Digital marketing maturity equals success - case Finnish B2B SMEs

Small and medium-sized enterprises (SMEs) are suggested to have a significant role in the revitalisation of the Finnish economy. Their current actual business performance is, however, not as good as expected. Therefore, it is necessary to look more closely at how companies´ own actions affect on their success. This post shows that based on a study, Finnish B2B SMEs do not effectively utilise digital methods and tools in their customer interface. It also finds that digital marketing maturity strongly correlates with success.

Changes in B2B business environment 

Competition in B2B markets is global, products and services are searched, compared and procured across the borders. Vendors have been forced to follow their customers, very few B2B companies can rely on domestic customers only. Local markets that used to be isolated with their own specific terms and conditions, are also changing: the same technologies, standards and processes are in place everywhere, making it easier to demonstrate and offer products by means of inside sales and marketing. Internationalisation also creates brutal cost pressure on all business operations.

Face-to-face meetings have traditionally played a central role in B2B sales. But today, customers are ready to meet sellers very late. According to a survey, on average, as much as 57% of customers´ purchase process is already over, before they are willing to meet with vendors. To win customer orders, vendor companies need thus to be able to present their offerings, references and other competitive advantages before the first sales appointment.

At the heart of the change is the Internet. It has become the first source of information for B2B buyers. And besides information search, the Internet significantly affects on all purchasing process stages. B2B company website and presence in social media are vital and indispensable anchors of Internet influence. The companies looking for information and solutions are then reached utilising inbound marketing techniques. Digital interaction with customers generates huge amount of data. Its utilisation will not only help to develop more competitive products, but also enables ever evolving customer operations. It is verified that B2B companies that effectively use digital methods and tools in their customer interface, are doing significantly better in acquiring customer leads, nurturing leads to paying customers and retaining their existing clients.

Besides evaluating overall digital marketing effectiveness, utilisation of real-time and predictive analytics as well as marketing automation are good yardsticks when estimating digital marketing maturity.

Real-time analytics (e.g. Google Analytics and Coremetrics) can be used, for instance, to follow how visitors will find company website and how they interact with it. This will improve, among other things, customer acquisition cost-effectiveness and understanding of clients' needs and priorities. In addition, it will sharpen marketing communications more relevant. Marketing Automation (for example Marketo and Pardot/Salesforce) automates communications and maintains customer interest in the marketer firm. It makes it possible to serve customers with higher quality and more cost-effectively – and thus get more sales. Studies show that B2B companies, utilising marketing automation, get more and higher-quality customer leads and grow faster than their competitors. Predictive analytics (e.g. Totango and Kissmetrics) with sensor-based customer listening capabilities can identify e.g. customers at risk of churn or intensify cross-selling and upselling.

Status of SMEs in Finland

Then, let us look at how digital tools and methods are used in Finland. A Finnish trade magazine, Kauppalehti,
database was used to pick randomly 108 B2B companies whose turnover is between 10 and 200 M€. Almost all the major industries were represented. Some, e.g. consulting, and construction were excluded, though the analysis is highly relevant to them, too. The selected companies are the best among their peers, so the general situation is hardly better.

To get an overview of digital marketing effectiveness, the companies were examined with algorithm based automatic tool, see also the box on the right. The results obtained can not in any way be regarded as an absolute truth, but anyway, the tool is accurate enough to analyse the situation.

We should be very concerned. The best Finnish B2B SMEs are below average in digital marketing, and almost every fifth of them are even rated bad, see the graph on the left. Only about 5% of the companies are good or excellent.

The situation by industry is uniformly poor, only software companies stand out better, see the graph below.

To get a domestic benchmark for the results, also the biggest B2B companies in Finland were examined (Finland top 20 in the graph). These enterprises are considerably

more advanced, even surpassing the software company results. Because there is a clear indication that the Finnish big ones are not at the utmost forefront of the global development, the SMEs sector is subject to a resounding wake-up call.

Next we examined the use of real-time analytics (by using an automated tool, see also the box above). More than one fifth of the surveyed SMEs do not take an advantage of it. It means that they in practise wander around in the dark, not understanding outcomes and shortcomings of their digital world activities. In the control group, on the other hand, all big companies in Finland are using the analytics. The most commonly used analytics solution, by the way, is Google Analytics that is free to use. US companies are a great international benchmark for the Finnish findings. There the big companies and also the SME sector seem to have faster adopted the use of analytics in their business operations than their Finnish counterparts.

Only 5.6 % of the selected Finnish small and medium-sized companies take advantage of marketing automation. There are no major differences across various industries, few pioneers are emerging in almost all sectors. Every fourth of the Finnish big corporation benchmarks are utilising automation. In the United States, it is estimated that 25 to 60 % of large B2B enterprises use marketing automation. Correspondingly, studies show that the penetration in US small and medium-sized enterprises is at least 10 to 25%. High-technology sectors, followed by consulting and manufacturing industries, are leading the pack in the United States.

None of the studied Finnish companies, neither large companies nor SMEs, used predictive analytics. Because of international examples, it is expected that those companies that have digital service elements in their offering will take the lead in adoption.

Lastly, we studied how digital awareness affects business performance. Business growth, profit, return on capital, as well as the size of international operations were picked up from the Kauppalehti database. The companies under investigation were divided into two categories, based on whether they are rated to be in the top half in digital marketing  (> 50) or in the bottom (< 50), see the graph below. The conclusions are very clear: on average the digitally-leading companies are growing faster and their profitability is better than those of their lagging counterparts. In addition, the international operations' share of net sales was clearly correlated to the digital marketing maturity.

Conclusions

On average, even the best Finnish SMEs are not taking care of their digital marketing very well or even satisfactorily. This is reflected in comparisons with large Finnish enterprises as well as relative to international benchmarks. And because utilisation of digital methods and tools is a key lever to achieve business success, we are facing a similar kind of problem as the whole Finnish economy: though business premises are good, the SMEs are capable of delivering significantly less than available potential. As an outcome, a company might face e.g.:

• Sales of existing products is smaller than possible opportunities available, the reasons being inefficiency in acquiring new customers and inability to maximise customer life cycle revenues
• Renewal and innovation are built on less and thinner customer insights, resulting in more product- and technology -centric development
• Commercialisation and go-to-market of new products and business models are limping, potential customers and profits are not achieved 
• There are unnecessary hurdles for internationalisation, because one of the cornerstones - customer operations - is not competitive

The situation, however, can be improved. Change is in the hands of small and medium-sized enterprises: they need to re-tool their strategies, processes and competencies to embrace new methods and tools in customer-facing operations - and then implement technologies that are supporting the new approach.

Go-To-Market: more customer-centric, hungrier and more agile

Turbulent market environment is constantly changing business and competitive conditions. New technologies blur industry boundaries, shorten product life cycles, change business models - and bring new competition through globalisation. In this environment, Go-To-Market (or GTM) success is becoming ever more important - competitive advantages are less and less sustainable; instead of technology and supply factors, demand and customer interface capabilities are becoming increasingly vital.

Today, most companies already have functioning GTM processes. They are useful in commercialising a new product or business model, opening up new markets or even when a new company has been acquired. 

This paper will first introduce GTM process and its benefits. After that some of the pain points will be discussed, and we shall show, how a more customer-centric, hungrier and more agile approach will boost results.

GTM process and its advantages

GTM activities make company's business strategy concrete by delivering its solutions and their value to target clients, see also a simplified picture below. In reality, however, GTM is a process, which covers activities from definition of a product to pricing, distribution, marketing, communications, sales and customer support.

Benefits of a well thought and implemented GTM process include:

• allocation of resources to the most lucrative business opportunities
• prevention of organisational silos
• cooperation between centralised and decentralised activities
• sharing best practises and learning

Metrics need to be created for GTM processes. The intent is to evaluate product and business profitability. Evaluation of project success already in product development and, respectively, GTM phases, ensures that resources are allocated only for the most lucrative opportunities. GTM thus acts as a tool to develop company's product portfolio.

Secondly, GTM process and project objectives bring together different functions of an organisation, thus inhibiting silos. This will also ensure that all the necessary skills and knowledge is just in time and adequately available. In addition, it is easier to create new practises in domains, which are new or require very different types of knowledge-based inputs. Smoother cooperation between marketing and sales activities is often highlighted as a great example of GTM process benefits.

When a company expands and becomes more globalised, it also needs to grow certain functions on a decentralised basis, in other words, close to customers locally. These include, for example, implementation of marketing and communications, sales and first level customer service. GTM process links centralised operations, such as specifying a product and planning of marketing and communications, seamlessly with distributed ones. Also GTM project objectives, strategies and other guidelines are centrally defined. In addition, prioritisation of regions and countries is usually centrally managed. By centralising selected GTM activities, duplicate work is avoided and local implementation gets adequate support.

GTM also allows for sharing of best practises within a project and between projects. Thus the most successful ways of working of the best individuals and teams become an integral part of the entire company's expertise, which is then available and repeatable from a project to another.

Improvement needs

As such an existing GTM process does not guarantee success. Among other things, drastically changing customer purchasing behaviour, multichannel marketing driven by digitalisation and new business models are forcing GTM models for continuous improvement.

More customer-centric GTM

Company products need to resonate well with customer needs and market demands. Thus increased influence of both consumer and corporate customers in the various stages of purchase process calls for rethinking and adjustments in a way a company approaches market. It is also important to find unique customer segments, whose needs can be met better. To tackle all this, GTM activities need to be built to meet customer relationship objectives and strategies, giving possible internal legacy requirements second priority.

Market studies conducted before product development start do not guarantee that products match with customer needs. Rapidly changing markets require that development activities are closer integrated with customers´ feedback on products. Customer development, which has its roots in the startup world, is playing a growing role to facilitate parallel product development and customer testing. Especially huge progress in the development of Internet and social media tools allows for market testing and possible corrective actions already in the early stages of product development. In a similar way it is possible to figure out target market prioritisation and GTM activities localisation needs.

Hungrier GTM

Overall effectiveness, quality and cycle time can be considered as baseline yardsticks of GTM process. However, this is not enough. Tougher business metrics should also be introduced: lead generation impact, sales increase and evaluation of GTM process on the basis of return on investment (ROI). By focusing on business outcomes, we can get rid of bureaucratic way of working, where checklists dominate over hunting for results.

Digital marketing and sales methods have been at the forefront of bringing measurability. But technologies are not to be seen here as masters but slaves - or enablers at most. The key is to create GTM strategies and processes that focus on right things. Furthermore, we should not forget people, who run the process and who truly need to understand and know how to operate the new fact-based model.

More agile GTM

Although a company would have created the world's best client-centred and business metrics-driven GTM process, it does not insulate the company from changes in the operating environment. These challenges require adaptability, responding by foresight or by further developing own activities. The keywords are continuous improvement and best practise sharing.

Activity and environmental data collection and analysis, as well as test and learn principle are the cornerstones of continuous improvement. Data insights lead us to the real issues and improvement options, which will be verified for operational scaling by testing. This makes it possible to avoid costly mistakes made with non-working or outdated GTM practises, and paves way for better results. 

Local mobile services - saviour for offline stores ?

Consumer buying behaviour change, driven by digitalisation, is inexorably advancing. This challenges consumer product companies to take advantage of new models to utilise the change. For traditional retailers, having physical stores, e-commerce growth means a serious threat. But after years of false promises, local mobile services based on wireless proximity technologies are wakening up. At best, they could get modern, digitally informed consumers to use their money in brick and mortar shops also in future.

Local services not-so-successful history

When computer-like features started to gradually appear in mobile phones in the 1990s, there was also a wave of interest in local services supporting retail merchants. In 1999, I was involved to establish a startup with a mission to use only recently published Bluetooth (BT) technology to send marketing messages to phones that were taken to shops. After that, I developed similar type of businesses at a large Finnish mobile phone company: in 2002, for example, we created patents for applications in local services context and for shopping experience improvement tools. Neither the startup nor the big company case turned out to be a success.

A number of other projects came up, both in local mobile marketing and in local payments. In addition to Bluetooth, for example Wi-Fi, RFID (or its offspring, NFC, widely used in mobile phones) and IrDA technologies were in use. For example, in the United States Wideray IrDA solution offered local data services for offline businesses. A little later, Wideray landed also in Finland, where Sonera's also Bluetooth-enabled iJack service was used, among other things, by individual stores, shopping malls and restaurants.

Wireless local marketing of brick and mortar stores has not really taken off in the last ten years. Today, it is easier, however, to analyse the reasons. The main obstacles were the factors related to retailers, ecosystem and mobile devices, for example:

• E-commerce has only gradually disrupted retail business, its global value in 2005 was about $ 150 billion - the forecast for 2013 is already $ 1.2 trillion
• Digital marketing has only recently established its position as a major tool for retailers and consumer product manufacturers
• Mobile marketing formats and business models were underdeveloped for a long time; ten years ago, the global market size was only around 100 million dollars, the 2013 forecast is close to $ 15 billion
• The number of mobile phones suitable for local marketing, i.e. smartphones, had a sharp increase only after 2007, after Apple launched iPhone; iPad tablets first came on the market only in 2010
• Usability of smartphones has not been very good; easy to use applications enabled by app stores and other usability improvements have gradually changed the situation

The great promise

Next we shall discuss factors which, if successful, could make local mobile services a significant marketing channel - or, if this is not the case, delay realisation of the great promise till not foreseeable future.

Retailers and digital change

Consumers' growing willingness to use digital channels has resulted in a huge increase in e-commerce and fierce price competition, which affects both online and offline merchants. Price competition also lowers margins, which creates pressure on consumer product manufacturers, too. In addition, digital channels have become key information and communication tools between brands, retailers and consumers.

In this context, both traditional brick and mortar merchants and their vendors are looking for new success factors by creating new, digital in-store experiences. By approaching customers when they are presumably ready to buy, i.e. when they are already in-store or in the immediate vicinity, marketing messages can be targeted much more precisely than when using only standard user profile and behaviour based models. The potential value of these messages, both to consumers and marketers, is therefore very high.

Mobile payments, as well as access to product information through reading QR codes or barcodes have been the main drivers of mobile device utilisation in stores. In addition, also local digital in-store marketing will benefit from wider and wider use of mobile technology. Marketing tools provide consumers, among other things, with information about new products or promotions, coupons, store maps, shopping lists, recipes, and other additional services that support products or purchasing. Identification of consumer location is the prerequisite of the service provision, and there has been various technologies available for that for a quite a long time.

Although the benefits of local digital marketing for merchant business are very concrete, the ultimate question is, however, consumer willingness to receive marketing messages and use related services. On the basis of recent studies, consumers seem to increasingly want local digital marketing, but it is not yet clear whether this is enough for large-scale deployment. It is also fair to assume that consumers must be able to determine who and when can approach them.

Ecosystem and development of mobile devices

Perhaps the most important event in the development of the ecosystem was Apple's recent iBeacons concept release. iBeacons enables low-cost Bluetooth Low Energy (BLE, or BT Smart or BT 4.0) beacons. They emit signals that Apple smart phones or tablets automatically react to when they come within range of the beacon - maximum distance of up to a few tens of meters. Offline retailers can use the concept, for example, to allow payment anywhere in the store, for coupons and other local advertising.


A number of BLE beacon manufacturers have already entered the market. For example, Estimote offers three beacons for $ 99, Sonic Notify ten pieces for $ 300 and Roximity service costs $ 10 per month for one beacon. Adomaly is an advertising network to reach consumers in-store using beacons.

NFC technology use, again, is widely supported by mobile phone vendors, mobile operators and payment service providers, but it is already widely predicted that its growth will be stalled. The problem is that key stakeholders are often competing with each other, which has led that NFC software package is not widely enough available in phones. In addition, Apple has not been favourable to NFC, and it looks that BLE will be positioned as a direct competitor to NFC in local mobile payments.

Amount of smartphones and tablets, as well as their usability are already at good enough level to boost local services mass market. Although all the major software platforms have their own application stores, processes and models to bring also store related applications available for consumers are already sufficiently developed. Notably, Android platform is the most fragmented one, in Apple and Windows Phone environments there are less problems.

BLE is already supported by most iPhone models, 4S, 5 and the newer ones, as well as by Apple´s tablets. In many high-end Android devices manufacturers have already implemented BLE support, and the support on Android platform level is coming in the near future. By the end of this year all the Nokia Lumia WP models will also support BLE.

In summary, local mobile marketing is still a great promise for retailers and consumer brands - but realisation of the promise still faces significant stumbling blocks that need to be avoided:

• There needs to be a common mode and format of communications between consumers, retailers and brands, and this needs to be supported by a sufficiently wide range of mobile device manufacturers and other ecosystem players 
• Offline merchants need to be willing to build the necessary local infrastructure in their stores, and use it effectively for marketing and other customer relationship activities
• Consumers need to be willing to adopt a new, mobile device based way to get information about products, access promotions, pay for purchases, etc.

Shotgun tactics when selecting international markets

A business acquaintance told me an interesting story about expansion into international markets. The starting point was four Finnish companies that wanted to start international sales. The companies wanted to cooperate as much as possible to minimise costs. Experts of internationalisation as well as public support organisations suggested that the companies should start by entering a very well-known neighbouring market, Sweden - and set that as a precondition for any funding support. The companies rejected the proposal. Instead, they hired a shared export manager and began an extensive round of testing the markets, the main instrument was trade fairs in over 20 countries. On the basis of this round, one of the companies launched successful international operations in a Western European country, one in East Asia, one in the United States, and one - in Sweden. If the companies had believed advisers, it is very likely that only one of the companies would have been able to successfully launch its export activities.

This post sheds light on why shotgun shooting tactics, as it is often called, is a feasible alternative when a company is planning to enter international markets or an established company launches a new product internationally.

International market selection

There seems to be a broad consensus on prioritisation and selection of international markets among internationalisation experts and researchers:

• The first step is to select the markets for closer examination by looking at macro-economic variables
• The second studies overall market potential of the industry in the selected countries, and
• The third evaluates company´s sales potential in relation to required investments.

The most important factors affecting the selection are thus firm-specific ones and those related to target markets and their entry barriers.

The plans made according to above mentioned model are systematic but also mechanistic. They often lead to significant investments, not being able to change plans as needed, until available money has already been spent.

The main stumbling blocks of commercialisation, which can be identified only with considerable delay, include for example:

• Do targeted consumer or business segments have adequate underlying needs that need to be satisfied?
• Are company products acceptable for targeted consumer and enterprise segments?
• Is there right type of channel partners available, such as distributors, retailers and system integrators?
• Are there partners, events, communities and other necessary tools available that are needed to execute planned marketing strategy?

Of course, these things can be studied by means of desk studies, but a more in-depth view can only be found by having closer contacts with customers and markets. Traditionally, the tool has been own or outsourced market research, but its disadvantage is significant time, money and resources required. Globalisation of consumption and purchasing decisions, along with online methods, has created new, more cost-effective methods; international market selection can be made more iterative, avoiding too early choices that can easily lead to waste of resources. This means that before concentrating efforts too strictly on certain markets, it is better to shoot a little bit wider, so that really the best launch markets can be found.

Iterative development of international markets

This section primarily deals with digital marketing methods as part of an iterative process to select target markets. We shall focus on the four particular stumbling blocks of commercialisation, discussed above, which are also among the most important market criteria when selecting target markets.

Customer need - market fit

Social media is a huge data repository of consumer and business needs and preferences. Available data are also continuously updated, real-time, so decisions based on this data are likely to be more relevant than when conducting market research based on statistics or sampling methods. Also location information of potential customers is extremely important in country selections of a firm: Facebook, Twitter, Linkedin and other social networks provide information on needs at country level and, where appropriate, at regional or even city level.

Market information can also be obtained by using inbound marketing methods: compelling content that relates to customer jobs to be done, is created on company webpages and consumers or businesses are lured to visit the site. Potential clients are attracted by participating in discussions on key websites and digital communities important to them, by inviting visitors through traditional marketing messages and by optimising company website to get found by search engines. If a company needs to select, what customer jobs its products will be targeting, this can also be conveniently tested by means of inbound marketing.

A website available only in English, along with social media and market statistics, provide sufficient guidance to reduce the number of markets to be screened. The important thing, however, is that preconceptions and 'usual country priorities' should not limit choices too early. When both digital and traditional methods have been used to find a good subset of countries, it's time to go and study customer needs in these countries in more detail. If necessary, and if you have time, the content can be localised for target market languages ​​to go deeper into local websites and social communities. At this stage it is essential to find those potential markets, with customers most eagerly waiting for company products.

Product - customer need fit

In traditional commercialisation models, a product feature set is defined and almost built, before there is any wider feedback on how features fit with customer needs. Various types of limited customer testing are usually arranged, however. Although internationalisation has created customer segments with similar needs around the world, different markets often focus on different features. Iterative product development continuously tests product features and their fit with customer needs, and this testing is started as soon as possible in product development process - and at the same time it is tested, how various product characteristics resonate at different markets.

By discussing pain points that consumers or businesses are facing in their areas of interest, it is easier to understand the needs of potential customers, which in turn helps to prioritise planned features of the product. The audience can also be asked direct questions, queries that are fast and affordable to execute online. Needs for product related support and complementary services can also be evaluated using the same methods.

Seeking feedback from potential customers thus directs development and commercialisation of products to meet also changing circumstances. In addition, the feedback becomes an integral part of market attractiveness assessment and ensures that the selected target markets really appreciate the properties of the company´s product.

Channel strategy - market fit

A successful channel strategy identifies right channel partners as well as makes them strongly committed to sell company's products.

The Internet can be used to discover and explore in detail suitable partners to sell company products. Digital dialogue with potential customers and thus obtained feedback also help define the most popular purchasing channels. These methods are suitable for both online and brick & mortar stores. Similarly, also other important channel players can be found, such as distributors and system integrators. One can also study, for example, what factors are driving the business of potential channel partners or whether potential channel partners are already representing competing products.

Inbound marketing aims to get channel partners interested in a company and its products and tries to motivate partners to visit the company website. The aim is to create relationships, which can be further developed at face to face meetings and various events such as trade shows and conferences.

Understanding of customers and getting them excited to buy company products are precious tools, when trying to get channel partners committed to sell company's products. If this is combined with partner interest generated through inbound marketing, even a smaller firm is able to achieve reasonable cooperation terms and conditions.

Channel partner identification and building their willingness to cooperate should be started early enough on each of the markets relevant for commercialisation. If the process is able to identify channel partner relationships that would have a perfect fit with company business and product objectives, priority of this market should be considerably raised. If, however, a market offers only not so lucrative partner candidates, you should forget this market for the time being and seek the first references on other markets. Similarly, if the sales channel structure or its mode of operation in a market differ considerably from those of other target markets, it usually decreases the attractiveness of the market in question.

Planned marketing strategy - market fit

Here we focus on two things: availability of marketing partners and applicability of company´s marketing communications messages on studied markets.

In addition to channel partners, company marketing plans might reserve a major role for players that boost awareness and demand of company products. The most important ones are advocates, such as industry experts, Internet sites, magazines, etc., that are trusted and relied on by potential customers during various stages of their purchase process. The best and most profound way to affect advocates is by using inbound marketing activities; by offering them new information, views or other ideas related to company products, as well as by attracting them to visit company web pages for more information. Besides influencers, for example, complementary service providers, various communities and events can have a significant impact on demand increase; these can be found by using the same methods as presented earlier.

By testing marketing messages, the best arguments and ways to communicate benefits are found. Also such online content tools as pictures and videos can be tested, to find those that best resonate with potential customers.

To assess the attractiveness of an individual market, it is essential to understand how well partnering and communications, as defined in marketing strategy, can be applied to this market. If the match is great, local adaptation requires very few resources. Of course, if a market is a very interesting one, it is possible to tailor a specific approach applicable to the market by spending a lot of money. In this case, success is uncertain, as experiences from other markets cannot be directly utilised.

Marimekko digitally x-rayed

Original collections, brand and marketing that is based on own and partners' shops are traditional strengths of Marimekko. At the same time, a number of consumer brands and retailers are increasingly building their competitive edge on digital tools, the Internet and social media. This post studies how Marimekko have managed to combine these new tools with their business activities. Although some of the analysis methods give only indicative results, the main conclusions are, however, built on a solid base.

Marimekko business 

Marimekko is a Finnish textile and clothing design house with net sales increasing again, after the bottom in 2009. This is caused by international growth, which in turn has eroded the profitability of the company. The numbers of 2013 are rough estimates based on realised results of the three first quarters.

Share of search engine visitors (%)

Digital Marimekko

Number of website visitors is a good yardstick for digital popularity. Most of the Marimekko website visitors are coming from search engines, see the figure on the right. More than half of the searches are Marimekko ones, written right or wrong. Thus, by studying the Marimekko keyword frequency, it is possible to make good enough conclusions about the company's popularity in the Internet world.

Global Google searches of Marimekko

If you look at the global number of Google searches made for Marimekko (see the picture on the left), we can see that the number was at its highest early 2008. After that the search numbers have fallen and the decline is projected (dashed line) to continue. The drop in 2008 is at least partially explained by the global economic crisis. It is to be noted, however, that the revenue growth seems to be driven by the visibility caused by retail expansion, not by Internet publicity (that is becoming more and more important).

The sentiment of Marimekko tweets

There is also room for improvement in how Marimekko use social media: the current effect is mediocre, and the company websites are not promoted enough. The sentiment of company's social network attention can be examined, for example, by means of tweets. There were not a lot of Tweets concerning Marimekko before April 2011. Since then the sentiment has been consistently positive, until since June this year apparently the copy scandal changed the tone much more critical. It seems reasonable to assume that the company, without further publicity problems, will soon be able to normalise the situation.

Engagement of Marimekko website vs. some benchmarks

When Marimekko get consumers to visit their website, they are out there reasonably well, see the picture on the right. Engagement of websites in Finland and in Japan is quite good, compared e.g. with fabrics and women's clothing benchmarks.  This is also confirmed by Hubspot evaluation of the Marimekko website, which gives 76 points out of one hundred possible. The main problems are the lack of regular blogging and partially website optimisation for search engines. Marimekko does not provide an application for smartphones and tablets to access the website conveniently.

In addition, the website has very little text (2.72 % ) relative to HTML code. This slows down page loading, which in turn affects e.g. result positions of Google searches. More broadly, Marimekko seem to have problems with content marketing, the low level of blogging is just a sign of it. Publishing compelling content for customers and thought leaders would help to get coverage on other websites and that would correspondingly feed visits to Marimekko's own website. The graph below highlights the number of inbound links to the company website. The number of links, both to the Finnish site and the international one, has since 2011 grown very slowly. It remains to be seen whether the good performance of 2013 is only the result of negative news.

Inbound links of Marimekko Finnish and Japanese websites

Business by market areas

Marimekko report their business by market areas, see the graph on the right. More detailed information is not available, but the analysis will attempt to go to the country level whenever possible. The numbers of 2013 are estimates.

Own stores

The table below shows the amount of Marimekko stores (own, retailer owned ones and shop-in-shops) by market areas. The revenue figures generally correlate well with the number of stores, especially in North America and Asia-Pacific. In Sweden, the option for online purchasing raised own sales; it remains to be seen, if possible online shop launches in other areas will affect in the same way. 

Marimekko webpages

Origin of Marimekko website visitors

Marimekko have their own websites in Finland, Sweden, the United States, Japan, China and South Korea. Swedish site is in English. In addition, there is an international site in English. The fact that there are no sites with local language available in some major market areas is a serious problem; France, Germany, Spain and Italy are good examples.

Global website ranking of Marimekko

There is no information available about the traffic volumes of the Far East websites. According to Sitetrail, Finland and the United States are leading the visit statistics of the rest of the world, see the picture above. The development of company´s global website ranking is shown in the figure on the left: despite of international expansion, the company ranking has not greatly changed. Finland is by far the most favourable country, Marimekko's rank is currently 615.

Marimekko searches

Google searches of Marimekko in Finland

Development of Google searches in Finland is shown in the adjacent graph. After 2011, there has been on a slight upward trend, surpassing even the sales and store number growth. Dashed line shows the forecast.

Marimekko searches, Sweden and Denmark

In Scandinavian countries, searches are, in turn, been on the decline, see the graph on the right. Interest to make Marimekko searches is thus not following the number of stores or even revenue growth.

The situation in biggest Central and Southern European countries is presented below. The trend is slightly positive in Germany and negative in Italy and Spain. United Kingdom has remained unchanged. In spite of the growing sales, the share of Marimekko´s store sales has been on the decline, which is also reflected in the search statistics. In all countries, the Google one day Marimekko promotion (Google Doodle) in 2012 has created a clear peak.

Google Marimekko searches in Central and Southern Europe

USA and Canada, Marimekko searches

Searches in the United States have roughly remained at the same level, only slight decline this year. In Canada, there is a slight increase. Although the number of stores and company own sales have grown up in a relatively fast pace, this does not appear to have an impact in the search statistics.

Japan and Australia, Marimekko searches

In the Asia-Pacific region, both in Japan and in Australia, business expansion, the opening of new stores and the popularity in the digital space have gone hand in hand. This has resulted in a brisk revenue growth. In Japan, the concern is that during the last couple of years, the trend is downward. There is no information available about China, due to the central role of the Baidu search engine in the market.

Inbound links to Marimekko webpages

Geographical origin of inbound links to Marimekko webpages is illustrated in the map below. At least China does not yet pop up with the weight corresponding to its value in Marimekko's strategy, and also in the United States the relative visibility is quite poor. In contrast, Finland and the rest of North and Central Europe are relatively well represented.

Inbound links to Marimekko webpages

Marimekko in social media

The origin of Marimekko tweets are shown in the map below. The United States and Japan are by far the biggest tweeting countries - the number of tweets in these countries is, however, always large compared to smaller countries. Other notable countries, as regards to Marimekko related tweets, include Finland, Australia, Canada, United Kingdom and Italy. There is a surprisingly weak popularity for example in Sweden, Denmark, Germany, and France.

Marimekko tweets by country

Business by product lines

The company business is divided into three product lines, Clothing, Interior decoration and Bags, see the picture on the right presenting their revenues. The numbers of 2013 are estimates.

Digital footprint and marketing of the product lines can be evaluated using Google search statistics. This is best done by comparing Marimekko related searches with suitable benchmarks.

Marimekko searches vs. women´s clothing ones

Women´s clothing is perhaps the most important segment of the Clothing product line. The trend of Marimekko searches has clearly fallen behind women's clothing category that serves as a benchmark. The thick horizontal line describes the zero-level development of searches  and Marimekko's line is a lighter blue, see the picture on the left. While Marimekko's Clothing sales has recovered slightly after the drop that started in 2008, this does not seem to appear in the digital popularity.

Marimekko searches vs. home-making & interior decor ones

Google searches of home-making and interior decor category are a good benchmark for Marimekko´s Interior decoration product line. Again, Marimekko has fared less well than the benchmark. Also the recent sales growth is not seen in Marimekko searches, compared with the benchmark.

Google Marimekko searches vs. clothing accessory benchmark

Clothing accessories category of Google searches are used to benchmark Marimekko´s Bags product line. The growth of the product line that started in 2010 was first visible also in search statistics, but after that Marimekko has fallen behind their benchmark.

Conclusions

It is clear that Marimekko are not effectively enough using available digital marketing tools alongside product portfolio renewal, expansion of retail and the brand. There is a risk that with changing consumer purchase behaviour, relying more and more on digital channels, Marimekko´s relative competitiveness will suffer.

Marimekko is not visible enough on the Internet. The websites are clearly not interesting enough, and the company messages do not reach other websites. In addition, in many major market areas, there are no company websites available in local languages. In social media, Marimekko is not sufficiently benefiting from word-of-mouth and the company websites are there not promoted enough.

The worrying thing is that Marimekko´s new stores and other major investments in new market areas do not seem to get enough support from digital activities. Although some promising examples can be found, this means inevitably only half-hearted success. All the three product lines seem to have a declining trend in the digital world compared with the benchmarks. 

Besides customer acquisition and retention, digital tools offer a great promise for in-depth identification of customer needs, rapid customer feedback of new products, as well as customer-oriented testing and improvement of marketing plans. Marimekko will face the threat of missing these potential benefits, unless they fully utilise opportunities of the Internet and social media.

Internet industrially - doping for competitiveness

I got to know industrial automation in the late 1980s, when we developed software and interface modules based on Bitbus distributed control standard to connect sensors and actuators. In mid 1990s, I was leading another company, which created and sold one of the first machine-to-machine (M2M) solutions based on wireless communications. This fuelled the view that this area will generate great business - but, as is often the case, slower than we imagined at the time.

In retrospect, it can be understood why in the 1990s there was no premises for the emergence of major businesses:

• Availability and use of sensors were limited and the prices were high: for example, our proprietary GPS tracking solution cost hundreds of dollars per unit
• IP technologies and wireless communications were not yet sufficiently developed: for example, we had to use wireless SMS and a proprietary protocol built on top of it to communicate with smart devices 
• Data storage and processing methods were immature: our solution was a typical client-server solution with proprietary applications
• Ability and willingness of firms to use networked solutions for optimising operations was limited: in most cases, solutions were customised, and thus it was not possible to scale business

The situation is radically changing. The Internet and other new technologies open up a world of new business opportunities. This post outlines the opportunities from manufacturing industry point of view, focusing on companies´ product sales and customer relationships. Benefits, relating to e.g. company's own internal decision-making or improvement of internal efficiency, are not discussed here in detail.

Manufacturing industries meet the Internet

The physical world is becoming an information system. This change is referred to as the Internet of Things (IoT), sensor revolution or programmed world, among others. GE calls it the Industrial Internet. Regardless of the naming, sensors and actuators embedded in physical objects - from roadways to pacemakers - are linked through wired and wireless networks, which often (but not always) use the same Internet Protocol (IP) as the Internet. Vast amounts of data are sent through these networks to computers for analysis and the results are further submitted to users in an easily readable format.

There are number of factors driving the development, such as:

• Availability of various types of sensors, growth of sensor use and sharply declining prices, caused by e.g. consumer product volumes and advances in material technologies
• Development and standardisation of wireless communications technologies, such as 3G, WiFi, BT Smart and RFID
• Development of Big Data storage and analysis technologies, especially driven by needs of consumer Internet services
• Companies with strong interest in business model development and operations optimisation, based on realised benefits derived from the use of Internet tools

The core of the IoT is to use analytics for process automation, performance optimisation and downtime elimination, as well as to predict when a machine or component will fail. For industrial companies, this may indicate a threat or an opportunity. The threat is that the value of products will migrate to software, provided by other companies, thus endangering profitability of traditional product companies. A more sensible approach is to see the opportunities; in parallel with securing current product business, new value adding Industrial Internet offerings need to be developed.

The Industrial Internet is expected to see tremendous growth. Wikibon says that last year $ 20 billion were used in IoT technologies and the forecast for 2020 is $ 514 billion. Similarly, the Industrial Internet generated last year value of $ 23 billion, and in 2020 it is projected to reach $ 1279 billion. Looking this from another perspective, the Internet today is connected to a little more than 10 billion units. By 2020, the figure is 30 to 75 billion, depending on who is the predictor. The IoT is the biggest growth driver.

Regardless of whether above projections will be realised or not, huge business opportunities will be opening up. The key is to use existing and potential customer relationships and to create new solutions that are exploiting the Industrial Internet. This will also build competitive barriers against cheap equipment suppliers and create opportunities to maintain and further develop company's manufacturing competitiveness.

Business models for the Industrial Internet

To realise the potential of the IoT requires, besides new technology skills, also new business skills related to the Internet and its business models. This section first discusses various options for company business development and then presents four models of how the Industrial Internet can be used by a manufacturing company.

Development options

In principle, a company can develop both technical and business aspects of Industrial Internet solutions in-house, only recruiting necessary additional skills, if needed. Possible challenges here are the old models of thinking and the legacy in building new competences - the company makes too little and too late. Often used solution is to establish internal incubators, organised separate from day-to-day businesses. The incubators are able to develop and test new ideas before they are transferred to the responsibility of mainstream businesses. For example, Bosch has set up three innovation clusters: connected mobility, connected energy and connected building.

Capability building together with partners is a very viable option. Partners may be universities, research institutes and other companies. Especially with the latter, there are many models where traditional rivalry may in some areas be complemented with tight collaboration.

Mobile operators that are very active in the M2M space as solution providers, are natural partners among larger companies. Other prominent players include such companies as Cisco and Ericsson in communications, Intel in micro chips as well as IBM in software and services. Correspondingly, also the big Industrial Internet players are seeking cooperation. GE has made a substantial investment in EMC / VMware spin-off, Pivotal, a company that builds Big Data solutions. In the same area, GE has also announced collaboration with Amazon.

As in the development of the Internet in the past 20 years, startups are going to be a very important source of new ideas and innovation. Cooperation with startups can be anything from using their solutions to acquiring a startup. In this area too, GE has been very active by setting up a base in Silicon Valley and by kicking off a number of cooperation activities with startups.

There are plenty of startups working with sensors, Big Data and M2M, just to name a few. Besides sensor technologies and solutions, startups are also launching solutions to gather and aggregate sensor generated data. Storage, analysis and presentation of Big Data has spawned a number of new entrepreneurs. The traditional model of M2M startups has been seeking cooperation with mobile operators, but also other models are already being introduced in the market.

Improving product competitiveness

Improving competitiveness of a company´s products by increasing their life cycle revenues or by reducing their life cycle costs is probably the most common way to take advantage of the Industrial Internet. For customers this is realised through various value-adding services that are either a core part to utilise the product or supporting the product very strongly in some other way.

A good example is GE that embeds smart sensors in the jet engines and takes advantage of terabytes of data generated to optimise aircraft performance and the ways the engines are maintained. Konecranes TRUCONNECT services, on the other hand, contribute to crane safety, optimise maintenance costs and predict the needs of modernisation. An finally, Vesta support services assist customers to define optimal locations for windmills.

New business

It is also possible to build a completely new, independent business. Typical products are consisting of software that solve specific customer problems. Software may be able to control only the equipment provided by the firm, but it is often advantageous to create interfaces to other vendors´ products, too. In particular, for start-ups and businesses that account for only relatively small part of customer's installed base, this is often the only sensible strategy.

Bosch software products promise to integrate equipment with customers' business processes - equipment can be sourced from numerous manufacturers. The software can also be connected to various back-end systems from multiple vendors. GE has developed an application for power companies, which can be used to determine how to best build and operate turbines. Same kind of software are being developed for rail, mining, oil and gas companies.

New business model

Benefits of new business models - if successful - may be significant. The challenge of reaping the most dramatic benefits is that the development of new value chains requires key players´ support and it takes time to build these chains.

Real-time data generated by sensors, combined with historical data, makes it possible to analyse and predict with high precision use of equipment and machinery. This paves way for new business models, where manufacturers are charging for their products based on costs, revenues or time, whereas the conventional model relies on equipment or machinery purchase and maintenance.

Another example uses crowdsourcing to create added value for company's products. Ford is utilising open interfaces and allows in its OpenXC initiative to customise car features with add-on modules and applications. GE also relies on individual and startup innovation and value creation, and has launched measures to develop solutions for tackling air traffic delays and efficiency of hospital visits.

Marketing assistance

Although it would not be possible to create value-added products, totally new businesses or new business models, the Industrial Internet can significantly boost company's marketing and sales efforts. The main idea is to provide customers and other important stakeholders useful and interesting information, which will improve the competitive position of company's products. The key stakeholders are traditional and digital media, channel partners and influencers important to customers. In this context, the key source of information is the data generated by the products of the company or other data that the company can access at a reasonable cost.

Also the companies that sell to business customers cannot forget opinions of media and consumers: if corporate citizenship is not communicated properly, it will be quickly heard by customers´ decision-makers. If a company sells its products through channel partners, the partners will appreciate any information that helps them acquire new customers or any new opportunities to sell customers new services. Both for media and for customer advocates, it is important to get new information and insights that will enable them to further build their authority in the topic area. Well-thought, fact-based opinions based on available data are a great way to engage customers through media and advocates and thus support sales of company´s products.

For example, a car manufacturer could embed one more sensor to its cars: air pollution sensor would give a car user air quality information from those places that are important to him and give everyone an overview of air pollution situation. When used properly, this kind of activities can provide very interesting information for consumers and also for media, which creates good opportunities to highlight company's social responsibility. Cisco is strongly involved in even more ambitious project. Planetary Skin tends to use billions of sensors on land, water and in the air to detect and predict changes in the environment.