Canary in the coal mine
Thursday & Friday's news might have alarmed you a bit if you're an industrial manufacturer....Durable goods orders fell 5.1% in December and GDP slowed to levels which statistically could indicate recession once adjustments are applied in upcoming months.
"U.S. Durable Goods Orders Tumbled 5.1% in December"
"U.S. economy grinds to near halt at end of 2015"
Is the proverbial "canary in the coal mine" motionless on the bottom of the cage?
Boring industry & blowout growth
Those weren't the only stats published on Friday though, and another set told an entirely different story.
The last business day of the month is a chance to review the results of industrial marketing efforts, and one set of metrics I reviewed told a dramatically different story than the economic indicators and headlines.
This client, a small midwestern manufacturer of durable goods, wrapped up a 3 month pilot with a 22% increase in website traffic and a 633% increase in qualified leads. That while markets were telling an entirely different story!
We typically start engagements with a 90 day pilot. Many industrial manufacturers have been burned repeatedly with promises of SEO, AdWords and internet marketing potential. They're skeptical and want proof of concept. There's typically also a lot of work to help understand buyer personas and buying journeys - and then creating some initial content and campaigns to fuel a trial. And the work is intense - requiring close collaboration and approaches that challenge many deeply held assumptions about B2B marketing. So a pilot is a great way for all stakeholders to limit risk with a couple months of preparatory work and a third month letting an inbound marketing framework run.
Will all those leads convert into B2B Sales? Certainly not. And the sell cycle will vary as the client and their sales team learn how to manage and sell inbound leads. Is one month of traffic increase a bankable metric? Of course not. Is the pilot representative of future success? There's no guarantee. There will be up months and slow months. But this success was achieved even though the pilot didn't even begin to address important elements that we'll begin to tackle now including:
- tracking telephone inquiries which are a common source of industrial marketing conversions
- redesigning the website to improve customer experience, optimization and conversions
- implementing contextual content to support buyer persona and buying journey preferences
- extensive distribution and promotion of content
- deliberate SEO analysis and optimization remediation
What it did demonstrate, as intended, is that even in a "boring industry" there are leads lurking in the internet shadows among current visitors; ample opportunities to attract more visitors; and between the two an exciting opportunity to create numerous new projects and drive B2B sales.
And, notably in this case, this was demonstrated at precisely the same time that durable goods orders were falling and GDP growth was nearing the recession tipping point.
That's the beauty of inbound marketing for industrial manufacturers. It's an approach that's effective regardless of economic conditions. Businesses still operate during recessions. They still have challenges (even more) to overcome, and they become more discerning in their research and vendor selection.
So whether we've entered a recession, or will muddle along for several more years until the next one, there will be an economic slow down. Why not implement strategies to prosper in good times and bad? Alternatively you could listen to your banker, slash all marketing expense, pull back into your shell and......hope.
The looming threat that you should sweat
Building really strong inbound marketing is an effective way for industrial manufacturers to manage the cyclical risk of inevitable market fluctuations. However they face a secular risk that many aren't proactively addressing.
Changes in B2B buying behaviors, driven by the internet, are fundamentally disrupting the typical indirect channel sales model used by B2B manufacturers in the industrial space. In short, much of the functionality provided by local, indirect sales channel, has been obviated by one of several trends:
- lead generation - manufacturers don't need local channel reps to do what buyers simply do on their own with Google
- tech support - as quality and reliability of products and related consumables improves, what used to be table stakes for repeat sales loyalty is now much less important (and IoT threatens to make it vastly less so!)
- warehousing - expedited delivery, the explosion of 3PL systems and the low cost of funds which makes consignment arrangements very feasible mean that simply providing physical proximity provides limited competitive advantage
- relationships - this is perhaps the strongest legacy benefit, but it's dwindling. Very insightful companies and individuals that create business value will be welcome...always. Old buddies, however, are retiring and the "donut delivery" type relationships are of little interest to a rising generation of digitally savvy, overworked buyers
Scott Benfield takes an interesting look at the challenge in a recent article focused on industrial distributors themselves and the existential crisis many of them face. But he's chasing the wrong problem - at least when it comes to complex and engineered industrial sales. He advises on how to fix the distribution model - the discussion needs to be how to augment the distribution model (if not replace it.)
I'll be writing more (probably much more) about this going forward, but companies that have built their B2B sales model on indirect channel sales need to be thinking expansively about how they can cultivate and profitably support direct relationships with customers. Economic cycles will come and go - the disaggregation of the "middle man" will accelerate.
Interested in how marketing automation can be used to improve direct and channel sales (at least among high performing and creative channel partners)? Download our free eBook with tips to do just that.