The race to embrace digital marketing can put you in a strong position with clients, the MDM/Real Results Marketing 2019 State of Distributor Marketing survey shows, but don’t elevate online efforts at the expense of traditionally profitable opportunities.
Distributors are focusing more on digital marketing vehicles — email, search and social media — and less on more traditional avenues, such as print catalogs and collateral, trade shows and branch-based events, an analysis of five years of survey data reveals. In general, the ongoing shift to digital is a good thing for distributors. Depending on the segment, customers prefer that you communicate with them digitally. But traditional avenues have not yet worn out their welcome; abandoning print and in-person entirely for digital is not the answer.
We’re living in an omnichannel world, with both baby boomers and Gen Z driving purchasing decisions. Distributors recognize this generational dichotomy. Most say more traditional marketing efforts are still important to their efforts, despite increasing the frequency with which they use digital versus print and in-person. For example, nearly half of distributor respondents said print catalogs were very important.
In our surveys of more than 10,000 end-users, about 47% still shop frequently or very frequently with print. This significant percentage of customers who want access to a catalog or product literature suggests a need to retain these options — but perhaps with smaller or more targeted runs. Certain sectors and demographics tend to use print more frequently, as well.
Your customer-facing personnel will remain critical to driving demand. About 62% of customers very frequently or frequently shop with a customer service rep, and about the same percentage say they very frequently or frequently shop with a distributor sales rep. The challenge will be balancing your more traditional marketing efforts with the right digital investments.
Don’t Be Satisfied with Status Quo
Distributors are generally satisfied with their marketing results, according to the survey. Still, the percentage of distributors in the survey who are extremely satisfied with their marketing results landed in the single digits once again this year, with just 3.3% falling in the “high performer” range — down from our 2018 survey. About 74% of respondents felt they were moderate performers, and another 23% put themselves in the low-performer bucket. Respondents who answered “very satisfied” or “moderately satisfied” were classified as moderate performers; respondents who answered “slightly satisfied” or “not at all satisfied” were classified as underperformers.
Align Marketing with the Times
The top four distributor marketing initiative objectives in 2019 were growing market share and growing wallet share, followed by retaining existing customers and increasing gross margin through pricing management.
Over the past five years, distributors’ goals with marketing have shifted, however, with fewer survey respondents focusing on growing margin through pricing initiatives and supplier management, and more respondents focusing on growing market share and selling more to existing customers. This could be due to the relatively frothy economy we’ve seen over the past few years, riding the wave with less incentive to focus on profitability. There are also more accessible solutions now, allowing distributors to invest in cloud-based tools that drive profitability through better pricing.
Find Your Place on Social Media
Three of the top four most important marketing platforms for distributors in the survey were digital — including email, search and social media. Email has remained steady, with 84% of respondents saying it was important or very important in this year’s survey. Search engine marketing, which about three-quarters of the respondents have called important or very important over the past two years, continues to be a top priority for most distributors. In fact, many leading distributors have doubled or even tripled the number of keywords they rank for in the past two years.
Social media has shifted the most over the past five years; in 2015, less than half of distributors responding to the survey said that social media was important or very important. That number grew to 70% in 2019.
All of the more traditional distributor marketing pathways have fallen year over year. Print has decreased in importance to distributors significantly over a five-year period.
Interestingly, 29% still named trade shows as “very important,” despite the medium falling out of favor with many of the respondents. This segment continues to hold tight to trade shows as an effective marketing opportunity.
Distributors’ use of mass media (television, radio and outdoor signage) hasn’t changed much over five years, but the single-digit percentage who consider it important or very important has gone down considerably. Mass media has never been a well-used platform by distributors to reach potential customers; it’s primarily used by larger distributors and manufacturers with larger marketing budgets.
Telemarketing is Significantly Underutilized
While distributors say more traditional marketing methods are less important, distributors are still doing telemarketing and branch-store events more often — in line with best practices. Telemarketing as part of a proactive inside sales strategy remains significantly underutilized by distributors, who are more comfortable with field sales reps selling to existing customers.
More distributors are also timing email and search engine marketing with increasing frequency. But for many, that frequency is still not in line with best practices. Email is a prime example. Most of the distributors in our survey know it’s important; but just 42% are emailing as often as they can. Our customer research shows that most want to be emailed more often, daily to weekly, depending on your customer base. From 2015 to 2019, those who email daily or weekly shifted from 40% to 48%.
The three marketing platforms that have the highest percentage of use by distributors at the right frequency are trade shows, print flyers and social media. Trade shows and print flyers are traditional avenues distributors have been using for decades. The digital vehicle – social media – has one of the lowest barriers to entry and is relatively easy to adopt. Younger employees – millennials and Gen Z – tend to run that part of the business, as well.
However, many distributors are more sporadic in their use of newer digital options. For example, more than 50% of respondents are doing email or search marketing monthly, quarterly, annually or never.
Make a Bigger Marketing Pie
Though distributors have embraced the importance of digital marketing tactics, there is still a lot of room for growth. Balancing the new with the old will likely continue to challenge distributors who don’t want to get left behind in this rapidly changing environment.
Many seem to have a mindset that marketing is a fixed resource: If you spend money on email, you can’t continue to invest in print flyers or events. But while more emphasis can be placed on digital, distributors still would be wise to integrate more traditional methods into their overall marketing strategies.
It’s not about moving money to something new. It’s about growing the pie. How that pie grows depends on how your customers want to be communicated with and who you are aiming to reach with your marketing efforts. To be sure, for many segments and customers, traditional vehicles will be less relevant over time. You can account for that. Digital will continue to grow in importance as well.
Over the next decade, marketing will play a bigger role in distributor operations than it ever has. Distributors who don’t find the right mix of traditional and digital strategies will likely shed market share and lose customer spend to competitors that do. A successful omnichannel marketing strategy expands to accommodate the new marketing requirements that will help you compete successfully in 2020 and beyond.
Real Results Marketing brings distributor marketing expertise from our time as successful executives, advisors and implementers with MRO and OEM distributors of all sizes in a variety of market segments. The author may be reached at email@example.com or more information at realresultsmarketing.com.
About This Survey
Modern Distribution Management and Real Results Marketing conducted this research through an online survey taken by 329 participants across a variety of distribution and manufacturing sectors. There was higher participation from industrial, safety, electrical, electronics, building materials, oil and gas, HVACR/plumbing and hardware sectors. Other participating sectors include janitorial, pulp and paper, chemicals and plastics, grocery/foodservice and pharmaceutical. Nearly 50% of respondents were companies with less than $50 million in revenue, more than 40% of respondents have $50 million to $500 million in revenue, and the remainder have more than $500 million in revenue.
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