before they contact a company or speak with a sales representative according to the CEB. The customer is not waiting for your call. They are getting out in front of the decision by educating themselves using search, videos, reviews, and other assets available to help them online. Smart companies playing for the long term understand that in a digital world, if they are not easy to find and sharing information, they are invisible to potential customers. Investments in customer segmentation, journey mapping, and customer experience initiatives are paying dividends to companies looking to grow revenues and retain customers.

3. “First place wins a trip to Miami! Second place wins a set of steak knives.” – Sales force efficiency is gaining traction as executives move their teams from order takers towards a more consultative model of selling. By understanding the shift in the customer journey and providing a frictionless eCommerce platform to enable purchases, CEOs want their sales teams to focus on relationships over transactions. Providing mobile tools to make sales calls more efficient in providing additional information beyond order taking gives companies an advantage over those which rely on sales teams to spend their time filling out sales sheets. Playing the long term means understanding that your sales team is your relationship team. Enabling this transition using smart technology provides your team with the tools they need to efficiently understand and support your customers’ needs beyond the simple transactional focus.

4. “Digital Maturity Attracts Talent” – A CEO I know told me about his quarterly lunch with new hires at his company. During the lunch he asks about the employees’ thoughts on working at the company. At one lunch, a younger employee said “Our technology is awful. It’s from 1990. Had I known that, I might have reconsidered working here.” That is common thinking among younger workers. In an age where we’ve trained people to use Google, Amazon, Twitter, Dropbox, YouTube, Facebook, and Netflix is it surprising that employees expect the same level of technological ease when at work? While many CIOs are bringing the tools into the workplace to support this transformation in work, there is little to no publicity about it. Manufacturers and Distributors focused on the long game understand that they must flip the recruiting process by first increasing the awareness for what they are doing from a digital perspective. It goes beyond using social media. The awareness comes from promoting their innovation through white papers, press releases, and videos first, following up with leaning on their digital maturity as part of the recruiting process.

What do these four trends mean for the Manufacturing and Distribution industries? A fresh approach to thinking about how digital can help the company grow is needed. Rather than a one-off focus on digitizing one process at a time, companies have the opportunity to rethink their strategy to further incorporate digital into more aspects of their business model. Digital brings efficiency gains and lower costs through technology. But it is a focus on using digital to grow that will help executives win in the long run.