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2018 Manufacturing Disruptors

Insite Software breaks down the top five trends impacting manufacturing in 2018.

Insite Software

5 Disruptors for Manufacturers in 2018

We’ve all read the often quoted “trillion dollars by 2020” statistic when the topic of B2B eCommerce arises. Yet looking at some of the figures that were tossed around a couple of years ago, it’s clear the actual numbers in our industry aren’t necessarily on track with past predictions. Only a year ago some analysts were predicting a mere $6.7 trillion for 2020. No matter what the analysts predict, it’s clear there are factors that are severely limiting the potential of B2B eCommerce in the manufacturing industry. Manufacturers are looking at a new set of disruptors in 2018. These disruptors must be overcome to gain the most advantage from both existing and new eCommerce solutions. Some of them have evolved from past trends, but others are new disruptors altogether. No matter what their origin, manufacturers need smart strategies to face these disruptors to move them forward into 2018.

In this white paper, B2B eCommerce experts from Insite SoftwareTM break down the top five disruptors impacting manufacturing in 2018. We’ll discuss how to overcome them to meet the true potential of their eCommerce environments, both mature and brand new. To meet the demands of 2018, manufacturers must pay attention to the following disruptors in 2018:

  • Direct to Customer
  • Pricing Complexities
  • B2B Marketing vs. Sales
  • The Internet of Things
  • Distributor Marketplaces

Learn from the B2B eCommerce experts at Insite as we unpack each disruptor and discuss how manufacturers can transform disruption from challenge…to opportunity.

Direct to Customer

As eCommerce solutions have evolved, the idea that manufacturers can and should sell direct to customers has loomed heavily on the industry horizon. Many large manufacturers attempted “website stores” years ago, but often decided it wasn’t worth the potential damage to their channel relationships. Others simply haven’t had the logistics needed to handle direct business. Complex orders, shipping to multiple locations, and fluid warehousing requirements are capabilities their distributors have provided for years. Online B2B eCommerce solutions solve many of those issues, and third-party services can handle the storage and delivery part of the equation. The most disruptive influence in 2018 may not be the logistics but the manufacturers’ customers themselves. In this section we break down the following factors giving rise to this disruptor:

  • Understanding the customer’s demand for self-service buying cycles
  • The increasing need for data to stay competitive, and how direct-to-customer sales models help deliver relevant data
  • How price transparency can satisfy the customer’s need for knowledge and be a valuable lead generation tool
  • How and when robust customer experiences make sense for manufacturers

Demand for Self-Service Buying Cycles

Business customers now want the same kind of self- service experience in their professional lives that they have in their personal lives as consumers.

Customers’ increasing need to move rapidly and the desire for independence within the buying cycle has created new demands on manufacturers. This includes not only the desire for more knowledge but the need for significantly more efficient in every process, from price transparency to shipping.

The Increasing Need for Data to Stay Competitive

Today’s unified commerce environments require that manufacturers capture as much data about their customers as possible. Shortened product cycles, cloud-based solutions and even comments on social media make product quality an even more competitive factor. Data analytics helps manufacturers by providing key information that can be used to create the most desirable product enhancements. When selling direct to customers, analytics provides the ability to personalize the user’s experience, and even incorporate AI into the mix. That data is critical to help companies respond faster to problems, allowing them to speed up the response and fix issues before they become mainstream. Selling direct is sometimes the best way to acquire it. In the past (and unfortunately still now in some cases) many manufacturers simply viewed their online portals as a replacement for CSRs or a place to provide an online catalog. But analytics obtained from direct to customer sales are crucial to helping manufacturers develop content and services that are more focused on what the customer really wants. This encourages engagement with the brand and helps develop smarter lead generation and more informed sales, and service, funnel.

Pricing Transparency and the Opportunities for Lead Generation

For many products, pricing is the most valuable information. In the past,  price transparency was considered nearly sacrilegious for most manufacturers. Today many manufacturers have learned that transparent pricing can not only satisfy the customers’ need for knowledge, it is an immensely valuable lead generation tool.

As manufacturers move towards pricing transparency in front of the login, the opportunity for lead generation and feeding leads to valuable channels increases. This is where manufacturers can actually incorporate direct to sales models to compete with Amazon and other larger marketplaces.

Jon Greene, SVP Customer and Partner Success

Insite Software
Jon Greene Insite Software

For many B2B marketers in fact, finding and qualifying new customers has become the whole purpose of exposing pricing. Providing prospects with pricing information in return for their email and other data can help turn that prospect into a qualified lead. B2B eCommerce solutions that allow for price listings and customized externally- placed pricing can be integrated with CRM and other backend systems and capture data on new customers that was never available in the past.

Manufacturers Must Develop Robust Customer Experiences All Their Own

As a disruptor, the direct to customer sales trend goes far beyond meeting the need for price transparency. As manufacturers become more sophisticated at building strong eCommerce marketing engines, they become better at building digital trust and retaining their own direct customers. In many cases, the manufacturer will create a robust, branded site for larger customers. These sites can support major customers with custom catalogs, specific pricing agreements, and highly targeted content. Manufacturers usually create this experience behind a login, so they know exactly who is on their site and what is happening during the buying cycle. Price transparency provides a way to acquire a new customer. They can extend the opportunity by creating sub-brands marketed directly to customers without interfering with other product channels encapsulated within a rich, robust, confined customer experience. Yet despite the dazzling promises of greater lead generation, robust branded customer experiences, and of course invaluable data, distributors are far from becoming obsolete. We predict that the industry will evolve to remove distributors only from buying cycles where they can no longer provide value. Distributors will naturally lean toward those products and services where they can provide greater benefit to both the manufacturer and the end customer.

Pricing Complexities

As manufacturers move toward a unified commerce experience based on a digital, self-directed buying cycle one thing is becoming abundantly clear. The cumbersome, complex B2B pricing scenarios common to the industry have to change. Obviously, improving the “process” of pricing can drive down costs and increase efficiency, creating more profit for the organization. Some companies even have entire teams devoted to pricing and quoting; this practice has to go.

Technology as a Major Force Driving the Pricing Disruptor

This disruptor has so many forces driving it that it can be hard to decide where to start. Reduction of overhead, the self-directed buying cycle, and the expectations of customers for a certain “experience” are all making overly burdensome B2B pricing and quoting mechanisms obsolete. Technology is one of the main factors behind this rapid change. There is an enormous need to tear down the complex, custom quoting processes that have been the hallmark of manufacturing and distribution for decades, and replace them with more efficient, faster pricing models.

Special quotes and one-off contract pricing agreements often simply cannot be mapped to an efficient technology process, let alone one that can run at high performance on a native mobile app, like Insite Commerce. As has been the case with many backend systems, the actual technology is partly driving the change in the process.

The Demand for a Better Customer Experience

Today’s manufacturers know that complex pricing models can transform into customer service headaches during the buying cycle. The overhead from custom pricing and quoting models can take far too much time for today’s busy customer.

Other studies show that a customer may speak to an average of 5 different company representatives during the course of a sale, and report the need to repeat themselves as a frequent annoyance. When compared to their expectations of a “self-service” model, customers simply do not tolerate the time and frustration often incurred. Once again, data is often the answer. Direct to customer sales models provide manufacturers with the ability to create specific pricing strategies that meet market demands and automate critical pricing functions. A strong B2B eCommerce solution can handle complex, rule-based pricing calculations like cost-plus pricing, group pricing, price lists, and contract pricing. Data from direct to customer sales gives the manufacturer the ability to meet the needs of specific buying scenarios without the overhead of manual pricing and quoting activities.

Manufacturers need strong, real-time data to support the many roles involved in a complex customer experience that combines building digital trust online, with complex support offline.

Steve Shaffer, CEO

Insite Software

B2B Marketing vs. Sales

From using pricing transparency as a lead generation tool to incorporating data for creating rule-based, technology-enabled pricing mechanisms, the marketing departments at many B2B organizations are growing both in size and influence. The need to build what many call “digital trust” is taking marketing out of the back office, and into the limelight.

Obviously, eCommerce has created a situation where less of the buying cycle is steered by sales, or by expensive pricing and quoting departments. As more functions move online, manufacturers need to focus their efforts on creating stronger marketing departments in 2018. Part of this disruption is due to the schedules of actual buyers themselves. For many years the primary knowledge about the customer resided in the heads of the sales team. As manufacturers relied more heavily on CRM’s, more of that data was captured but sales still drove most of the cycle. Days of meeting with customers in person, much less treating them to “team” lunches, are disappearing. The same need for efficiency on the part of the manufacturer, combined with the desire of the customer for self-service, is driving a new paradigm where sales are enabling the process, not defining it. The need for a sales force that can handle complex or larger ticket sales is still a requirement for success. Much like channel partners, however, sales needs to focus their value-added activities on supporting the buying cycle, not owning it.

In return, the marketing team has to be able to hand over more qualified leads. That may include new customers being nurtured from an initial online sale that meet the characteristics of newly developed target personas. Both sides of the marketing and sales equation need to provide strong value to the organization within the context of a connected commerce environment that combines online and offline processes. Constructing the engine is not an easy task, but it begins with building a bridge between sales and marketing and the rest of the enterprise. As the customer experience becomes more automated, sales are still required to manage many aspects of a complex buying cycle. Without a strong relationship with marketing, this cannot happen effectively.

Obviously, eCommerce has created a situation where less of the buying cycle is steered by sales, or by expensive pricing and quoting departments. As more functions move online, manufacturers need to focus their efforts on creating stronger marketing departments in 2018. Part of this disruption is due to the schedules of actual buyers themselves. For many years the primary knowledge about the customer resided in the heads of the sales team. As manufacturers relied more heavily on CRMs, more of that data was captured but sales still drove most of the cycle. Days of meeting with customers in person, much less treating them to “team” lunches, are disappearing. The same need for efficiency on the part of the manufacturer, combined with the desire of the customer for self-service, is driving a new paradigm where sales are enabling the process, not defining it. The need for a sales force that can handle complex or larger ticket sales is still a requirement for success. Much like channel partners, however, sales needs to focus their value-added activities on supporting the buying cycle, not owning it.

In return, the marketing team has to be able to hand over more qualified leads. That may include new customers being nurtured from an initial online sale that meet the characteristics of newly developed target personas. Both sides of the marketing and sales equation need to provide strong value to the organization within the context of a connected commerce environment that combines online and offline processes. Constructing the engine is not an easy task, but it begins with building a bridge between sales and marketing and the rest of the enterprise. As the customer experience becomes more automated, sales are still required to manage many aspects of a complex buying cycle. Without a strong relationship with marketing, this cannot happen effectively.

A strong marketing engine includes many different components. It often means creating a more efficient sales funnel through the use of account-based marketing techniques. Marketing technology can be implemented that introduces sophisticated lead generation tools to capture potential and new customers online, qualify them, and deliver them to sales. Content marketing and even social selling can provide further value in the process. Finally, tools that provide integration with enterprise systems can update key information for marketing both during the planning process and for sales out in the field. Determining the right investment in marketing depends on the factors that deliver ROI within a manufacturing organization, and those factors may vary. The overall way to manage this disruptor, however, is to give marketing its dues in 2018.

A strong marketing engine includes many different components. It often means creating a more efficient sales funnel through the use of account-based marketing techniques. Marketing technology can be implemented that introduces sophisticated lead generation tools to capture potential and new customers online, qualify them, and deliver them to sales. Content marketing and even social selling can provide further value in the process. Finally, tools that provide integration with enterprise systems can update key information for marketing both during the planning process and for sales out in the field. Determining the right investment in marketing depends on the factors that deliver ROI within a manufacturing organization, and those factors may vary. The overall way to manage this disruptor, however, is to give marketing its dues in 2018.

The Internet of Things

At Insite, we talk a lot about the need for a unified commerce environment. For manufacturers, that’s beginning to mean a lot more than integrating online and offline customer experiences, and synchronizing with enterprise systems. As smart factories become a reality, and devices begin to deliver more data than we’ve ever seen, IoT is causing specific, dramatic disruptions for manufacturers. In fact, we think it could be one of the biggest disruptors 2018 has to offer where two very major components of eCommerce are concerned: customer sales and customer service.

As early-adopter manufacturers begin to implement smarter factory “objects” customer expectations will continue to accelerate. In fact, some IoT impacts are already accelerating customer expectations. Take for example the need to provide logistical efficiencies like immediate drone delivery for marketplaces, or the experience of building a custom, personalized product in real time. Manufacturers need to begin planning for IoT in 2018 to stay competitive not only within their markets but within the desired customer experience as well. Some of the earliest disruptions to come will be in the area of customer support. We’ve already discussed how price transparency and aspects of digital transactions can drive lead generation and personalization of the customer experience. Research group Gartner said by the end of 2017 we would have 8.4 billion connected “things”. Many of these “things” – electronics, sensors, and software for example – are part of the commerce ecosystem for manufacturers. Already, many companies are using AI and IoT to create what RFID Journal calls “predictive failure models” that schedule preventative maintenance and find issues well before they become problems. Manufacturers with the ability to deploy AI-based processes can easily be viewed as the more reliable option.

Pew Research reported that more than 70% of customers stop doing business with a brand due to a poor support experience. As connected maintenance and other customer support processes become more sophisticated due to AI and IoT, the definition of “poor” may become further defined as those manufacturers who are simply “disconnected.”

As more of the manufacturing commerce cycle moves to a digital customer experience, the ability to personalize the customer experience becomes critical both as a competitive and efficiency factor. Digital interactions offer scores of data about the past, present and future behavior of customers.

IoT for manufacturers provides even more data from personal interactions, in many cases from devices we’ve never had the chance to capture before. Personalization is the biggest opportunity to use that data to capture new customers and retain them. As manufacturers become adept at hybrid sales models, where some customers are direct and others are delivered to valued distributors in the form of leads, IoT data will become the competitive edge in personalization. One of the most exciting disruptions from IoT is that manufacturers can begin to experience real-time engagement. Instead of waiting for data to be crunched, many manufacturers are already gaining information in the present that can be used for re-orders, service requests, lead generation, and many other pieces of the complex B2B commerce landscape. At Insite, we often talk about manufacturers needing to think “beyond commerce” to a unified experience where B2B commerce can meet its true goals and really transform an organization. If planned well, IoT for manufacturers provides a disruption that will not only lower costs and increase efficiencies but provide manufacturers the ability to enhance the experience of every customer they meet throughout a unique, complex buying journey.

Distributor Marketplaces

The influence of direct to customer sales has created a new benefit for manufacturers as forward-thinking distributors find more ways to remain relevant and add value to their clients. Cloud-based distributor marketplaces are disrupting the market with hybrid customer experiences that deliver extraordinary assets for both online and direct sales and service. Manufacturers are faced with the happy problem of deciding between the products best suited for direct sales, and those that can be incorporated into these new, highly efficient marketplaces. Before we dive into the specific factors in this particular disruption, we have to talk about Amazon. It’s obvious that Amazon is driving up everyone’s expectations for customer experience, whether it’s within B2C, or part of a more complex B2B buying cycle. The online experience is elevated, and the “norms” for processes like delivery, returns and re-orders are constantly improving as Amazon races to stay ahead.

Despite these impacts, there will always be an aspect of B2B commerce that Amazon can’t handle well. Direct sales and service are components of the B2B buying cycle that will never disappear.

Tim Sobocinski, VP of Sales

Insite Software

Manufacturing products may be complex and often require live support. It’s true that B2B buyers want to stay in control of the experience and may want most of it to occur online. But when they need support they want it right away and they want it to be smart. The B2B commerce cycle will never be entirely self-service. For that reason, Amazon cannot take over the market. This is where distributor marketplaces come in and they’re creating some fascinating waves within the manufacturing industry.

Distributor Marketplaces

As cloud-based solutions for eCommerce have emerged, the speed to market of building a major distributor marketplace has dramatically decreased along with the costs. According to IDC, the first marketplaces began to emerge more than three years ago. These new single sign-on “mega-portals” provide buying, support and service capabilities in a hybrid online/offline model. The result is a focused marketplace for customers to find a specific set of products, as well as the support they need for those products. A deep product catalog that is personalized to a customers’ specific profile and buying history is of enormous value to a commerce ecosystem that typically has a primary goal of efficiency.

However, buyers will want and need a smooth user experience. These new marketplaces contain a sophisticated, Amazon-like customer experience plus the advantage of an offline sales and support model. From one login, customers can realize the major advantages of Amazon without losing the support they want, when they want it.

Distributor Data

Data from distributor marketplaces is providing extraordinary value to manufacturers as well. Strong marketplaces have the ability to integrate information from their customer service and sales departments with data from digital transactions. Having a holistic view of a customer’s preferences and behavior throughout a unified online and offline buying cycle is invaluable for a manufacturer. Add new data from IoT and the result is pure gold.

Although manufacturers can decrease costs by selling direct to customers, they cannot provide the breadth of products that a distributor can. Smart distributors creating e-marketplaces can provide additional value to manufacturers by delivering the data they sorely need. In return, smart manufacturers should consider ways to use tools like price transparency to deliver better leads. As a result, costs are decreased, upsell is increased and the entire commerce ecosystem operates within a continuously improving cycle.

As distributors provide more value, manufacturers need to decide where it makes sense to go direct, and where value may be gained from the new marketplaces. It’s a good problem to solve, but one that manufacturers must incorporate into their strategies very soon if they plan to stay ahead of this disruptor.

Conclusion

In order to stay relevant and competitive in the eCommerce space, be sure your 2018 commerce strategy plans for the disruption we’ve covered in this white paper:

The Impact of Direct Customer Sales

  • Understanding customers’ demand for self- service buying cycles and when robust customer experiences make sense
  • The increasing need for data to stay competitive, and how direct to customer sales models help deliver data

Price Transparency and the Challenges Beyond it

  • New technology is demanding more efficient, faster pricing models
  • The need for real-time pricing data to support an increasingly self-service buying cycle
  • Hybrid online/offline customer service models that don’t accommodate complex pricing and quotation processes

Why Marketing has the Driver’s Seat

  • Building and reinforcing a bridge between sales and marketing and refocusing sales to support the buying cycle instead of own it
  • Creating the right marketing engine to deliver strong ROI, without unnecessary overhead

How IoT is Impacting Sales & Service

  • The economic, business and data impacts of IoT
  • How IoT is already accelerating many customers’ expectations for the buying cycle

The Impact of the New Distributor Marketplace

  • Amazon’s role in driving up expectations for the B2B online experience and how distributor marketplaces can answer the challenge
  • Why data from distributor marketplaces and other factors are making some distributors more valuable than ever to manufacturers

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Manufacturing and distribution companies know that the true value of digital commerce is the ability to make it easier for your customers to do business with you. The B2B buyer is often responsible for purchasing products from one to many vendors or product types

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