E-Catalog--With an ROI Twist
By Richard Karpinski
The
problem with so many first-generation catalog sites is that they are
all about the transaction. Click the button, buy the product, send
out the purchase order. What's lost is the fact that any transaction
is part of a larger relationship between that buyer and seller.
Hoping to address that larger relationship--as well as recognize
that a third party, such as a distributor, is often part of the
bargain as well--is Black & Decker's Emhart Teknologies division, which sells fastener and assembly technologies
such as nuts, bolts and rivets, with often-whimsical names like the
"Heli-Coil."
Obviously not as well known as Black & Decker's home
improvement brands, Emhart--with more than 3,000 employees and 23
sales offices worldwide--is a B2B play that sells fastener hardware
to some of the world's largest manufacturers, such as Ford and
Boeing.
For the past year, Emhart's director of e-business, Dennis Byrne,
has been leading a team in fine-tuning an innovative Web
site--dubbed the Virtual Innovation Center--that tries to better
reflect the total sales experience. To that end, the site, which was
built with the help of vendor i-Mark Inc., includes not just an
online catalog but also value-added features such as rich parametric
search and the ability to download 3D models of parts.
Even more interesting is a unique ROI calculator that lets buyers
calculate, on-the-fly, not only the cost-per-part of any purchase
but also the overall payback--reflecting related costs such as
manufacturing procedures, maintenance and replacement costs--across
the life of a deal.
Sell on Wheels
The "virtual" sales center is the culmination
of a touch-the-customer sales strategy that began with a CD-ROM
catalog and eventually led to "mobile" innovation centers that
literally drove from customer site to customer site.
The mobile centers--basically a working engineering lab housed in
an Airstream trailer--let customers touch fasteners first-hand. It
also placed a major emphasis on helping customers determine the
so-called "in-place" costs of making the switch from one brand of
fastener to another.
For example, a switch to a new fastener might also include a move
to a new assembly technology--such as a fully automatic robotic
system--that might cost more in the short term but ultimately save a
manufacturer money and literally change the way a product gets
designed and built.
Think of it as a variation on the familiar
sell-the-razor-to-move-the-blades strategy, all executed within a
complex industrial engineering design environment.
"Our CEO had a quote that got picked up a few years ago: 'there's
too many fasteners in autos'," e-business chief Byrne says today.
"Now that sounds nuts; we're a fastener company. But fasteners slow
the assembly process and hamper quality. If we can help our
customers become more efficient, we win too. We want to be there and
own the customer's total experience, from concept through design,
development, production and after-sales service."
The Web-based ROI tool goes a long way to that end. The "payback
tool," as Byrne calls it, is like a glorified spreadsheet that lets
engineers calculate not only the cost of buying new fasteners but
the expense--and ultimate savings, both in machine costs as well as
labor--of moving to a different assembly method.
Of course once an engineer has done the calculations, the Emhart
catalog offers not only the fasteners but complete assembly
solutions matched to the products, ready for purchase.
"A value analysis engineer looks at things much differently from
the typical buyer," Byrne says. "If he can make a capital investment
in equipment that can streamline a manufacturing process, and he can
see a payback from that, that's going to affect his purchase
decisions."
E-Business Nuts and Bolts
More subtly, a focus on total
in-place costs, and on partnering early in the design process,
ensures that Emhart's products--even such things as nuts and
bolts--don't become commoditized. Once a fastener is no longer at
least in some way custom-designed, -specified or -assembled, a
customer can beat down prices or move to a different supplier
without worry, Byrne says.
So far, Emhart's catalog has proven to be a success. The site has
had roughly 700,000 visitors since it went live about a year ago.
And by linking the Web site to Emhart's CRM platform, the company
has been able to turn 50,000-plus leads over to its sales force,
which follows up with potential customers literally hours after
they've spec'ed out a product on the site, Byrne says.
Emhart is now moving onto the next phase of its strategy,
literally re-selling its virtual innovation centers to key
distributor partners so that they can give their
customers--ultimately Emhart's customers too--a better online sales
experience. "We're actually in the software business now," says
Byrne.
Setting up an IT department to sell software is always a
dangerous step. But because Emhart sells about 80 percent of its
products through distribution, it's crucial that it help its sales
channel became as savvy in e-commerce as it is itself.
Beginning in April, Emhart had set up two distributors in Europe
and four in the U.S. with ASP versions of its virtual innovation
centers, also hosted by iMark.
Emhart still has some big steps to take in its e-business
strategy. Yet to come are private extranets with key large
customers. That move awaits the deployment of a new ERP backbone
here in the states, to match a recent upgrade in Europe, Byrne says.
But Emhart's keen focus on customer requirements--even helping
them define what those requirements are via its online payback
tool--is an e-business technique other suppliers would do well to
watch closely.
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