Yogi Berra was right. The future ain't what it used to be. Part two of two parts.
With all they have been through over the past three years, electrical manufacturers are understandably a little gun shy about taking many risks. They still want to grow their top and bottom lines, but they are evaluating any potential growth opportunities very closely. It can be tough to grow with such a cautious view. The following 10 ideas are safe bets that can help electrical manufacturers grow in 2011.
- Be social
By now everyone has heard of how the younger generation keeps in touch through Facebook, YouTube, Twitter, LinkedIn and other social networking sites. You may not yet communicate regularly with your business associates via social networking. But it's time to start exploring how it will fit in your communications and branding and strategy, because more people who make or influence buying decisions on the purchase of electrical products use it to regularly to share information, generate influence and gain customer feedback. If you are not already a member of LinkedIn or Facebook, sign up and research how other electrical manufacturers are using them to promote their brands and connect with customers. We have found that the lighting community is particularly active on LinkedIn.
Funds for traditional print media are diminishing while customer demographics and behavior are changing. The need to educate, inform and introduce new products and programs economically and to a wider audience will continue to move marketing and branding strategies online via these forms of social media.
- Distribute information electronically
Your sales, promotional or marketing material must be available in an electronic format whenever possible, because when end-users and distributors want this information they need it fast and easy to access. Electrical distributors want online access to catalog content (graphics, product details) to populate e-stores; submittal sheets; marketing information; training; marketplace research/data; case studies; new production information and more.
Additionally, when you think electronic, you may need to consider new distribution possibilities to reach certain segments of your target audience. Some manufacturers have had success with e-tailers/e-distributors.
- Develop new distributor incentive programs
Everyone we talk to is tired of dusting off their distributor program and re-launching the same old things that generate the same old results. More progressive manufacturers have gone to a level beyond traditional rebates, terms and conditions, and operational issues and are using tiered initiatives to drive distributor sales and enhance their profitability.
Distributors can be challenged to deliver results, be they sales, market share, marketing awareness or new product support to earn enhanced benefits such as rebates, marketing funds, sales resources and special pricing.
Consider integrating a non-cash distributor incentive program such as a “frequent buyer” or “President's Club” into your distributor program. When you fund it through incremental business, the ROI becomes apparent. Just about everyone offers a rebate program, and many manufacturers funnel their rebates through marketing groups. These rebates provide distributors with most of their profitability. Unfortunately, rebates don't move market share the way they used to, which was the original goal of the groups. With marketing groups now representing more than 40 percent of industry sales and most manufacturers offering comparable rebates, rebates are no longer business drivers — they are the ante to play in the game. In the future, manufacturer support to distributors will be performance-oriented.
- Build your brand preference
While many industry observers believe price is the key purchasing decision driver, research shows it's only one of a number of criteria. In the future, we believe the more progressive manufacturers will refocus on building their brand preference by differentiating their products and services. With so many buying options now available, it's more important than ever to give buyers clearly identifiable reasons to buy your products instead of competitive offerings.
Consider why many customers purchase through electrical distributors: availability, price, credit, value-added information, friendship, location and more. What can you do to affect this? And if you can't do anything to affect the end-user, how can you reinforce why a distributor should be doing business with you? Remember the “ever-green” reasons such as improved profitability, error-free transactions, timely shipping and ease of doing business. Understanding and promoting your value and brand preference is key in supporting your sales and marketing messaging.
- Consider jointly developing customer demand with synergistic manufacturers
To increase awareness of how your products address a customer's need or application, manufacturers will team up to present a total solution for the customer. For example, if an application in the food processing industry requires a reliable electrical installation at the assembly line, then stainless steel conduit and fittings installed to a corrosion-resistant weatherproof box with a locking receptacle will make a very appealing story to any food processing plant's electrical maintenance person. Think about how a group of manufacturers could promote this package of products. Perhaps a marketing group or other third party could be the catalyst to develop these marketing approaches.
- Don't underestimate the power of product samples
Would you buy something solely on someone's word or would you prefer to touch it or read about it? As consumers we expect to interact with what we buy. So, why do we treat new electrical products differently? One of the most effective new product marketing strategies is a sampling strategy. Up until the mid-1970s, sampling was the norm in the electrical market because of its impact at the end-user level. While a sampling strategy can be expensive and isn't realistic for all electrical products, it's still one of the best ways to introduce new products to the marketplace.
- Rebuild relationships in the market
The old adage, “It's not what you know but who you know,” could have been coined in the electrical business. Our industry is built upon relationships at the distributor and contractor level. However, with all of the turnover in the market during the past couple of years, many old-timers have retired or been laid off. There's a new generation out in the market and you may need to reintroduce your company to them. Getting the right message to the right person will be more critical than ever. While CRM (customer relationship management) systems aren't new, they will be more important than ever to establish, track and manage communications with contacts. Point-of-sale (POS) information will also be an even more valuable tool because it will enable more one-to-one and one-to-similar marketing strategies.
- Make sure your salespeople are getting enough face time with customers
The need for more face-to-face sales time for direct salesmen will increase. While companies won't add people, the role of inside sales will expand from primarily being order-takers to making outbound calls to selected customers or types of customers. Equipped with product knowledge, account information and online tools such as e-mail, web conferencing, Skype (for calling, chat, video), chat/instant messaging and texting, inside salespeople will evolve into a “tele-salesforce” to supplement your feet on the street. This may enhance or supplant rep firms with some of your distributors.
Additionally, manufacturers will support dedicated personnel at key distribution partners (some already are) with all or a portion of the expense of a dedicated salesperson funded by participating manufacturers. This strategy will be expanded to market/application specialists and marketing personnel.
- Consider new distribution channels
While these channels may not carry all of your line, they may represent unique customer subsets. We know an LED manufacturer selling through petrochemical distributors. and electrical manufacturers who sell through medical supply wholesalers, food-service distributors and building supply dealers.
Leading manufacturers are trying to become recognized as experts to key audiences by advertising in both mainstream and niche medias, including television and consumer magazines. For instance, because it wants to get in front of key decisionmakers of Fortune 500 companies, Schneider Electric is advertising in Fortune and Time. Rockwell Automation/Allen-Bradley has a product placement in a Ford television ad and Lutron has for the past few years been advertising in building magazines. Reaching decision makers is more critical than ever to generate demand, and emerging media venues can provide low cost to reach your target audience.
Lots of things have changed in the electrical wholesaling industry over the past few years, but one core truth is still valid — taking market share in will still require influencing the end user. Doing this may require repositioning your sales and marketing efforts by blending in some of the strategies explored in this article.
David Gordon is president of Channel Marketing Group. He can be reached at firstname.lastname@example.org or (919) 488-8635. Stan Rydzynski is an associate partner for Channel Marketing Group, having spent over 35 years with Leviton. He can be reached at email@example.com or (516) 319-1191. To learn more about the services they provide, visit www.channelmkt.com and www.electricaltrends.com.