The 139-year-old papermaking equipment manufacturer has committed tens of millions of dollars to hire and train engineers. It also is mounting an aggressive advertising campaign to prove it now puts the customer first.
Competition in the rapidly evolving $15 billion global papermaking industry prompted this change.
“Two of our major competitors were becoming very determined [to win business],” says Jim Maier, corporate VP-sales and marketing of the Deerfield, Ill.-based company. “We always have been positioned as a market leader in papermaking technology. We were known for reliability and innovation, but somehow the company . . . lost contact with some of its customers, became lax at bringing closure to its innovations and somehow was perceived as not paying attention to the changing needs of the marketplace.” He says the problem is common in many industries.
“A lot of other markets have gone through the changes the paper companies are now going through. The oil and gas industries, the transportation industries have gone through it. We have seen this change occurring and we, too, at Beloit have realized we needed to change,” Mr. Maier says.
Today’s marketplace and stockholders demand greater attention to quality and efficiency. “The demand today is not for more mills, but to make those mills faster, cheaper to operate and produce better products,” Mr. Maier says.
Beloit, with sales of $1.6 billion, furnishes equipment and systems for every step of the papermaking process, from receipt of raw materials to finished products. Clients include papermaking giants such as Kimberly-Clark Corp., Champion International, International Paper Co. and Weyerhaeuser Co.
Beloit’s two main competitors are Helsinki-based Valmet Automation, with annual sales of about $2.4 billion, and German-based Voith Sulzer Paper Technology, with sales of $1.7 billion.
International holding company Harnischfeger Industries, Brookfield, Wis., bought Beloit in 1986. Beloit is its largest division, contributing nearly half of its sales.
Putting the customer first
Beloit’s transformation can be traced to Tom Engelsman, who became president in August 1995. His charge to Beloit, which had been highly driven by technology and applications, was to reverse its entire process – first find out what the customer wants and needs, then provide the technology to produce the exact products and services required.
Putting the customer first is “an issue that’s fundamental in all capital-intensive businesses. I’ve worked this model all my life,” he says.
That combined with industry-specific trends, which include globalization, competitive repositionlng, and environmental and shareholder concerns, is the way to add value and build long-term customer relationships, Mr. Engelsman says.
The only way to truly understand customer needs is to go into the field. In the past 18 months, Beloit has hired some 200 new mill and pulp engineers to work with mills. In effect, Beloit wants to be part of its customers’ mill teams.
“We’re not popping in, doing a project and leaving,” Mr. Maier says. “With the MillPro program, we’re putting Beloit people permanently on site so that the customer feels they don’t have to wait for weeks for the Beloit guy to come to him. We’re after being there on a continuous basis to provide continuous improvement.”
To give a sense of Beloit’s commitment, each engineer gets a first-year salary of $50,000 to $60,000; the company spends at least that amount to train each of them.
Challenge in communication
The challenge, says Mr. Maier, is communicating the changes to the papermaking industry. With its MillPro Services program (Beloit’s Web site http://www.beloit.com promises “one call to your local MillPro Engineer brings prompt response for virtually any problem”) in place, Beloit in September broke a $5 million to $7 million trade campaign via Bader Rutter & Associates, Brookfield, Wis.
“This is the most aggressive marketing communications effort that Beloit has ever made in our experience with them,” says Curtis Gorrell, Bader VP-account supervisor.
Ads using a vivid orange-yellow background promise that Beloit has made “change that’s real and significant” with “restructuring from top to bottom, so we can be more responsive to your needs.” The ads, complete with a tight shot of an eye with an embedded Beloit logo, challenge papermaking executives to “watch Beloit.”
Second phase of campaign
The second phase, breaking this month, is what Bader executives call the evidence part of the campaign* During the next 15 to 18 months, Beloit plans to run ads that focus on true examples of how Beloit is helping specific customers. Focus group-tested advertising is running in pulp and papermaking magazines in North America, Europe and Asia in five languages.
The third so-called fulfillment phase will emphasize how Beloit is the supplier a customer wants, no matter what the situation may be.
“We’re telling the story of how Beloit has changed, pouring on the evidence that this is the company that suppliers want to work with,” Mr. Gorrell says.
The effort includes trade shows, direct mail and public relations.
“We’ve had some good input from customers that indicates this is the way to go. This is an old, traditional market that’s going through tremendous change and we at Beloit are determined to be a leader of that change,” Mr. Maier says.
“From a customer standpoint, we’ve actually raised the expectation level and now we have to make sure . . . we perform as we said we will,” Mr. Engelsman says. The goal is a 95% customer satisfaction level. “Certainly we’re not there yet. . . . We’ve had some extraordinary successes and in some areas we’ve stumbled a bit.”
“What has been very positive has been the extraordinary response internally to [the concept of one, customer-focused Beloit]. People all over this organization have stepped up and said, ‘Yes. We should have been doing this earlier.'”