Boost subcontractor business through Internet tools

Subcontracting companies often claim that the Internet and social media are not so important to their business - if something should be done, it is probably website face-lift. These companies could not be more wrong; digital world opens up new success opportunities also for subcontractors. This post is discussing, how subcontractors can utilise the Internet and social media for business and as a sales and marketing tool to build a successful customer relationships strategy.

Subcontractor business

Although other definitions could be used, here we define subcontracting as activities, where a company produces and supplies its business customers (principals):

• broadly manufactured standard products,
• own special products or custom-made products,
• parts, components or sub-assemblies ( modules ), or
• materials

It is also assumed that the principal uses subcontractor's products as part of the final product or solution. Business logic of companies supplying professional or other services differs quite a lot, so findings of this post can be only partially applied.

Awareness and brand recognition of subcontractors among end users (whether they are consumers or businesses) is quite poor. Thus there are only limited options available to improve subcontractors´ competitive position through end user demand generation. There are exceptions, however, such as well-known Shimano and Intel.

While web based tools are very important also for manufacturing operations, logistics and product development, these are not discussed in detail here.

Regardless of size and industry of a subcontractor, utilisation of Internet tools is built on a traditional model, how a successful company should plan its business strategy: what is the product and the business model and who is the customer. It is also vital to define target customers and understand, what kind of buying process they are using; who influence the purchasing decision and how, what kind of information they need in various stages of the process and where they are typically looking for information. In addition, external parties that affect client companies´ buying process should be identified, whether they are sources of information, reviewers, references or something else. All this is a foundation for a solid customer strategy that uses both well-established sales and marketing tools and new and more effective approaches enabled by the web.

Sales and marketing tools are changing

Subcontractor business is subject to a number of change forces affecting business success and shaping customer buying process. Next we shall discuss in more detail tools to

create and maintain customer relationships and how the Internet is changing their use in various phases of the buying cycle, see also the figure.

Face-to-face sales

Face-to-face selling and resulting customer intimacy is often claimed to be the core of subcontractors´ customer relationships. But principals - as all B2B customers - are engaging later and later with their supplier candidates: recent research indicates that typically more than half of the customers' buying process is completed, before they are ready to directly meet vendor sales rep. In practise, this means that a company must be able to demonstrate to potential customers its offering, references, and other competitive advantages well before the first sales call. The biggest reason affecting this change is the Internet, offering easy-to-use means to look for and evaluate possible solutions and suppliers.

An increasing number of people are involved in companies´ decision-making process, buying process lasts longer, and buyers are better informed of competitive situation - but also busier. Again, the Internet, social media and other new technology tools have largely caused this change, but they have also increased the use of inside sales in B2B businesses.

Inside sales can be used not only to reduce costs, but also to reach a larger number of customers' decision-makers at an earlier stage and to supply them with more information, relevant in decision-making. Especially in the early stages of the buying process, it is possible to do remotely a significant proportion of the activities, earlier requiring face-to-face interaction. And excluding only the most complex products, it is becoming more convenient to also close deals using remote sales. Relative importance of inside sales, compared with traditional field sales, is growing rapidly, both as regards to number of sales people involved and time used for it.

Information

Among other things, company brochures and other printed material, industry trade journals and key influencer reviews and analyses have been instrumental in building target customer awareness. Also, not so long time ago, the main purpose of first customer visits was to introduce the company and its products - as mentioned above, not so successful tactics anymore.

Although most of the companies still provide the baseline information also in printed form, the Internet is by far a superior media, thanks to being always close to up-to-date, affordability and availability of information. On the other hand, it is difficult to be found in the vast data archives of the Internet, but fortunately there are both digital world and traditional methods to influence it; in both cases the key is to motivate and attract potential customers to visit the company website.

Also news, reviews and reports have largely moved online, printed word is complementary, particularly used for comprehensive analysis and report distribution. And since number of available information sources is huge, it is essential to know, where your potential customers and other people affecting customer purchases are looking for guidance and what are the most important professional social media groups to which they belong. On this basis, a company can plan the actions needed to create awareness and positive attitudes among external influencers.

Events

Events, such as trade fairs, seminars and conferences, are becoming less critical as a means to deliver generic information, but still they are very important to directly discuss with target customers and influencers and share with them own point-of-views. As a result of digital tools and application of mobile technologies, the nature of events is also changing. It is possible to explore potential client businesses in greater depth and reach and affect a much larger number of businesses than in the past. For the most advanced B2B companies, events are no longer individual campaigns, but an integral part of continuous face-to-face and online interaction to acquire and retain customers.

Advertising

Digital media has taken much of the previous role of trade magazines, and neither TV nor radio are able to effectively target subcontractors´ customers. That's why they are ineffective, as shown in subcontractors´ advertising spending. For example, in the U.S. newspapers' share of the B2B media revenue was 37 per cent in 2008 and only 29.4 per cent in 2012. Digital advertising is the winner, in 2008 11 % and in 2012 16.2%. It has clear advantages: easy targeting, good results to costs ratio and excellent measurability .

Search engine, e-mail and mobile advertising, banners and sponsored content are the most important tools for digital advertising, and all of them are gaining popularity in B2B business. These tools are excellent for raising awareness among potential customers, with the intent to continue dialogue with them by attracting them to move to the company's online premises. Sponsored content on other sites, important to customers, is also an effective way to maintain existing customer relationships and to push customers to purchase more.

Making subcontractor more valuable for customers

As a key part of their strategy, numerous subcontractors try to get rid of bids with detailed customer specifications and heavy competition; their aim is to become a strategic partner with their customers, with joint development of subcontractor´s offering, thereby also contributing to the development of customers´ end products. All strategies, of course, can be successful, and all can effectively utilise digital tools, too. But the more a company is seeking partnerships with its customers, the more important inbound marketing becomes. Thus, inbound marketing can also be seen as a key part of solution selling or consultative sales.

Inbound marketing is built on digital channels, such as making use of blogs, videos, articles, e-books, search engine optimisation and social media. The aim is to create engaging content to earn customers' attention, to make it easy for customers to find the company and to attract customers to the company website to familiarise themselves with company´s expertise and strengths.

Maturity of a company in inbound marketing can be divided into three stages. A basic approach primarily serves company´s own activities, such as product launches and marketing campaigns. In a more sophisticated model, content is directed at the target customers and their needs, in order to provide adequately information to the customers and external influencers and to make them view the company positively. The most advanced companies are seeking to become thought leaders in selected areas that are important for customers, by presenting in-depth and well-founded point-of-views on those areas. Thus, inbound marketing is not just a part of marketing or customer strategy, but a key element of company's business and competitive strategy.

If it is realistic to assume that a subcontractor could affect end customers of its client companies to improve its competitive position, interesting content for the end customers should be placed on company´s own and external websites, too.

When creation of content is rooted in target audience and their information needs, the most important thing is to understand, what kind of information various internal decision-making roles and external influencers need at each stage of the purchase process. At best, traditional marketing and sales roles are mixed and overlapping. Marketing tends to push knowledge and influence deep into client's decision -making process. Sales aims to get close to the customer before there is even awareness of a need, and using various inbound marketing tools, tries to build the purchasing process favourable for the subcontractor.

Business objectives and digital media

Finally, let´s look at some typical business objectives and how digital media tools can help to achieve them.

Retain existing customers and generate new business

With existing customers, it is not only retaining the current business, but also getting them to make additional purchases and to buy totally new subcontractor products.

The most important thing to maintain and grow business with existing customers, is to make customers feel that they have made a good purchase. This is achieved through helping clients to use the product and through external reinforcement. The basic guiding principle of use assistance is the same, as when using content for buying process: first identify critical use phases of customers and main stakeholders that are involved in use of the product. Then for each of the phases and use roles, produce and make available tools and information that help customers to use the product or get more out of it. Positive reviews by industry influencers, publication of new reference cases and other external confirmation convince the key customer stakeholders that your company continues to be a competitive business partner.

Existing customers are known to be the most receptive to company's new products, and smooth cooperation with a customer is an excellent starting point for new deals. If customer employees, affecting on new product purchase, are not yet known, existing contacts can be used to create a connection with them. The goal is again to influence the customer as early as possible, even before the need is materialised. Well-planned and targeted information can convince the key customer persons to notice that the best partner for the new need is the supplier, already well-known.

Acquiring new customers in existing markets

Today, subcontractors no longer need to rely on cold calls, coincidental exhibition meetings or newspaper advertisements to generate customer awareness and interest. First of all, the Internet and social media can be used to identify potential customers and their key influencers, and even those individuals and entities that these influencers trust and rely on. After this, customer targeting is much more focused even with traditional approaches. Another way, often a better one, is to attract target customers to the company's website by providing sponsored content or ads to the sites and communities, where the target customers' key people spend their time.

Creation of interesting and compelling content for customers on company website will benefit new customer acquisition in two other ways: first, references to the content on industry influencers websites generate new contacts and potential customers, and secondly, well-planned content improves search result page position of the searches made by potential customers. High-quality content that directly does not try to sell subcontractor´s products or expertise, is also welcomed free of charge by external web sites, important for customers.

Expansion into new market areas

When expanding into new market areas, awareness of a company is very low compared to the ones, where the company is already active. Therefore, development of new markets should start early enough with content that is interesting for the new regions and also localised; for example, also available in local languages. The same tools as described above, when acquiring new customers, can be successfully used in this context, too. Special attention should be paid to influencers, who are not directly present in the new target areas, but who nevertheless have a significant impact on subcontractors´ potential customers. For example, internationally-oriented industry websites and important reference customers often create fertile ground for new market penetration.

New product launch

When a company is still only planning to launch a new product, it is vital to get feedback from current and also new customers. The aim is to test and iterate important go-to-market elements, such as customer value proposition, product features, business model, target segments and key marketing messages. At the same time, this step is also beneficial to prepare markets for the product launch and to produce right type of content related to the new product. Since a company is a newcomer in the markets, it needs to show its expertise in the areas related to the use of the product; and, to be considered as a thought leader, a subcontractor needs to introduce new approaches to customer jobs to be done. For example, a subcontractor may introduce a new product that is supported by a tool that assists product use or by a modelling software that can be used to evaluate benefits of the new solution before it is bought.