Digital Commerce: Disrupting the Manufacturing Industry. By Dale Traxler, VP, Commerce and Thomas John, Senior Director and Commerce Practice Lead

Transcription

1 Digital Commerce: Disrupting the Manufacturing Industry By Dale Traxler, VP, Commerce and Thomas John, Senior Director and Commerce Practice Lead

2 Digital disruption has created new market opportunities for manufacturers. Although the manufacturing industry is not generally on the leading edge of digital transformation or digital commerce, that is now changing as manufacturers adapt to new marketplaces, globalization and competition from innovative startups. Shifts in strategic thinking and organizational structures will be imperative to their success on their journey to increase engagement and expand self-service options to end customers. To better understand manufacturers, digital transformation and, commerce in this paper, we will explore: Trends: Industry Disruptions for Manufacturers 1 Challenges: Manufacturers face many challenges as 7 they embark on their digital journey Key Opportunities for Digital Investment 9 Sitecore for Manufacturers 13

3 Trends Industry Disruptions for Manufacturers 1

4 Industry Disruptions for Manufacturers 2 Ten years ago, the thought that non-consumer manufacturers would be building robust online stores and selling directly to their end customer was a bit of a stretch. Even consumer manufacturers were afraid to rock the boat and compete with their retail distribution channels. Many had B2B portals where channel partners and distributors ordered and checked status information, but very little was done to produce product content or a thoughtful user experience for these portals. Now, manufacturers find themselves revolutionizing how they need to do business, and are scrambling to create optimal, content based user experiences in order to stay competitive. And it is all due to these industry disruptions: Buyer Demographics Manufacturer Omni-Channel Aspirations Commerce Integration with IoT (Internet of Things)

5 3 Buyer Demographics The changing buyer demographics rapidly disrupt the traditional manufacturer s channel strategy. Millennials (aged 21-34, as of 2018) are the biggest driver of this oncoming change, of going directly to the manufacturer instead of the dealer or distributor. UPS conducted a survey in which they found that 81% of buyers have purchased directly from manufacturers due to younger buyers driving digital marketplace demand. This is up from 64% in As Millennials continue to increase their purchasing power, there is little sign of this trend slowing anytime soon. Omni-Channel Aspirations Manufacturers adopted the B2B model in digital commerce primarily out of the necessity to evolve from the traditional, transactional mode, to a more collaborative mode of doing business. They have grown to closely involve their customers in each step of the buying process. The key practices in the B2C model have created a need for more focus on the customer experience and context. The evolution of the B2B model and the emerging of trends from the B2C model has driven customer expectations higher, as consumers now assume a B2B shopping experience will provide relevant content and functionality, such as dynamic promotions, targeted content and product recommendations. Digital Commerce Integration with IoT Manufacturing Operations and Freight Monitoring are some of the globally-leading use cases for IoT. These are areas where we see the practical use of IoT within the context of day-to-day operations, and an added benefit to the human element of the operations equation. The manufacturing industry is leading in IoT because of the revolutionary ways this connected technology has streamlined and simplified various manufacturing processes. For instance, IoT can provide real-time feedback and it alerts companies of defects or damaged goods. These simple yet critical implementations of IoT reduce cost and waste. 81% OF BUYERS HAVE PURCHASED DIRECTLY FROM MANUFACTURERS.

6 4 Macro Trends for Manufacturers Key trends affecting the industry at a macro level include: Using data and analytics to optimize factory operations, equipment utilization, product quality, supply chain operations, customer service, and energy consumption. Improving customer experience across channels and engaging directly with end customers. Acquisitions for expansion, growth, and increased sales. Connecting people and systems to design more quickly and efficiently. Emphasis on product technology and innovation, building smaller factories that are highly-automated. Intense competition from other global manufacturers, operating with lower labor costs and tax bases. There is a large skill gap in the U.S. In fact, two million jobs may go unfilled in the next 10 years; so companies are looking at digital solutions and automation to fill that gap.

7 5 Digital Trends for Manufacturers Creating Relationships and Selling Directly to End Customers Regardless of whether manufacturers sell all or some of their products directly to end customers, they need to establish a relationship with them. Customers are coming to a company s website as a source of truth for products, to find out where to buy products, how to get service and support, to research industry trends and a host of other purposes. Manufacturers need to find a reason to connect ask customers to sign up for a newsletter, a webinar, to speak to a rep via chat. Better yet, they should provide their customers with the opportunity to purchase on whatever channel is appropriate to meet their needs (hint: mobile). Understanding your Customers Manufacturers need to get to know their customer personas and journeys, and leverage that information in all the touch points they have with their end customers. By knowing the customers, companies can personalize content and merchandising, and build products their customers really want. It is also critical for them to understand the appropriate sales channels to be used to reach their target customer. In many cases, customers want to buy from manufacturers directly. Or, they want to make a purchase when they are ready and let you worry about who handles the fulfillment. Connecting Online and Offline Channels Manufacturers direct and indirect sellers need to understand the online engagements of the mutual end customers. Their online channels should be informed by what their customers are doing through more traditional sales channels. Sales and marketing data needs to be combined and personalized for their various sales channels. To do this, companies are utilizing their BI warehouse, website and commerce analytics, and CRM to combine data and turn it into actionable insights for their direct and indirect sellers, who provide additional input to create storytelling and case studies that influence online sales. Companies should create online promotions and cross selling opportunities aligned with what works in direct sales efforts. Improving Self-Service Tools for Channel Partners and Distributors If a manufacturer s B2B online store is more than a few years old, it s time for a refresh. They need to get rid of their static, product catalog or spreadsheet like storefront and create a rich B2C buying experience that includes sophisticated search, enriched product detail pages and content, configurations, and comparative tools. Manufacturers need to ensure that all of their product data and content is available within a few clicks. They should leverage the same pages they use on their end customer product catalog or digital commerce site to power their B2B experience to ensure all end customers and sellers are operating from the same source of product truth. Leveraging Digital Commerce to Enter New Markets Traditional distribution channels include local distributors, dealers and retailers in global markets. Current trends are to skip traditional models and go directly to end consumers or retailers using digital commerce. In some cases, it s a way to test a market with a low investment and expand as manufacturers incur success. In other cases, it s may be the fastest way to enter a market and may allow companies to avoid setting up expensive multi-tier distribution systems. CURRENT TRENDS ARE TO SKIP TRADITIONAL MODELS AND GO DIRECTLY TO END CONSUMERS OR RETAILERS USING DIGITAL COMMERCE.

8 Beware! Digital Challenges Abound Manufacturers face many challenges as they embark on their digital journey. 6

9 7 1 Access to data In general, manufacturers are not digital marketing or digital commerce savvy. In many cases, they don t have direct relationships with end customers and instead rely on their channel partners to provide feedback on their products as well as to represent their brands and provide competitive proposals. In many industrial markets, distributors don t like to share customer information. They may sell competitive products, and may or may not market your broader line of products. This creates a speed bump in tracking leads and attribution. 4 Digital resources and organizational issues can be huge barriers to success Many times, it s difficult to recruit top digital talent without defined opportunities for growth. Top notch designers and developers are in demand and tend to ask for relatively high salaries. Many manufacturers in industrial and energy segments lack traditional marketing organizations. Adding expertise to support PIMs, experience management platforms, marketing automation and social marketing is often a stretch. 2 Markets and target customers may be very different Many manufactures have several brands that may have evolved or been acquired over time that service different markets with alternative approaches to sales and marketing channels. This creates problems in building a seamless online experience that serves all markets with a consistent brand message. In many cases, the market positioning of one or more of the brands may be misaligned. 5 Leadership may not be digitally savvy or understand the business benefits of digital investment In many cases, companies are accustomed to making investments in a project, and expect the spend to stop once the project is complete. Digital commerce is a program, not a project, and it requires constant investment and innovation. 3 Technology can be a huge barrier Internal systems may be diverse and complex, and include several different ERPs, CRMS, and digital marketing systems. Integrations for B2B businesses are complex and ongoing. Pricing and availability are real-time. Frequently, legacy systems are designed to support traditional distribution channels and are not well-aligned with digital channels. Products may have many types of geographic or contractual restrictions that technology must represent through business rules and customer experiences. Today, these are handled by humans in call centers or within channel partners. That being said, the return on digital investment is very high when done properly. Having a sound business and aligned digital strategy is the first place to start. Developing a sound technical roadmap and planning to address gaps in resources and processes is also mandatory. HAVING A SOUND BUSINESS AND ALIGNED DIGITAL STRATEGY IS THE FIRST PLACE TO START

10 Key Opportunities for Digital Investment Make these key investments today for high returns in the coming years 8

11 Normalize, enrich and control the distribution of your product information across all channels to better control your brand experience. Introduce Product Information Management solutions to assist in the management and syndication of that content. Invest in Digital Asset Management solutions for media and non-product digital assets. These products will assist in sharing assets across digital and print channels in the appropriate resolution and format. Put your full product catalog online for your end customers and channel partners. You may want to block access to competitors especially for proprietary and pricing information. But, let your target customers learn about your products without barriers whenever possible. Sell directly to end customers as appropriate, but also enhance your support of online and offline channel partners. This will vary by industry and market segment, as well as by product complexity, but be sure to meet your end customers where they want to buy. Don t let your legacy processes dictate the strategy. Build tools to connect your online and offline channels. Provide channel partners with relevant performance data, enriched product content, support information and systems, lead generation tools and programs.

12 10 6 Have an Amazon strategy to make your products available for sale, least visible. This could include Amazon only products. If you choose not to sell on Amazon, have a strategy to combat competitors who do sell there Test and learn. Use digital A/B and multivariate testing to improve your product data, messaging, promotions, and content. This is an ongoing process. Leverage your analytics and BI systems to mine for actionable insights that will improve your KPIs. Personalize your digital experiences by customer, persona, and behaviors. This requires a lot of content, but you will improve your KPIs for conversion, engagement and revenue growth. 11 Officer or similar title to create an internal focus on your end customer and meeting their needs across all channels. This may also include creating a Digital Center of Excellence to provide guidance on governance, branding, and customer experience across different business units, brands and channels. Get help from digital experts. Very few manufacturers can do this without outside help. Agencies like Rightpoint can assist with strategy, change enablement, customer experience design, technology selection and implementation, and ongoing optimization. Digital operations and execution are other areas for outside investment. 9 Build loyalty programs to incentivize and engage your best customers. These can also include your channel partners. Find ways to connect and learn from your customer communities to further engagement, and build your brand reputation and referral base. Invest in a Chief Customer Engagement

13 11 Technology is frequently the firstplace that companies start their journey. They realize the investment in platforms that support integrated content, commerce, and digital marketing may be substantial. Here we ve provided some details on how to best approach architecting scalable digital content and commerce solutions: MANUFACTURING PLANT Monitor operations to help predict and determine expected outputs. Eliminate risk of downtime with equipment with alerts based on conditions or runtimes. ACCORDING TO THE IDC 2017 RELEASE, MANUFACTURERS INVESTED $102.5 BILLION IN INTEGRATING IOT TECHNOLOGIES INTO THEIR OPERATIONS. EVEN AS THE INTEGRATED APPROACH IS A LONG WAY FROM RAW MATERIALS TO FINISHED GOODS, IT IS ALREADY MAKING A DISRUPTION IN THE SUPPLY CHAINS, FREIGHT AND LOGISTICS. GLOBAL FACILITY INSIGHT Increase customer satisfaction with aggregated data such as status of order, expected delivery times or tracking information CUSTOMER SITE Monitor and transmit operational information to dealers and field service reps to automate equipment monitoring Remote management utilizing threshold limits such as temperature ranges to increase equipment efficiency and cut costs. Increase efficiencies in supply chain by sharing data across channels into inventory silos

14 Sitecore for Manufacturers 12

15 13 With the disruptions that the manufacturers are facing, or will face within the next five years, digital marketers are working to deliver a more personalized customer experience across various touchpoints. They are often challenged with the distributed nature of data sources, and endpoints of functionality within the business. Sitecore brings digital marketing capabilities together with content and commerce to provide a robust platform that drives a contextual and personalized experience for the end customer. In addition, manufacturers are looking for scalable integration solutions to help grow their solution and integrate into their process such as operations and logistics. The approach we have taken to address the disruptions that manufacturers face follow Customer Experience capabilities and Scalable Architecture to address the wave of the future such as IoT.

16 14 Customer Experience in the Digital Commerce Age The Sitecore Experience Platform (XP) Version 9 is the only experience platform that unifies all data and interactions from campaigns and other data sources into one platform, providing you with an ongoing, holistic, real-time view of your customers. Through a 360-degree customer view, Sitecore now helps you deliver personalized content within the context of how your customers interact with your brand across all channels and devices. And with native integration to Microsoft Azure and Sitecore Experience Commerce, you re able to get to market faster, with a lower total cost of ownership, and to manage seamless experiences before, during, and after the purchase transaction. SITECORE NOW HELPS YOU DELIVER PERSONALIZED CONTENT

17 15 Omni-Channel Experience People Information Product Management and Digital Commerce capabilities are available on the Sitecore Experience Platform (XP) Version EXPLICIT IMPLICIT 9 via a module called Experience Commerce 9. In addition to the industry-leading Content Management system, Sitecore has added a more integrated capability for creating a commerce experience. Mobile Web Sitecore utilizes the Experience Database (xdb) to track user profiles, and rules, and to collect all interaction points. With this data, your digital commerce site is able to target and personalize the end user s shopping experience. With the release of Sitecore xconnect, we have more flexibility to help build more information with user interaction points be Commerce IOT it online or offline. With Sitecore xconnect, you are able to store more information in the Experience Database (xdb) about the user,. and therefore present the right product in the right context. The Sitecore Experience Platform (XP) provides true omni- Print channel marketing automation. The automation functionality has been built primarily to address Marketing at scale and Experience Commerce. The features and functionality have been designed and built by marketers for marketers. STRUCTURED UNSTRUCTURED Within this intuitive UI (drag-and-drop functionality), you can create engagement plans specifically around certain events Product Information on your site, such as abandoned carts.

18 16 Product Management & Business Tools Categories SKUs Inventory Variants Inventory 1 Catalogs 1 Inventory Set With any platform supporting digital commerce activities, a robust product catalog management system is needed to help present your catalog to the end-user in a concise manner. In Experience Commerce, the Product Management capabilities vary to fit your product line offering. The catalog schema is configurable to help organize like products (hard and soft goods) to ease the management of these products and you can create product attributes which will provide detailed information to the customer. In addition to catalog management, Experience Commerce provides a robust and scalable system to support Inventory. The inventory is tracked via a concept called Inventory Sets. These Inventory Sets can be configured to apply to business process of tracking inventory such as multiple Distribution Center, physical dealer locations or Third Party Logistics solutions.

19 17 Sitecore Architecture & Extensibility The traditional monolithic platform architecture is being replaced by a more agile and scalable one. The micro-services architecture has slowly become an accepted pattern for platform that offer both scalability and wide array of customization opportunities. Some of the Sitecore technology framework includes ASP.NET Core 2.0, Angular 4, SQL Server 2016 etc. Integration Framework - Sitecore Data Exchange Framework (DXF) The Data Exchange Framework (DXF) is a Sitecore module that provides a way to transfer data in and out of Sitecore. In addition to the providers that are already built (Dynamics), the DXF will allow you to create your own custom providers. As with most transactional applications, the data exchange framework (DXF) will allow scalability within the integration layer. This will allow you to build the necessary inbound and outbound operations such as inventory, shipping and order integration. XML Data Data Exchange Framework Sitcore

20 18 Now more than ever, manufacturers are feeling the pressure of digital disruption. With buyer demographics and commerce expectations constantly changing, organizations are on the defensive, reacting to industry disruptions to remain competitive. With the help of Rightpoint and Sitecore, manufacturers and other companies have been able to shift from reactionary organizations bracing for another disruption, to industry disruptors on the cutting edge of customer experience technology. Rightpoint is an independent customer experience agency with technology at our core. We create seamless digital experiences driven by insight, strategy, technology and design to evolve the way our clients do business. Contact us to learn how we work with Sitecore to develop end-to-end digital commerce and customer experience solutions that turn our clients into digital disruptors RIGHTPOINT.COM Copyright Rightpoint 2018