← The Agile Brand with Greg Kihlström®: Expert Mode Marketing Technology, AI, & CX
The Agile Brand with Greg Kihlström®: Expert Mode Marketing Technology, AI, & CX
#571: Unlock Expert Mode: Getting to a B2B E-commerce Strategy with The Office of Experience and Znode
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The agile brand.
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Welcome to Season six of the Agile Brand where we discuss marketing, technology and customer experience, trends, insights and ideas with enterprise and technology platform leaders. We focus on the people, processes, data and platforms that make brands successful, scalable, customer focused and sustainable. This is what makes an Agile brand. I'm your host Greg Kilstrom advising Fortune 1000 brands on MarTech, marketing operations and CX, best selling author and speaker. The Agile Brand Podcast is brought to you by Tech Systems, an industry leader in full stack technology services, talent services and real world application. For more information go to teksystems.com now let's get on to the show. B2B E Commerce offers great opportunities to
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manufacturers and distributors, but creating an industry specific strategy and finding the right partners and platforms to implement it can make all the difference.
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This episode is brought to you by
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the Office of Experience, a design driven digital first vertically integrated and collaborative agency that believes in the power of ideas
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and the strength of People and by
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Znode, the premier B2B E commerce enterprise platform.
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Carlos, Will and Tom, welcome to the show.
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Why don't you each briefly introduce yourselves?
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Sure, I'll start. Carlos Manalo I'm one of the co founders of the Office of Experience but what I bring here to the show is that I'm a B2B E commerce geek. Spent a little time at Grainger.com helping lead up UX and then took that and parlayed the insights there and started this agency. But what I'm truly interested in here is in helping both manufacturers and distributors figure out what do they need to do to ensure maximum impact for the experiences that they build so that they can have better experiences which equals better business.
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Thank you Carlos. Tom Flerl with Zenode I basically work closely with Will with our sales engineers in helping align our product with different customer types. Grew up in a manufacturing family. My dad was an MRO purchasing agent and he ran maintenance for a large manufacturing company. So I'm very familiar with how products are purchased in B2B contract rules catalogs and have applied that in the E commerce world.
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Thanks Tom. My name is Will Goodman. I work with manufacturers and distributors every day on their E commerce experience and where they're looking at building their digital channels. I have a rich background in distribution. My father owns a building trades materials organization so I I grew up with that every single day as a kid and then out of college I worked for a billion dollar plus medical distributor where I would sell fixtures, furnishings and equipment. I repped hundreds of different brands so every Single day I've lived the life of an individual that got 15, 20 phone calls. Hey Will, get me pricing. Hey Will, what did I order this time last year? Will, can you get me a quote for this? Can you help me get a payment for this product and can you help me with the return? So what I do in my day to day life is I actually help automate some of these processes and help build out the roadmap with many manufacturers and distributors.
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Great. Great.
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Well, yeah, sounds like we got the right people in the room here to talk about this. So let's get started by talking a little bit about the challenge here before we start talking about some solutions. What happens when B2B E commerce strategy, platform selection and partner selection is too general or not specific enough to the brand? So why don't we start by talking about some of the unique opportunities in each approach?
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Sure. Tom and I have spent many a night talking into the early morning about this at length. Fundamentally, B2B E commerce is a massive, massive plot of land for everybody. But in reality it actually breaks down into some very specific use cases. So where we ended in our last rounds of conversation is that two most organizing segments to start with is manufacturing and distribution. Tom, you want to unpack that a little bit for our audience here?
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Yeah. So last time Carlos and I spent some time talking about this, we talked about how a lot of the analysts, a lot of the podcasts talk about B2B as just a general thing, but it's really not a general thing. Small to medium sized distributor has very, very different needs than an enterprise manufacturer. And as we know, manufacturers sell through distributors and dealers. Those are two different types of customers they sell through. Distributors typically are not very loyal. They have a broad selection of products. Dealers are very brand loyal and they only deal with a specific number of manufacturers and they go to market differently and they need different support. And then both distributors and manufacturers also sell to end businesses. Some manufacturers have avoided that because of disintermediation and they don't want to destroy their long term existing relationship with their distributors or their dealers. Some of them can't do it because it's illegal, but other ones are exposing their catalog because they want to win a portion of the aftermarket parts business that maybe their dealers and distributors are losing on. So when people talk about B2B E commerce, it's not one thing. It's like every other market where there's segments and sub segments and those different segments of B2B for manufacturers, B2B for distributors, and then Start to subsegment that it's just more complex than that. And so we were talking about this podcast and how we could maybe help people figure out where they sit and some things to think about depending upon where they're at in that journey and where they fall and what segment they are.
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Yeah, yeah. So to build on that, then, you know, how does this differ between manufacturers and distributors? And you know, what are some of the dangers of overlooking some of those differences?
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Yeah, it's interesting because for so long, channel conflict has been such a taboo term when we're talking about manufacturers and when Tom and I are working with prospects every single day, we refer to. All right, well, what does your digital experience look like? How do your sellers engage with the different distributors or dealers that you work with? What are you exposing to them? So oftentimes this really does come down to, all right, is this going to be a semi gated site, so that way it works with new business acquisition? Is this an open site so that way anybody can find your products they can see pricing, inventory, et cetera. And I think what we really need to flesh out is what does the experience for the existing prospect look like in their ideal world. Carlos, would you agree with that based off of the agency side?
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Yeah, definitely. I mean, this is why we actually exist is to help people figure out what's bespoke, what's out of the box. It's very nuanced when you talk from one organization to the other, whether they be a manufacturer, a small manufacturer, or a large manufacturer, or a small distributor, or a large distributor. But it breaks down from where I sit and my experiences. It breaks down into five things. It's around pricing, pricing strategy, what the experience layer feels like. Availability is almost always critical. How do you manage and facilitate payments, and then there's custom workflows around all of this. Fundamentally, the danger that you're talking about, Greg, is that a lot of these platforms don't come out of the box with all of the use cases. How could they? So you're managing potential technical debt versus experience impact at every juncture. So it's really boiling it down to where can you maximize your impact by picking the right platform out of the box, given your use case, whether it be a small distributor, large distributor, small manufacturer, large manufacturer. Then we'll get into this later. Also your specific industry. So it's constantly weighing it out, Greg, and then making sure that you pick the right partners who understand what you need out of the gate. So you don't over invest.
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Yeah. When I think about distribution. I'm going back to Greg's original question. I even think there's other pieces of distribution like are there value added services that the distributor offers? So are they taking raw product from the manufacturer and cutting it up into parts and are they doing that for specific accounts, in which case, you know, you talked about pricing experiences, availability, but part of that might be also product information and management of catalogs specific to the buyer that's buying those products. Because now that distributor is also part of the manufacturing arm in the fact that they're buying raw materials and they're customizing it for the, for the end customer. So there's even within distribution, is it a commoditized product? Would be another question. Because if there isn't a value added service in the distribution, it's more than likely commoditized, in which case exposing pricing, having competitive pricing suddenly becomes more important versus if you have a specialty product that's engineered or tailored for the end customer. So again, there's just so many nuances in thinking about strategy based upon what are the products, how do they go to market things of that nature.
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And so it's, I mean it definitely seems like there's a lot of nuance even just looking between first of all, not simplifying to say all B And B is B2B is the same. Then not simplifying, you know, manufacturers versus distributors, kind of each, each of those being kind of all the same. But you know, know Carlos, you mentioned briefly now let's add the component of industry. Right. So you know, we've, we've got all this stuff we've talked about already, but it's not enough to just look at manufacturers versus distributors and those, those nuance we discussed for a brand to be successful, they've got to look at their e commerce needs by their specific industry which can vary pretty, pretty vastly. So you know, can you talk about some of the platform selection needs as well as the partner selection needs that might vary by industry.
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So in terms of that like you know, you were just drafting this out in preparation for this meeting. Sample industries, you've got mro, Healthcare, electrical, plumbing, food and beverage, office supplies, materials, commodities, and then there's this emerging, you know, bastion of marketplaces. All of that can even dovetail into each other. For example, MRO can do a lot of electrical and plumbing on the part side. MRO stands for maintenance, repairs and operation. Marketplaces can, can accommodate all of it. So it's very tricky. So finding the right type of company that has experience Sets on this helps out a ton. You know, znode in terms of the work that they do, obviously anything that has more complexity in terms of the industries that they serve, the better they do because it was engineered specifically for those things. Us as an agency, we have specific specialization and expertise around food and beverage. You know, we work with Shamrock, Dot and a couple of others, Tate and Lyle in the space. So we have a bias towards that. And obviously anything MRO related we can do really, really well. So it's just a matter of making sure that the platform have the capabilities and your system integrators or your agencies have some kind of an experience in it so that you can get out of the gate faster with all the use cases or as many of the use cases already pre identified so that they can make a faster, better impact on your business.
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Yeah, Carlos, it's a good point. Tom and I have these conversations on a regular basis and, and the way that we approach our introductory conversations is more consulting than anything. We wanna learn as much as we can about the use case being presented, how sales reps are engaging with a platform, how are they utilizing it, your marketing teams, because again, this has to be a cohesive approach. And again Carlos, you've seen this, having been in this space for quite a while, there are many E commerce platforms that can serve a number of needs. So when Tom and I are actually going through that discovery process, we're trying to flesh out all of the possible use cases and Zenode can best fit to the business model rather than just selling right away. And nobody wants to be on a call where you just start demoing rather than understanding the other side first.
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Yeah, I would agree with what Will said and I would say if you really want to simplify it, obviously smaller distributors may have a single store, be price competitive, smaller margins, very different than larger distributors where they might have a roll up of multiple brands. They want to sell products across multiple storefronts. Then you move to manufacturing, which I still think is the most complex E commerce needs because they have roll ups of multiple brands, they're releasing new product lines. So they have to have a very flexible platform from a data perspective. But more than likely they're standing up a portal or multiple portals for their dealers and distributors to log into. They're probably integrating third party systems like a service system if there's any sort of service that's done to a product, et cetera, could be a cpq. So there's just so many nuances. But the big thing is one, how do you go to market currently two. Who are the different roles that are involved in the platform? Those roles could be internal roles. They could also be salespeople. They could be external roles, such as distributors and customers. And then where do you want to be in five years? Because more than likely any manufacturer or distributor, either one is going to say, well, we learned a lot during the last four to five years. Primarily because during COVID we were forced to sell online. Now it's a couple years later. Here's where we are today. But if we could really get to a clear vision in five years, this is what we'd like. And it might just be something as simple as 80% of our revenue going through our online storefront or fronts, but really having those three legs really defined and very clear as part of the process of working with an agency or selecting a platform.
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Well, I think that's a good segue to the next thing that I wanted to talk about, because a lot of what we're talking about involves the features and functionality that we want as part of the platform. But to achieve true success, we need to think about things like measurements. And so you mentioned some revenue goals, but other things like conversion rates, you know, is there just like the nuanced needs for manufacturers, distributors, industries within. Like, is there a global benchmark for, you know, quote, unquote, B2B? Or, you know, how does a brand approach establishing a benchmark given all these nuances we've already discussed?
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Oh, my Lord. I mean, Greg, you basically hit on a very compelling topic there. Our customers ask for that all the time. If you have access to Forrester, Gartner or any one of those insights types of organizations, you can get some of that. There's not a plug for them. But Digital360 used to publish a top 500 list for B2B E commerce stores, but that sort of faded out. And I was asking them why. It was because the customers, the people who ran these programs, were not necessarily opting in as much as they needed them to make it sustainable because it was kind of viewed as giving away a competitive edge. If I were to read between the tea leaves. So yeah, it's needed. And if the people with serve can lean into that more, if they ever get surveys against it. And Tom, maybe Zenode and Ox can spearhead some of that, it would benefit everybody. You know, let's pick on one. Like for example, in B2B, conversion definitely varies by a lot. It depends on the size. For some organizations it's 1 to 2%. For others it's all the way up to 15 to 17%. What does it really depend on? How many existing customers are there that are habituated that are using these things? So the more habituated users you have, the higher the conversion rate.
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Of course.
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So no normalized benchmark across all of these. But it does need to be segmented into from where I sit, distributor versus manufacturer, your industry, and then the maturity of recurring or habituated buyers. Then you can start to see that. And three I think most important statistics to watch is conversion rate, average basket size or average order value and definitely numbers of sessions a day. Then you can start to make progress. But would love to get some kind of benchmarks on this stood up. It's just really contingent on how on the level of participation that the customers we're trying to serve really are willing to give.
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And again, it depends. Distributor, manufacturer, certainly adoption and conversion rates matter. I think other KPIs that a lot of companies don't think about is operational efficiencies. So a great example of operational efficiencies could be. And we hear will and I hear this a lot, especially with manufacturers. Yeah, we have a customer service team or an inside sales team that is taking phone calls and they're keying the orders into our ERP or they're creating proposals and they're sending them back out to the customer. And the customer's frustrated because they just want to buy in an E commerce experience. So if you have 10 people in those roles that can be automated or maybe move down to two people, that's eight people's salaries plus benefits. Suddenly the ROI becomes very, very achievable. And it's not just about conversion rates and traditional E commerce metrics. It's about ROI on how you're using your human capital best. Those are some examples and other examples. In a world where hopefully all E commerce leaders and technology leaders are thinking about an API first approach, what are you integrating into the E commerce experience that can also drive ROI? We have a ZNote has a customer in the manufacturing space that found a shipping software and a shipping provider that had very fast real time API calls for all different types of shipping. And they ship large products, you know, on flatbed trucks, they ship pallets, et cetera. And in the past they had a hard time calculating shipping. The ROI for the implementation of Z Node, which again this is a very sizable manufacturer. A commercial manufacturing that sells globally was realized in one year just on how much they saved in shipping by integrating a best of breed shipping carrier via API. So how do you, Is that a standard KPI versus like conversions or adoption? Probably not. But there's hard evidence that ROI goes way beyond just adoption and conversion. It's also better use of human capital and resources towards human capital, automating processes, even integrating salespeople into the process and having better sales throughput, which again is hard to justify up front, but things that happen very quickly with the right platform, the right partner and the right processes.
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Yeah, Tom, it's funny, I think about it and I said it during my introduction, I've lived on that side of the house. Think about all the manual inputs that as a sales rep I had for it was a billion dollar distributor. Hey, give me a quote, give me pricing. Can you convert that quote to an order? Help me get in contact with financial service to pay this. Every single one of those phone calls that I received was one less proactive outbound call I could make to find that next large project. So when we look at the return on investment, automation is key, especially with your sales team. The next thing you have to look at is, well, what does the next generation of buyers truly look at? Look, what do they care about?
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Right?
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They're going to care about whoever is going to make their life easier. They don't want to make those phone calls, they don't want to send those emails. They want to be able to go on. They want to have that seamless experience. And their loyalty necessarily isn't to a specific brand. It's going to be to whoever makes their life as a buyer as easy as possible.
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You know, two things come to mind. One, Will, to what you were just saying, you know, we start looking at overall customer lifetime value and then you know, Tom, to what you were saying, it's like total cost of ownership, which I think is hard to, to your point, hard to quantify sometimes at the beginning of a process. But it's, it's easier to see some of the unanticipated. Unfortunately, sometimes there's unanticipated costs, but there's also sometimes unanticipated cost savings from, from different areas. So yeah, interesting metrics to, to consider in talking a little bit more about, you know, any, any company buying one of these platforms, you know, they know that they're a manufacturer or a distributor, you know, they, they kind of know where they, where they fit into these things. But I think the challenge to some degree fits in. Companies don't buy an E Commerce platform every day. You know, this is a big, this is a big initiative and investment for them. And and it's often, you know, part of a transformation or anything like that. And so they're not necessarily experts on the, the full landscape. Right. So they, they don't necessarily come to the table knowing the nuances and everything. So let's talk a little bit about, you know, again, the, the brands know who they are, but they don't know exactly what they're looking for. You know, what should they be looking at when searching for the right platforms and the right partners for their E commerce strategy? And you know, where should they start with their strategy?
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Well, Tom and I, well, zNote and ox are aligned in this. You always have to start with the actual customer that we're trying to serve. Everything else is just lining up to that. Right. So you got to look at this holistically. Some people in the audience may have heard of this term before in the past, but definitely look at it from a service design standpoint. And what does that mean? Well, understanding the employee experience against the user experience. And what does that 360 omnichannel journey look like? A lot of buzzwords there, but it's the truth. So if you're a manufacturer and your primary customer is a small mom and pop distributor and you're gonna focus on that use case, what do you need to stand up in terms of your call center, your sales rep from an employee side and the systems they use to facilitate transactions while the end customer is trying to figure out how to facilitate placing an order? So, user experience across 360 degree journeys, understanding the employee experience and their service models. And then, and only then can you start defining your people, process and systems or technology requirements so that you can make the right choices. And then last but not least, most importantly against all of this, once you've gotten all of that information together, have great goals, you know, what needles are you trying to move? You know, if you've got KPI's move, great, baseline it, develop a benchmark and then you can call those goals and you can track that against one year, two year, three years and see what impact your E commerce program is having. That's where I would do it.
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Carlos. I'll jump on top of that because I think you're 100% accurate. And obviously Ox does such a great job with digital strategy and E commerce strategy. On the platform side, we run into a lot of generic demo questions and pretty much you get generic demo answers. So if you're going to make a big investment in re platforming, I would also say find your three most difficult use cases or Your three most difficult things that you need to to to manage an E Commerce and ask for a native demo of that functionality or say, hey, here's three things we'd like to be able to do quickly and we heavily rely upon our internal team or our partner and our release cycles to make these things happen are three months to a year. What could you do to make this happen quickly for us? Because it would allow us to get to market faster, create a better customer experience, name the list of benefits and actually test the platform and test the sales engineer and the sales team on the platform for how easy it is to do that in the platform because that's where you're going to see greater value derived when you go through digital transformation and the strategy is done. But also can the platform keep up with the strategy?
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Yeah, Tom, that's a great point because oftentimes we're in these conversations and even in these demos and it feels like we're playing a game of feature bingo. And to your point, it's important to note that hey, can the platform that we're looking at, can they be flexible enough for us or do we have to change our business to work with the platform? The latter should never be the case. So whether you're looking at account based catalogs, unique experiences, that way when Carlos, Greg or Tom login, they see a specific homepage ticker that notes, hey, welcome to the site, here's a specific discount or coupon. We have to understand what those difficult scenarios look like to be able to see can the platform serve us in the best way possible.
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Well, and to build on that, I know we touched on this a little bit when taking it to the next step, let's say some initial questions get answered about those very important requirements and tasks. What should a B2B brand be asking as far as to take it to the next step and what should they be asking as far as requirements go to really, you know, before they sign on the dotted line, so to speak.
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So I think Tom hit it out of the park when he said that it's important to note that you should be asking about native functionality. We've run across businesses that see custom demos of an E commerce experience that doesn't exist for them natively. So understanding uniqueness to their business, understanding, hey, let's see native functionality and then you can build off of it from there.
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I think native functionality. I also think flexibility when I think of B2B E commerce and I think there's one word that every manufacturer, every distributor needs, it's Flexibility. They need to be able to easily integrate with third party systems which is all API based. They need a flexible data model for as will said, creating customer specific catalogs or adding new fields and attributes as they bring in new product lines. Flexibility is the number one piece of. It's not even a feature really but I guess it's not functionality but it is a feature of a platform. That's where I start with helping manufacturers and distributors.
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I think that's spot on. The only thing I would add is that make sure that you're developing those features and functions against a low, medium, high prioritization so that the platform can come back to you. And we've done this numerous, numerous times in this life cycle and basically say here's what's out of the box, here's where we need to do a little bit of work, here's where we need to do a lot of work and then here's where we need to integrate with something else. We call that a scope table. And if you have something like that helping you do your platform selections against a discrete set of requirements, you, a person running the E commerce program will have a much better shot at a clarified budget that you can hit and make as well as a timeline. And we can help with all of that.
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C
That's great. Well yeah, and definitely there's a lot more to talk through here and especially when we start diving into the details and the nuances and stuff. But just to wrap up here, wanted to ask each of you since you're definitely keeping up with the latest trends and things, what's a trend or area that you're keeping an eye on that will affect B2B E commerce in the months ahead?
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Months if not years. And we've been living with it for last couple of business cycles now. Supply chain is almost always an issue. B2B E commerce is about making sure that people are getting the things who need to get things done fast in as cost effective way as possible and we make their lives easier. That would be the number one thing from my perspective.
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E
Will, if it's okay, I'll just jump in what we see as a broad trend in the market and we talked, you know, Carlos just mentioned business cycles. If you take a look at the data pre Covid and again I'm giving directional data. About 80% of distributors had already invested somewhat in E commerce or digital experience. I'm not saying full on E commerce but they were, they were definitely getting more and more to market digitally. A lot of manufacturers hadn't touched e commerce yet. Maybe they had a custom built 10 year old portal for ordering, but it was very very light, very outdated. Covid hits Suddenly every distributor, every manufacturer doubles down on E commerce because their salespeople can't get into offices. They want to start automating things. People are working from home and the connection to the ERP is slow and suddenly sales transactions are slowed down by tech tech stacks. So a lot of decisions were made in haste to get through the pandemic. As we move into 20, 25, 26, I think a big trend is going to be did we buy the right platform and the right tech stack during the pandemic? Is it flexible enough? Is it easy to integrate? We're updating our ERP now. Does the E commerce platform work well with erp? Can we present the data that we want easily? How many people do we need in our customer service team or a call center or IT staff to support the platform? I think we're going to go through another iteration in the software cycle where customers, our customers, meaning manufacturers and distributors, are much more educated on the nuances of where they need to be and much more invested in digital. And I do think you're going to see more companies investing for the ROI being beyond just the conversion rate, et cetera, but it's actually going to be about automation and true ROI to the bottom line.
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F
Yeah, without repeating too much of what Carlos and Tom just said, I think it really comes down to digital maturity of buyers, whether they're manufacturers or distributors is continuing to improve and I think that's going to be a trend that we see going into the end of this year, early next year and then as Tom said, those investments will reflect that level of digital maturity growth.
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D
Greg, thank you so much. You have been an awesome host as always and we appreciate it and we love being on this channel and this thread. So thank you very much.
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C
Yeah, love having you all on. Thanks again. I'd like to thank Carlos, Tom and Will for joining us today and sharing their expertise. Thanks also to the Office of Experience and ZNODE for sponsoring this episode and you can learn more about our guests and our sponsors by following the links in the show notes.
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Thanks again for listening to the Agile brand brought to you by Tech Systems. If you enjoyed the show, please take a minute to subscribe and leave us a rating so that others can find the show more easily. You can access more episodes of the show at www.gregkilstrom.com. that's G-R E G K I H L S t r o m.com While you're there, check out my series of best selling Agile brand guides covering a wide variety of marketing technology topics. Or you can search for Greg Kilstrom on Amazon. The Agile Brand is produced by Missing Link, a Latina owned, strategy driven, creatively future fueled production co op. From ideation to creation, they craft human connections through intelligent, engaging and informative content. Until next time, Stay Agile.
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The agile brand. There's a fire inside you you can't ignore. Stand still. Not a chance. You're a lifelong learner who's come this far. Now we are here to help you. Keep going Further. Capella University what can't you do? Visit capella.edu to learn more.