The CMO’s role in BtoB manufacturing companies

With regard to marketing, for years BtoB represented a distant land, far away from the areas where fundamental principles of the discipline could more readily apply. The reason for this was the prevailing orientation centering on the product and its technical features, rather than what we now call “customer centricity.” But times have changed.

This was the topic of our conversation with Paolo Montanari, Chief Sales and Marketing Officer at DAB Pumps, the third interview of the Profession CMO series.

The evolution of digital technologies has changed the very essence of industrial products, which are often transformed from “pieces of steel” to “repositories of information and intelligence.” This tremendous change shapes the potential for product innovation, and resets the role of the marketing team and the CMO in B2B manufacturing concerns. Is marketing finally coming into its own in these companies too?

Fascinating topic. For a company like ours – we produce pumps and other systems for water transportation and management - BtoB means a chain that includes contractors, importers (in some cases), wholesalers, installers, and end users. And there are other operators too like project designers, maintenance workers, even HOA presidents, who may not be actual links in the chain, but they do play a key role in the purchasing process. Often innovation creates value not for people who pay our bills (wholesalers) but for the ones downstream. So, we have to get a fresh take on who our customer is, which means we have to rethink our target. It’s taking complexity to the next level, because it’s no longer just one target, but n targets. And every target will find different content relevant, and we’ll need different methods to reach them. It’s a challenge, but an opportunity too, to strike a new balance in the power play with distribution. It’s the chance to go from a purely “push” approach, where the trend is commoditization, to a combination push/pull approach, where marketing activity centers on creating awareness and demand downstream of our direct customer. We can sum all this up by saying that the approaches we should use look more and more like B2C, even for a B2B company. I mentioned innovation, and typically we think of product innovation. But there’s a lot of room to create differentiation even on the same product: pre-sales, logistics, post-sales, training, digital touch points – there are all areas that can make a difference.

The combination that comes up from what you’ve just described is servitization, as it’s known today. In other words, value production through services that physical products enable us to generate. How does servitization change the role of CMOs? What kind of competence is a must have? A nice to have? No longer need to have?

The biggest challenge is a cultural one. In a product-based company, placing value on data or services is a change that impacts people, processes, tools, and KPIs. So the first (and perhaps the toughest) customers are our colleagues, our sales people. The trick is to show them that thanks to the services associated with (or enabled by) the product, we can create value and drum up business opportunities for our customers. But once again, the problem is that generally the benefits go to operators who are downstream from our direct customers; the distributor or the wholesaler sells merchandise and doesn’t see the service side of things. It’s a diversification strategy that has to originate in the vision of top management; they then delegate the marketing activities to peripheral teams (at affiliates and regional branches), so the focus is on diversification strategies at headquarters. What’s needed is both product competence and customer competence. Product competence is the ability to integrate a service with a product. (It’s hard to compete in areas that are disconnected from the product, where players may be more competitive.) This is a competence that’s very different from a product manager’s typical skill set; it means striving to design solutions rather than simply products. The second competence has to do with post-sales and customer care, which has to become a profit center thanks to new value streams. Servitization, along with digital communication (via the web and social media) are our only chances to reach the final customer, skipping over all the middle section of the chain, and setting up a channel for B2C communication. This is how to keep in touch with the end user throughout the life of the product to create business opportunities and to build customer loyalty.

Another specificity of B2B companies is the closer proximity between Marketing and Sales. It’s no coincidence that your title is Chief Sales and Marketing Officer. What are the advantages and the drawbacks of wearing two hats, heading two departments, in a company like DAB Pumps?

I’d draw an even wider perimeter here. At DAB I’m not only at the helm of Marketing and Sales, I head up customer care too (or “customer success,” which is more descriptive of what we’re aiming for in this area.) This is a perfect vantagepoint because it’s easier to align plans and objectives. Marketing and Sales live in different time zones, which makes it complicated to dialogue and cooperate. For the most part, even marketing metrics are incomprehensible or irrelevant for sales people. We need a pragmatic, concrete approach to build trust and collaboration (or better still, complicity).

• Measuring ourselves against the competition has to turn into being able to describe our value proposition and our unique selling proposition. Even better if we accompany salespeople in the field, so they can get a real taste of how just effective these talking points are. In the sales world, what counts most is the customer’s reaction.
• I talked about working alongside salespeople in the field. This is an essential competence (and a responsibility) of marketing, to promote and test our value proposition. But it’s also about business development, to glean insight that we can use to integrate the value proposition.
• Innovation needs to be explained, and operators need to be properly informed so they feel confident enough to propose new solutions. This translates into an enormous need for training which we can run like a co-marketing activity with our distributors.

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