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By admin in Business Stories

babwAs far as Beloit Corp. is concerned, the best way to maximize customers’ business is to work right alongside them.

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 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.'”

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By admin in Advice

ccaIt’s a scenario we’ve seen before. A $7 billion category leader has consistent sales growth, but earnings haven’t kept up. Year after year, marketing executives review campaigns, rewrite plans and adjust budgets, all with the noble goal of building sales by adding new customers.

But profits suffer, shareholders remain cautious, sales teams are restructured, and products and services face review. What’s the problem? After much analysis of sales figures, market share and customer data, it’s apparent the customer turnover rate is in the double digits.

In industries across the country, fierce competition, price wars and savvy marketing tactics are actually leading to increased customer disloyalty. It’s often said it’s five or six times as expensive to get a new customer as keeping a current one. Existing customers usually are more profitable.

Customer retention falls to other departments

Marketing professionals inherently know current customers are important, but don’t always see how to play a significant role. In most organizations, customer retention and growth is a job that falls to operations, sales or customer service professionals.

Breaking our of the traditional, outbound marketing mindset, like all paradigm shifts, may be trickier than most people think. Marketing directors already have a tough time getting their teams to focus equally on both parts of the equation – getting and keeping customers – much less coordinating the different silos of activity (salespeople, customer service, advertising, public relations, promotions, product development, etc.) that have some relationship with’ the customer now.

Equally challenging is the training required to understand more about current customers – what they want, need and like; their reasons for buying; how they want to get information; and what they expect. Only then can a plan be designed that includes strategies and messages built on customer insights.

4 ways to change marketing a approach

Here are four ways to help change to a current-customer marketing approach.

1. Look at last year’s marketing plan. Identify programs designed to acquire customers vs. tactics to keep current customers. Evaluate how much time and money was spent in each area, asking if you’ve set the right and most profitable priorities.

2. Understand the 80/20 rule. Determine who your best customers are – those that account for a disproportionate share of your income and profits. Then market differently to the 80% vs. the 20%. For example, Husqvarna, an international high-end garden power equipment supplier, pampers its most profitable dealers with trips to its Swedish headquarters.

3. Fellow IBM Corp. Chairman-CEO Lou Gertsner’s lead. He recently said he is spending 40% of his time talking with customers. Strike up a conversation where customers buy your product, travel with a salesperson or simply pick up the phone and call. Then use this insight to focus marketing more tightly on customer interests and needs.

4. Start to build feedback loops. Request customer service reps ask a question or two at the end of each incoming call. Ask customers’ opinions of a sales program before implementing it.

Maybe the lesson from this is not just about the importance of current customers, but also about the importance of breaking out of long-held paradigms. We need to get back to focusing on those we’re in business to serve: Our customers.

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By admin in Business Stories

tmpcThe Internet is hot: It the glitz, the glamour, the allure. But old-fashioned, traditional direct mail is still a powerful tool.

That’s the premise of Bob Leonard, president of RSL Communications, New York, and founder of Marketing-Pak, a business-to-business co-op direct mailer targeting the package goods industry.

Using BrandBase, a database of 8,500 brand managers in the package goods industry, including those at Fortune 500 companies and regional and privately held businesses, Marketing-Pak is a strategic tool that generates solid business-to-business sales leads, Mr. Leonard says.

“The Internet is good for immediate information. But direct mail is intrusive,” he says. “It comes in the mail and, hopefully, it intrigues you, so you open it and read it. On the Internet, users must seek out information. Remember when people said computers were going to reduce paperwork? It hasn’t happened. The Internet will supplement direct mail, but the Internet will not replace direct mail,” Mr. Leonard says.

Marketing-Pak is mailed every other month and each mailing includes six inserts. The one-time rate is $2,500 and the three-time rate is $6,000.

Participating marketers

Marketers who insert ads into Marketing Pak include Alpha One, Memphis, Tenn., an in-store merchandising services company; Magnet, Washington, Mo., a manufacturer of magnets; Esoteric Sports Tours, a Duluth, Ga. company that hosts corporate trips to major sporting events including the Super Bowl and the World Series; First Data Corp., Omaha, Neb., an interactive services company; and NFO Research, Toledo, Ohio, an interactive market research firm.

Publications running inserts in Marketing-Pak include Harvard Business Review, Utne Reader and American Demographics.

Marketing-Pak specifically targets package goods companies. Mr. Leonard’s BrandBase database – which was built up largely by Mr. Leonard while he was a salesman calling on these companies – includes the name of the company, address, phone number, contact name, title, brand assignment and department. Companies in the database cover all major product categories such as tobacco, beer, pet food, beverages and household products.

BrandBase is made up of about 8,500 marketing professionals, from brand manager to VP-marketing.

An additional 1,000 names on the list are in sales promotion agencies.

Response depends on execution

Response to the mailing depends on the execution of the piece itself, the category, how competitive the category is and other factors, Mr. Leonard says.

Jeff Rice, Alpha One director of marketing, just completed three inserts this year.

“We did our first direct mail with them in the latter part of last year and secured a considerable amount of business,” Mr. Rice says.

Alpha One is an in-store merchandising services company whose clients include Bristol-Myers Squibb Consumer Care, Bayer Corp., Schering Plough Corp. and Fuji Photo Film Co.

About 9,000 pieces of direct mail lead to a 0.5% response rate, Mr. Rice says.

High-quality leads

“It’s not a big response rate but they are very high quality leads,” he says. “The lead generation is very high quality.”

High enough, in fact, to prompt Alpha One to increase its commitment to Marketing-Pak to seven inserts in 1998, when the number of mailings will increase to 10, Mr. Leonard says.

Mr. Rice says he expects to bring in about $500,000 in business in 1998 based on leads generated by the Marketing-Pak mailings.

Also next year, Marketing-Pak will be expanded into other categories including spirits, automotive, travel, financial and telecommunications, Mr. Leonard says.

Separately, the BrandBase list itself rents for $800 and a CD-ROM of the BrandBase list is due out in 1998, Mr. Leonard says.

The Marketing-Pak direct mailer envelopes feature archival photos with irreverent captions that create an attention-grabbing image for Marketing-Pak.

Gus Tejerina and Frank Corkrum of Ogilvy & Mather Direct, New York, designed the envelopes on a free-lance basis, Mr. Leonard says.

“In traditional direct mail, the Holy Grail of direct mail is getting people to respond. That is why our envelopes shock people a little bit, to get people to open them up,” Mr. Leonard says.

Be realistic

“When you sell to package goods companies, it is a slow burn. Any b-to-b marketing is a long process. The purpose of any kind of communication is to generate business and generate leads. But marketers have to build response rates. They can’t be unrealistic in what they expect in terms of response. One piece of business will sometimes pay for the entire marketing effort,” Mr. Leonard says.

Also included in every Marketing-Pak mailing is PromotionLink, an advertiser-supported newsletter. Though it has an editorial look and feel, it is set up in a way similar to newspaper classified ads.

PromotionLink covers free-standing inserts, special events, cause related opportunities, sponsorships, entertainment licensing and co-branding opportunities.

Advertisers include Ice Capades, Humane Society of United States and the Los Angeles Marathon.

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By admin in Advice

tssr1I’ll never forget it. It was a Thursday afternoon a few years ago. My advertising agency had just won a big account with a Southwest real estate developer, now in the hotel business in a big way. The marketing director was giving us our indoctrination, presenting models of the future properties. The first was spectacular: A southwestern Taj Mahal that would sit on a mountainside. Next came a first-class business hotel. “Were these people crazy?” I thought. The business district was across town, with businesspeople nowhere close, When asked why the hotel was to be built where it was, the client beamed and said, “We got a deal on the land! Half of what it cost anyone else! Can you believe it?”

I knew right then there was nothing anyone in my profession could do to sell this property. Its fate was sealed. Another company with which I had worked also flashed through my mind. A sporting goods manufacturer wanted to generate awareness for its new retail product line. The ad campaign ran in various trade publications. Inquiries and product orders poured in. One catch: The equipment that had been selling so well to schools and gymnasiums was so cumbersome it could not fit through a residential front door.

What is marketing, anyway?

Years have passed since I left advertising because I became obsessed with the revelations and questions that hit me on that Thursday afternoon. No matter how good the advertising and marketing, companies cannot reach their potential until a lot of other ducks are in a row. What is marketing anyway? After considerable introspection and investigation, here is some of what I learned.

* Senior managers today are more often equipped with management and financial backgrounds than marketing ones. They, in turn, hire marketing types and together seek out an advertising agency to get the job done. Marketing is compartmentalized and is now a function in, rather than of, the company.

* Companies generally do not operate with any real appreciation of how much competition there is. Consider: IBM Corp. 20 years ago had 20 competitors. Today there are 5,000.

* “In the long run, the most important single factor affecting a business unit’s performance is the perceived quality of its products and services, relative to those of competitors,” according to the “Profit Impact on Marketing Strategy” from Strategic Planning Institute, Cambridge, Mass. Companies that ranked in the top one-fifth in perceived quality had a greater return fm investment and sakes, the study says.

Marketing correctly pays

Peter Drucker, one of the finest business minds of our age, defines marketing: “Marketing is everything the company does to get and keep its customers.” What is everything? It is the strategic marketing mix (1990s style), but it is seldom packaged like this in business because it cuts deeply across departmental (territorial) lines.

If marketing were practiced this way, the commercial hotel would never have been built miles from the business corridor. And the sporting goods manufacturer never would have ventured into the retail business without a far greater understanding of retail customers.

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By admin in Business Stories

tssrMotivation Show producer Hall-Erickson and the Direct Marketing Association took advantage of coincidence, one that brought them to the same place at the same time for their major conference and exhibition of the year.

But whether they’ll again allow cross traffic between their respective exhibit floors in 2001, the next time they’re both at Chicago’s McCormick Place, has yet to be determined. It was the first time the DMA has ever done such a thing and just the second for Hall-Erickson, officials say.

Marketing is common ground

Potential sales and marketing synergies among their respective audiences prompted the decision to allow cross traffic at the early October gatherings, said Chet Dalzell, public relations-issues management director for the DMA, New York.

“It’s a great opportunity for shows focused on one aspect of marketing to create a bigger event,” said Peter Erickson, president of Hall-Erickson, Clarendon Hills, Ill., and show director for the Motivation Show. The Motivation Show already is a team event by the Association of Incentive Marketing, Union, N.J., and the Society of Incentive & Travel Executives, New York.

“If [an industry is] in marketing, they will be users of incentives in one shape or form – whether for customers or employees. It was a real opportunity for the incentive marketplace to showcase their main event to the direct marketing audience,” Mr. Erickson said.

DMA Imposes limits

While the Motivation Show-changed its schedule – starting on a Monday instead of a Tuesday – to coincide with the DMA’s schedule and allowed all DMA attendees access to its exhibit floor, the DMA limited Motivation Show attendees to 90 minutes on its exhibit floor the first two days while opening it to everyone the entire final day.

“We set up hours based on the ability of each show to handle the potential number of attendees,” Mr. Dalzell said. “We couldn’t afford to have 30,000 people walk our show floor with the meals and comfort stations available. That logistics concern is what led us to set up structured hours for our portion of the floor.”

The DMA, which he said had record attendance of about 16,000 people and sold-out exhibition space to more than 550 exhibiting companies, had to give up some lounges and comfort areas to accommodate exhibitors.

The Motivation Show had some 22,000 attendees and 2,700 exhibiting companies, a spokesman said.

Mr. Erickson says the Motivation Show had about four times as much exhibit space as the DMA, which devotes a greater portion of its gathering to member seminars.

Neither man had figures on how many people actually visited both show floors, but Mr. Erickson said “the perception on the floor . . . was that there was a substantial crossover of interest – at least coming our direction.”

Looking ahead

Mr. Erickson said exhibitors would be surveyed to determine their reaction to the cross-floor traffic before deciding whether to open future shows to organizations that might have mutual interests.

Mr. Dalzell said it had not been determined whether DMA members and/or exhibitors would be surveyed on the topic.

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