How can distributors become more important to manufacturers, take advantage of supplier resources and gain more market share? Ian Heller talked with representatives from two major manufacturers, Signify and ABB, on how distributors can go on the offense and take share from other channels.  

Luca Zanella, Global eCommerce Distribution Channel Lead at ABB, one of the world’s largest electrical manufacturers, and Ignacio Bruyel, Global B2B Marketing Partnerships Lead at Signify, a world leader in connected LED lighting systems, software and services, shared their take: 

Ian Heller: Today, we have a global digital leader and a global marketing leader on the show; both have digital and marketing responsibilities, meaning they have seen the best and worst in distributor marketing and execution. For distributors, this is your opportunity to learn how you can improve your marketing and digital capabilities.  

What are some of the geographic differences between the marketing and digital capabilities of distributors? 

Ignacio Bruyel: My experience and background is mostly with European distributors. But I still have contact with South American, U.S. and Canadian distributors. For me, the most significant difference is the way U.S. distributors strategically view marketing. Where in Europe, for example, marketing is primarily tactical, short-term or based on promotion. In North America, distributors take marketing seriously, and they have the right capabilities, people and long-term approach.  

Having said that, I have seen a tremendous transformation in Europe in the last few years, maybe due to the influence of the U.S. or from increased marketplaces coming to Europe. Distributors in Europe are changing faster in the previous two years because they can see marketplace threats. They’ve taken content and promotion seriously. They come to us and say, “Hey, what can we do together? How can we improve together?”  

These are the right questions to ask if you want to improve in the market.  

Free Report: How Distributors Can Leverage Marketing, Services and Digital Excellence to Become More Important to Manufacturers 

Luca Zanella: We do see some differences, but not so dramatic. Obviously, the bigger groups and consortia have more resources and capabilities and move faster. But the smaller ones are shifting gears. Two or three years ago, they were far behind. Now they’re moving fast.  

We’ve seen interesting cases such as loyalty programs, trade marketing initiatives and online loyalty programs. In South America, we’ve seen partners develop interesting platforms, leveraging digital marketing capabilities. This was surprising because it’s happening in smaller countries we never considered. It impressed me. Surely the U.S. could be the leader, but we are seeing some interesting examples in Europe.  

Heller: In your experience, are marketing co-op programs effectively connecting a unified marketing effort between distributors and manufacturers?   

Bruyel: In my experience, marketing co-op experiences are the best because we don’t do direct business on B2B. That’s why we need our partners, our customers and our distributors to increase the awareness of our products and systems and generate demand. It’s more effective if we do marketing together in a cooperative way where we disclose the goals, the KPIs and resources. It’s the only way we can do marketing in this type of business, growing hand in hand with distributors. To make that happen, we need distributors to have the right marketing resources, attitudes and capabilities.  

Zanella: I agree. The cooperation is fundamental. The best way to do this is to sit down at key moments of the year or during program milestones to define goals and set common targets. This is where we invest in distributor capabilities and encourage them to grow.  

Bruyel: Sometimes, manufacturers can become frustrated when we have to handle it all. It’s up to the distributor to activate the marketing activities.   

Zanella: It’s also about sharing information about the outcome of these campaigns. It’s fundamental because we need to see the results of the initiative to know if we are going in the right direction regarding strategic planning, execution and approach. Distributors are an extension of the manufacturer. We can’t reach the end-market the way they can. This is why we work together. 

Heller: There’s no substitute for getting together and planning. You are often one of the distributor’s largest suppliers. Suppose they call you in October wanting to know your goals, plans and capabilities for the year to build them into their plans. In that case, that’s a more reliable way of ensuring alignment between the manufacturer and the distributor than anything else. In my last job in the construction supplies world, we used to sit down with Bosch every year and talk about what their plans were in that market. That made for better alignment because we knew what they were doing and their objectives, and we could work together on it. 

How effective are AI-based marketing tools? It may be too early in the lifecycle of AI, but are either of you seeing distributors use AI marketing tools yet?  

Bruyel: I’ve seen virtual reality tools for educational purposes, which we’re also testing.  It’s virtual reality in the metaverse where we see a lot of potential for education but not artificial intelligence yet.   

Zanella: Same. We have discussed how AI can work for content but not related specifically to marketing tools. We must remember that before running, we need to walk and before walking, we need to crawl. Sometimes, it’s better to stop and work on the data content, enhance content, optimize information and then move toward marketing. I’m not sure if AI topics are hype at the moment in areas like marketing or a real concrete thing. It’s too early to say.   

Heller: That’s fair. I’ve been a VP of marketing at four big distributors. I see a lot of applications, but I think right now it can be more of a distraction than an assist if you aren’t careful.  

Bruyel: A distributor shared that they were testing AI to make specific content for product content. All of us will share the same product description for some products, meaning it has a negative impact on SEO (search engine optimization). This distributor disclosed they were already testing AI to make specific content for themselves, different to the rest of the distributors or manufacturers. I think this might be a solution not only for doing content but also for translation.   

Heller: How do you balance traditional distribution channels with digital channels? 

Zanella: There’s a matter of leveraging the capabilities and characteristics of a traditional solution channel and not abandoning them, but rather growing and adding new digital capabilities. 

Bruyel: The internet is disintermediation; it’s breaking the traditional channel. The end-user can go directly to one of the manufacturers and interact with them directly. Having said that, we still need our distributor partners that bring value to the market.  

They play an important role in warehousing, finance services and as a capillary to reach as many users as possible. We could potentially go direct, but it’s not in our intention. Our professional products are not something easily sold directly. We need the structure and knowledge that distributors have to do that. We still rely on the channel and we need them. We need them strong. We need them to compete in this new marketplace with new online players in the market. This is the approach of Signify.  

Zanella: Manufacturers are not structured to have the end-reach on that customer. This is why we rely on the characteristics and capabilities of our distributors.  

Heller: Many times, the digital channels serve different customers. A good example of this is Grainger. They opened Zoro.com, a pure digital marketplace, and it has hit a billion dollars. But Grainger says there’s no channel conflict because Zoro buyers weren’t buying from Grainger to begin with. There’s no overlap.  

Bruyel: Exactly. Our story is about generating demand in digital channels. We as manufacturers have a strong brand, we have a strong online visibility, and we can generate leads that we can transfer to our distribution partners. We are able to generate that kind of demand, but we don’t fulfill; we hand over to our partners.   

Heller: Managing content for thousands of products can be challenging for distributors, especially in niche verticals. What resources do you offer to help distributors manage product data more efficiently? And to what degree are distributors taking advantage of them? My impression is that manufacturers could do a better job with product data, but a lot of distributors aren’t using the product data currently available. 

Bruyel: That’s precisely the case. When I have conversations with our distributors, the biggest issue is product data and how they get data from us. There’s a lot of room for improvement to integrate ERP systems with our product database systems and make a seamless connection. That’s the future of content syndication. I know the solution is not just on our side, not just on their side, it’s on both sides. We need to collaborate better. We’re not done yet.  

Zanella: One of the biggest challenges as a manufacturer is the need to improve the data because providing the right information is fundamental. This is before going into enhanced data, complex videos or 3D images and so on. Starting from the basic data and understanding how the distributor can consume the information we share is fundamental.  

Sometimes, we provide information to the aggregators at a certain level. Then, we find out that they’re missing some basic things such as a distributor website, and they are not able to consume that attribute. And so, the question becomes, why do we need to work so strongly and push ourselves so hard to provide data or content that the distributor will not able to consume?  

Heller: They are often underinvesting in ecommerce or measuring it wrong. We have a whitepaper coming out next week on how distributors can leverage marketing services and digital to become more important to manufacturers. Based on 1,800 responses, only 1 in 6 times will a customer check out from the shopping cart for an order they put together online. They will call it in or more commonly, send it by email.  

Distributors think their websites produce much less return on investment than they are. So, they are not enhancing them to bring in product data. They’re not subscribing to these services. They’re not investing in images or upgrading their websites. They think their websites are losing them a lot of money, when, in reality, their websites are making them a lot of money. They’re just measuring incorrectly.  

Bruyel: That’s exactly the problem. This oversimplification that B2C ecommerce is the same on B2B ecommerce. The journey is different. It’s a professional buyer with different price conditions, needs and negotiation factors. He may be taking information on the ecommerce platform, but the purchase may be done later in an email or through the procurement platform. Many distributors are incorrectly measuring the performance of their ecommerce. The biggest opportunity is how you integrate your professional ecommerce into professional purchase platforms. 

Zanella: The B2B buyer journey is much longer and much more complex than B2C with more touchpoints. A buyer has complexity within their own organization. They have to speak with the engineering department and the purchase department, they might have also budget limitations or restrictions. All these elements are complicated.  

Measuring digital marketing investments based only on the sales results is not the right way to invest and measure that kind of initiative because we never know how long the buyer’s journey will take. It’s an overall approach that goes back to the distributor having and embracing a digital sales transformation journey.    

Heller: Do you think distributors’ marketing departments do a good job managing and taking ownership of the customer lifecycle? 

Bruyel: I’ve seen some independent distributors do a good job in that direction without knowing it was marketing. By nature, they have a customer-centric approach. But I don’t think distributors have this kind of marketing platform yet. We have to improve the data-driven marketing plans. We do marketing based on opinions, not facts or figures. We’re changing, the sector is changing, and the industry is changing. 

Some distributors aren’t monitoring the performance of a KPI. They don’t have data or have a culture of data. If there’s no marketing data, how can marketers improve? We need to monitor marketing KPIs, not just sales.  

Zanella: I agree. It’s not so analytical. It’s more a good capability, a good habit they have rather than knowing that they are managing customer lifecycles. Defining the proper KPIs at the beginning, being scientific and measuring them along the span of the initiative is fundamental. We face challenges in measuring the results due to the complexity of the campaign, which could be multi-source and multi-touch points. We do it either internally or with the external support agencies. This is something inside our B2B world that needs improvement.  

Free Report: How Distributors Can Leverage Marketing, Services and Digital Excellence to Become More Important to Manufacturers