Feb 3, 2017 - Accordingly, digital marketing and online ... PwC's strategy consulting team Strategy& .... is only ju
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Online marketing is increasingly becoming an important part of chemical manufacturers’ business strategies
Breaking the barrier
Over 1,000 people responded to the global ICIS/Accenture survey on commercial excellence, which suggested that chemical companies were still focusing on the traditional means of gaining value through customer interactions but were increasingly looking to digital technologies. When asked what percentage of their customers were approached via digital channels, the average answer was approximately 35%. Some 30% said they interacted with over half their customers via digital channels, with Digital technology is expected to transform the over 25% saying the integration of digitisation was a very important or even critical part of way chemical manufacturers and distributors their strategy. It was rated as “relatively /modestly important” by 47% of respondents. do business – but is the industry ready? An earlier study carried out by the American Chemistry Council (ACC) and Accenture ANDY BRICE LONDON needs of the customer. Most leaders are wary revealed that about 60% of chemical compaof change – deterred by the associated costs nies are adapting to digital technologies, alben today’s tough low growth business envi- and risks as well as resource constraints. it with some resistance. They recognise the ronment, everyone is fighting for market Instead, they tend to stick with tried-and- need to “embrace digital technologies to gain share and margins. Rising costs, a lack of tested practices. a competitive advantage”. innovation, increased competition and an In fact, research shows that digital technolResearch recently carried out by ICIS in asageing workforce mean chemical manufactur- sociation with Accenture shows that finding ogies are an effective means of raising brand ers urgently need to look for new avenues for new avenues for growth is now the top priori- awareness, generating leads and significantly ty for chemical industry professionals – and boosting sales performance. top line growth. The chemical industry is mature, conserva- many are looking to digital technologies as Accordingly, digital marketing and online tive and can be slow to react to the changing the solution over the next five years. presence are playing increasingly important ❯❯
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❯❯ roles in the commercial strategies of forward-thinking chemical manufacturers, both large and small. The buyers’ journey is changing rapidly, with the internet and social media transforming the way they look to buy products and services. The customer experience is key and producers risk falling by the wayside if they fail to capitalise on the opportunity to tap into this key growing channel. Few doubt that digitisation is set to shape the future of the chemical sector – the question is when and where. PwC’s strategy consulting team Strategy& says chemical companies would certainly benefit from focusing on improving productivity and efficiencies through the uptake of digital technologies. Its 2016 Chemicals Industry Trends study suggests it is critical they “embrace digital transformation wholeheartedly” to better engage with customers and become a true solutions provider. For some producers, this digital transformation means using these technologies to enhance their production capabilities and processes, while others instead see the need to develop their marketing and improve their customers’ online experience.
A NEW WAY OF THINKING According to research from Google and best practice insight and technology company CEB, the average customer now goes through about 70% of the buying process online before engaging with a sales representative. Today, the modern buyer wants to know all about a product, its benefits, applications and alternatives before engaging with a sales team at all. Effectively, sellers now have far less time to influence a purchase. It pays then to optimise your business to accommodate this shift – and certainly to act before your competitors do. Yet the need to make such a fundamental change to your business strategy is always a daunting proposition: what do you do, who is going to help you get there, and what investments are needed to achieve your goals?
“Most traditional distributors underestimate the power of a strong online presence. They’re being very slow to react and missing a real opportunity” GERALD BRIAND Vice president global, ChemPoint
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Customer engagement is key “Suppliers and distributors are all starting to recognise the need for change; it’s about targeting customers accurately and providing them with the information they want, when and where they want it,” says Gerald Briand, vice president global at e-distributor ChemPoint. “Things have really changed in the last 20 years. It’s difficult trying to get new customers on the phone, especially when many have neither the time nor the inclination to communicate in that fashion. These days, people are using the internet to find products and solutions for themselves.” Differentiating yourself from the competition and making the move online can really pay dividends, adds Briand. ChemPoint, a wholly-owned subsidiary of Univar, has done just that and producers have been very receptive. “Every time we talk to a supplier about our capabilities and the direction we’re going at ChemPoint, their eyes light up,” he says. “Most traditional distributors underestimate the power of a strong online presence. They’re being very slow to react and missing a real opportunity to nurture existing and potential customers.” Rather than focusing on a conventional “outside sales” model, ChemPoint has instead steered towards digital capabilities and “inside sales”. It provides producers with a 24/7 presence that helps to increase brand awareness and generate far more viable leads than conventional methods, explains Ali Amin-Javaheri, vice president, marketing at ChemPoint.
The distributor was founded in 1999 and offers a web-based platform to provide sales and marketing for specialty and fine chemicals in North America, Europe, the Middle East and Africa. It has adopted a unique space in the distribution sector, using its digital model to find new and innovative ways to engage with potential customers. “Outside sales still has an important role in the chemical industry,” he says, “as some customers still require on-site support – but when you want to reach the rest of the market, you need to deploy a model with a lower cost to serve. “At ChemPoint we wanted to figure out how to effectively engage all customers. And the way we started doing that was through an inside sales team and integrated digital marketing. They allowed us to lower our costs and reach far more customers.” According to a report by management consulting firm Bain & Company, improving customer interaction is becoming even more of a priority for chemical companies, providing an effective way to reach out to prospective clients, and gain real-time feedback about a campaign’s effectiveness. “Digitisation provides an opportunity for chemical producers to rethink the customer relationship, to take a more customer-centric view and to focus on improving the customer experience,” it says. “Analysing customer interactions across the value chain, from
“We wanted to figure out how to effectively engage all customers. And the way we started doing that was through integrated digital marketing” ALI AMIN-JAVAHERI Vice president, marketing, ChemPoint
shopping through purchasing and after-sales interactions, makes it possible to understand customers and their businesses better, to anticipate their needs and help them improve the way they use products and services.”
A BOLD NEW ERA ChemPoint recognised early on that the chemical industry was on the brink of change – with a changing demographic meaning younger, more tech-savvy leaders were looking online for a faster, more convenient way www.icis.com
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of researching products and services. They demand quick and easy access to information, without the usual sales pressures. “In our personal lives, we all love the convenience of the online experience – but this is only just starting to be seen in the B2B world,” says Briand. “At ChemPoint, we wanted to do this in the chemical distribution sector.” ChemPoint is focused on building a world-class inside sales organisation, the likes of which the industry has never seen before, he adds. Central to its strategy is leveraging technology and using online marketing to address the changing needs of the customer. The company was the first in the chemical industry to develop a customer relationship management (CRM) system, and invest heavily in the development of information and analytics tools to provide valuable insight to suppliers. “We’ve designed our technology and processes to improve the flow of information from the market directly to our suppliers. They don’t just receive data, they get actionable insights derived from the performance of campaigns specific to their product lines, each centred on their unique value propositions,” he says. “Most chemical companies don’t have a team dedicated to digital initiatives. When these companies talk about marketing, they think about trade shows and brochures. Today’s buyer wants to learn and educate themselves in a different way. They’re looking to self-serve and grab the information they need quickly – and if they can’t find the information they want, which is primarily online, then they’ll just move on and look elsewhere”, adds Amin-Javaheri. “Every macro-trend tells us that this model is the right direction,” he says. “There are very few people who still think the chemical industry will never move online. Our objective is to make information available that maximises engagement with our customers and establishes ChemPoint as a thought leader in the market so we’re front of mind when those customers are ready to buy.” The results are impressive. Leads cost a fraction of the price of conventional methods – often only around 10% – while it takes 33% less time to convert them. ChemPoint works on an exclusive basis with its clients to promote their product lines, developing branded microsites and creating content to satisfy potential customers’ hunger for product information. Engaging with them early in the sales process supports lead generation that can then be passed to its inside sales team. “Conceptually it’s a great model and from an execution standpoint, we’ve proven that it works,” adds Briand. “Most distributors grow by maybe 2-3%/year, so for our busiwww.icis.com
ChemPoint’s combination of inside sales and online marketing is unique ness to consistently grow by double-digits is quite r emarkable. We generate hundreds of leads a month – far more than by traditional outside sales methods. I don’t think there’s another distributor out there that can do what we can do.” Marketing director JN Swamy is confident that the chemical industry is finally showing its readiness to embrace a digital future. “The chemical industry has been slow to embrace the online movement of customers. Only in the last couple of years have we started hearing a lot of interest from manufacturers to engage customers online. We’ve continued to invest in this capability for quite some time, so we consider ourselves at the leading edge of it. “Given the technical nature of products and long sales cycles, we recognised that we had to target customers early on in the buying process, when they are looking for information online and starting to research options. Today, through online marketing, we are trying to influence their buying decisions online,” he says. “All modern chemical companies should change their sales processes and consider moving online because the
“We’ve continued to invest in this capability for quite some time, so we consider ourselves at the leading edge of it” JN SWAMY Marketing director, ChemPoint
returns are much better and it’s a more effective way of operating.” Marketing director Shondra Garrigus agrees. “The industry recognises that top line growth is of increasing importance because there are only so many cost levers you can pull. To grow your top line, you need more customers. Going digital is the least expensive way of doing that. Moreover, it gives you access to the latest information about their industries and trends, data that allows you to innovate products and services that differentiate your business. “It shouldn’t be such a foreign concept. Companies are increasingly leveraging digital technology to improve operations and production. In areas such as demand planning and inventory management, digital technologies and analytics are helping companies reduce costs and improve service levels. Why not leverage similar technologies for marketing and sales? That is what we do at ChemPoint. We use digital technology to boost our producers’ online presence in order to cost-effectively grow their business and brand. And as we do that, we aggregate and analyse customer data to inform their decisions” she adds.
PLAYING THE GENERATION GAME Driving this change is the demographic shift that is seeing younger people moving into leadership roles. Millennials – now aged 18-34 – are expected to play a key role in the move online, with the generation far more receptive to the use of technology. US Census data shows that earlier this year, Millennials overtook Baby Boomers (aged 51-69) as the largest generation for the first time. By the end of the decade, almost half of ❯❯ February 2017 | ICIS Chemical Business | 3
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❯❯ US workers are expected to fall into the Millennials category. By 2025, they will represent 75% of the workforce. As Baby Boomers retire and take with them all their knowledge, the Millennials will be left to take the reins. Their desire to make informed purchasing decisions and natural affinity to looking for information online means there will soon be a fundamental shift in the way companies operate. Their behaviour is very different to their older peers – they are used to working online and demand speed, ease and objectivity. They are far more aware and accomplished at using the internet and social media – and are willing to buy from you if you can meet their expectations. “We’re seeing a real generational change – a
different way of thinking and completely new mind set,” says Swamy. “With the availability of technology, everyone – the Baby Boomers, Generation Xers and the Millennials – are increasingly looking online to find the sort of information they need. “The buying process within the chemical industry is inherently full of friction; Millennials, in contrast, are used to a very frictionless experience. They have a self-serve mind
set; they want to find out the information and speak to someone when they are ready. And that’s where we come in. “In the next 10 years, Millennials will be in the positions of power and making all the decisions – so there’s no choice but to start heading in that direction too.” ■ For more details about how ChemPoint and digital technology can transform your business, visit www.chempoint.com/why-chempoint
“We use digital technology to boost our producers’ online presence in order to costeffectively grow their business and brand” SHONDRA GARRIGUS Marketing director, ChemPoint
A generational shift is being seen in the workplace, with Millennials making an impact
SURVEY ANDY BRICE LONDON
CHEMPOINT CUSTOMERS SUGGEST INDUSTRY IS READY FOR CHANGE A SERIES of supplier interviews carried out by ChemPoint last November suggest that chemical companies are now recognising the need to develop their digital capabilities, despite initial concerns about the transition from traditional sales methods. Baby Boomers are clearly more resistant to change, preferring instead to physically call on clients and meet onsite at their offices or at trade shows. Millennials, however, appear far more receptive to using new technology and understand how it enhances customer interaction. Of those questioned, many appear ready to embrace a digital future and believe it is an effective way to improve performance, develop relationships and promote new products and services. Brody Russell, Dow’s North American product manager for industrial solutions – and a Millennial – acknowledges that attitudes are
changing even at larger, more established companies that typically tend to rely on websites and face-to-face meetings to attract business. “The switch hasn’t happened yet but it is coming,” he says. “The new generation is used to Googling and looking things up on line. We’re used to being contacted by email rather than in person.” A new hiring wave since 2005 has seen a younger, more tech-savvy generation emerge that understands computers and is keen to embrace the technology, he adds. “The younger generation grew up in the digital age, and is able to understand and learn quickly,” notes another Millennial, Matthew Ciallella – an account manager at Solvay. “It’s a very conservative industry and it’s hard to know when things will change; you can grow, or fight it and be behind.” A director of sales at an ingredi-
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ents supplier – a member of the Generation X age group, sandwiched between the Baby Boomers and Millennials – recognises that smaller accounts take a lot of time and effort to maintain so a new approach is needed. “There is a lot of expertise retiring and young people don’t have the experience with in-person meetings because of cost reduction. They use the internet to do a lot of searches so 50% of their work is done up front. I think we’re going to have to supplement our efforts with a new digital strategy. “There’s been a dramatic change in technology and some of these younger researchers are doing the work online,” he says. “It doesn’t replace meeting in person; but we’ve got to be ready. We’re still trying to figure this out. We’re like a lot of big companies; you don’t want to be reactionary.”
Competition in the chemical sector could accelerate the shift to digital for smaller companies, suggests Stephanie Kalil, Dow’s product director for adhesives, who sits in the Generation Y age bracket (born from 1980 to 2000). She believes cultivating relationships through face-to-face meetings is vital to doing business in the chemical industry, and agrees that the younger generations are driving changes at an accelerated pace. “We have a younger workforce and are starting to ask ourselves a lot about digital,” she says. “I think technology can help if they have the tech and data analytics. If they have market insight or competitive intel, that’s a benefit.” In summary, while individual suppliers’ opinions on digital technologies differ, the industry is seeing the increased uptake of online marketing now.
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