Most companies with Internet presence don’t fully exploit the advantages of online services

Manufacturing Business Technology - September 2006

Cole Ollinger

Many manufacturers selling products through retailers and distributors were slow to embrace the Internet as a sales & marketing tool for fear of alienating channel partners. And the idea of B2B trade exchanges as the means to lowest price using online auctions proved to be—by almost any measure—a resounding failure.

Nevertheless, most manufacturers use the Internet to find, qualify, sell, and serve new customers, and, most especially, to nurture established relationships.

It's not that the course of time more clearly differentiated the lines between marketing, sales, and services. Manufacturers simply moved ahead based on the need to generate revenue, reduce costs, and improve customer satisfaction.

When Itasca, Ill.-based NEC Visual Systems Division sought to expand its Internet capabilities, it was NEC's turn to face the common online marketing dilemma of how to better serve existing resellers and distributors while increasing brand awareness.

The $300-million unit of NEC Corp. makes plasma screens and projection systems, and markets its products primarily through a tiered network of contract resellers. The company already had an online presence.

"We provided good product information on our previous 'brochureware' site," says Judy Dluzen, director of business operations, NEC, "but it wasn't very well organized, and we didn't offer online ordering."

In response to a corporate directive to leverage the Internet more effectively, NEC Visual Systems chose Comergent's eBusiness System solution as a means to simplify its product-management and distributed order-management processes.

In 2005, NEC launched a portal for its partners, and an online outlet store with limited consumer access to products.

The centerpiece of the portal is a catalog based on Comergent's Parts Modeler, with features like "hot spotting" and "scroll-overs" that streamline product ordering. It also has order-tracking, product-configuration, and quote-generation tools for larger orders.

According to Dluzen, the portal contributed to both a 20-percent increase in sales and a significant drop in help-center call volumes. "We met our goal of growing sales without increasing internal staff," she says. "Plus, we've made it a lot easier for customers to do business with us."

Where the action is

Manufacturers are still trying to figure out how to get closer to consumers online, says Rob Bois, a director with Boston-based AMR Research, "but without 'disintermediating' retail and other channel partners. Online outlets provide a good balance and solid new revenue streams," he says.

NEC Visual Systems uses the site to support authorized service providers that may order any of 6,000 parts. Product information is available at several levels of detail, including bills of material, what Dluzen calls "product explosions," and full specifications.

The site is integrated with NEC's SAP ERP system. That's important because each reseller operates under a different contract and is authorized to sell only certain products. ERP integration also ensures order information is current and accurate. Moving forward, NEC is looking to add more Comergent modules for purchase order-matching and co-op marketing programs.

"Our customer base is very diverse," says Dluzen, "but everyone—from our smaller mom-and-pop stores to larger full-service providers—can communicate with us however they prefer."

Internet marketing is as varied as the products companies make—including e-detailing in pharmaceuticals, demonstration films on automotive brand sites, and promotions and online community-building for consumer goods manufacturers.

And nearly every type of manufacturer is looking to optimize search-engine rankings and placement within online directories like ThomasNet.com, MacRAE's Blue Book, and globalspec.com.

AMR's Bois thinks OEMs with distributor and reseller relationships should focus on better catalog management, guided selling capabilities, online ordering and tracking, and training information—"Anything that makes it easier for customers and partners to do business the way they want," he says.

Bois adds that the Web can be useful in recruiting and qualifying new partners, though that's not yet a widespread practice.

Thoughts that linger

A recent study of B2B marketing effectiveness by Cambridge, Mass.-based Forrester Research shows a lingering reliance on traditional marketing tools in companies that make industrial goods. Trade shows remain the most popular marketing tactic, used by 94 percent of manufacturing respondents. Print advertising (92 percent); public relations (80 percent); and email (76 percent) are the other popular options.

Other online tactics—e.g., display ads (53 percent); search marketing (53 percent); Webinars (42 percent); blogs & Podcasts (22 percent); and rich media & video (20 percent) scored much lower.

"Face-to-face interaction is still hugely important, but manufacturers could—and should—be doing more online," says Laura Ramos, a VP with Forrester Research. "Considering that 50 percent of all B2B industrial buying is for custom products, Webinars could be a cost-effective way to raise awareness, deliver information, and answer questions without the expense of a sales or telemarketing call."

Interestingly enough, several of the top marketing issues identified by the Forrester study—including measurement of results, improving lead quality, and generating more leads—play to the strengths of online marketing.

Pat Yanahan, president of Chicago-based marketing and communications company USA Strategies, agrees that print and direct mail are here for the long term. But while USA Strategies research identifies print as the most popular medium for information sharing, Yanahan says the primary function of many print ads is to drive people to the Internet, because that's where business gets done today.

"The real value of Internet marketing isn't talking to customers, but listening to them," claims Yanahan.

USA Strategies helped the plastics division of Morristown, N.J.-based Honeywell Specialty Materials create two-way dialogue with its customers. Because the company sells complex resin and polymer products, the sales process requires lots of technical and analytical support. A chat system allows customers and prospects—most of them engineers—to connect directly with Honeywell's own engineers via the Web site.

"Engineers want to speak with their peers, not just salespeople," says Yanahan.

For Portola Packaging, a Batavia, Ill.-based maker of plastic closures and bottle caps for the beverage industry, USA Strategies built an online ordering tool that enables customers to select the right item from more than 700 stock keeping units (SKU). Users perform searches based on possible uses of the closures and caps—not just Portola's in-house specifications—and can link to the services and sales teams.

According to Yanahan, marketing should seek to capture new product ideas from customers and feed them into R&D and new product development. "That way companies can start making what customers want—instead of selling what they have—which reduces the need for marketing," he adds.

A broader view

Some analysts take the view that online marketing activities can only be as effective as back-end systems allow them to be.

"The key question is: Will ERP support your customer-facing needs?" asks Cindy Jutras, VP and manufacturing service director for Boston-based AberdeenGroup. "The real promise of the Web isn't just marketing, but better integration between functions and throughout common business processes—for example, available-to-promise and capable-to-promise, which can drive interoperability with prospects and customers."

Another key integration leading to a more effective online presence is that of customer relationship management (CRM) systems. A recent AberdeenGroup study found 24 percent of manufacturers already have CRM, while many others are looking closely at it. Nearly three-quarters of those with CRM systems in place bought them from their ERP vendors, similar to other external-facing ERP extensions such as supply chain planning and execution.

Jutras encourages a broader view of processes for quotation management, lead-to-quote, quote-to-order, production order-to-deliver, and prospect-to-cash. "Web-enabling these cross-functional processes leads to better visibility," she says. "Today, MRP and work-order management become necessary ingredients for effective marketing and customer service."

Though the marketing tools and templates in ERP can be highly useful, adoption has lagged—even at companies using CRM modules. "Sales and marketing is still viewed as more art than science, so there's resistance to formalizing processes," notes AMR's Bois. "Many sales reps are content with their spreadsheets and contact-management applications."

To combat that legacy view of marketing, Mitchell Goozé, president of Santa Clara, Calif.-based consultancy Customer Manufacturing Group, thinks marketing should be viewed like most other processes.

"Marketing aligns the desires of customers with the capabilities of a company, and the output is a loyal customer," says Goozé. "Companies can apply Lean, Six Sigma, and constraint theory to make marketing and sales more efficient and productive, just like they do with design-to-production."

The post-print world

In looking to expand its online capabilities, Torrance, Calif.-based Oriental Motor looked to ThomasNet.com, the site created by the company best known for its "green books."

Oriental was looking for a big upgrade from its first site. "Users had to know our product line to find what they were looking for," say Kimberly Freisheim, Oriental's sales promotion manager.

Since launching a new catalog navigator through ThomasNet.com in February 2005, users enjoy a wider range of search parameters. Detailed information includes CAD drawings and side-by-side comparisons. Freisheim says 21,000 CAD drawings have been downloaded since the launch.

ThomasNet's Linda Rigano, director of strategic alliances, believes rich content—such as CAD drawings—is the key to online success. "Our research shows eight out of 10 users who download CAD drawings buy the products," she says.

Oriental continues to advertise in trade publications, but everything points to the Web. "Our site helped all of our sales efforts," says Freisheim. "New prospects are finding us more often through search engines, and our field and phone sales engineers can use it to communicate with customers."

Distributors are happy too, adds Freisheim, as the online catalog extends to their sites, allowing customers to order directly. Sales have tripled since the launch, and user feedback has been positive. "We've had customers tell us how incredible our site is and how easy to use," adds Freisheim. "From a customer satisfaction standpoint, the feedback is wonderful."

These are great gains for Oriental Motor, yet ThomasNet.com's own story illustrates the impact of the Internet, and says as much as anything about the state of online marketing.

ThomasNet printed its first catalog in 1898. By the 1980s, the company was distributing hundreds of thousands of copies in printed sets as extensive as 38 volumes. It also published dozens of regional buyers' guides. But in February 2006 it printed its final catalog, and now operates only on the Web. "We like to say we're a 110-year-old Internet company," says Rigano.

ThomasNet.com online listings include more than 67,000 product categories and 750,000 companies, roughly half of which are distributors. The other half is comprised of large and small manufacturers of all types. The site draws approximately three million users a month, claims Rigano.