As I conclude this seven-part series of articles, I'd like to remind you it started with my argument that the aftermarket Office Products Industry has failed both itself and the independent resellers. The industry has failed to transform itself for the digital age and it has failed to provide a leadership position for the resellers to accomplish the same for themselves. As a result, the aftermarket share of the $25 billion market for ink and toner in the United States has been static for a decade and, even worse, is now positioned for the double whammy combination of a loss of share in a shrinking market.
The Series Index & Links to Access
- Part I - Domain Age and Authority
- Part II - Website Grade
- Part III - Backlinks
- Part IV - Traffic Ranking
- Part V - Social Shares
- Part VI - Social Authority
- Part VII - Conclusions
As explained in our recent article The Transfer of Commerce with B2B e-commerce set to grow 45% and eclipse $1.1 trillion by 2020, it's simply too big a deal to ignore.
Before I go any further, and because this topic is so important for the future of the aftermarket and, in particular, the office products reseller community, let's look at a definition of just what B2B e-commerce is. As provided by Wikipedia, with italics added for emphasis:
B2B e-commerce (also written as e-Commerce, eCommerce or similar variants), short for business-to-business, electronic commerce, is selling products or services between businesses through the internet via an online sales portal. In general, it is used to improve efficiency for companies.
If office products resellers fail to deploy the systems necessary for participating in this transfer of commerce, then they will necessarily miss out on a share of the business they may otherwise have been eligible to compete for.
Simply deploying a shopping cart site is not enough to satisfy the requirements for B2B commerce. While it may theoretically permit an online sales transaction, it does nothing to improve the efficiency of a business considering a transaction. So, even in the remote chance a resellers shopping cart is organically [accidentally] located from out of the depths of the internet, a transaction will be unlikely to occur because the options available from the site fail the test for improving efficiency.
Any reseller can quickly, and relatively easily, deploy an office products shopping cart site. There are numerous options available to support this and, as a result, over the last decade or so hundreds of these basic "cart-sites" have been deployed and many subsequently retired.
As I've gone to some lengths to explain in this series as well as in many other blogs, deploying a website and operating it with an objective to develop relevant traffic is not easy. In fact, there are few examples of successful office products e-commerce enabled websites within the reseller community.
Option 1, the easy option, doesn't work and Option 2, the hard one, is mostly beyond the skillset and resources of the typical office products reseller.
Clearly, there's considerable complexity in accomplishing a digital transformation and, clearly, few office products resellers are currently on the right path. Given the complexity, effort, and specific skill sets required, our purpose is to explore what tools and mechanisms could be deployed that may help facilitate and incentivize resellers to start a concerted effort to go down the digital path.
First, we must identify what is the nature of the primary change that needs to occur in order for the subsequent sequence of changes (that make up a digital transformation) to be able to take place.
As you may be unsurprised to learn, the first step in the solution involves money! Unfortunately, there's nothing else that's likely to successfully motivate the required changes at the reseller level. This requirement for funds (of course) represents a problem, but, it can be overcome as it doesn't necessarily need to be provided for from additional funds that the industry cannot afford.
Money that already comes into the reselling community via the Tier-1 manufacturers rebates needs to be repurposed and paid according to newly negotiated metrics based on digital key performance indicators.
Repurposing Existing Funds
Unfortunately, it's not sufficient to just recalibrate calculation of rebates from a volume-driven plan to an alternative, digital plan. Part of the bargain that needs to be driven (if the Tier-1 manufacturers were understanding of the concept to eliminate volume driven rebates in favor of a suite of digital metrics) must also be to include a demand by the manufacturers for their resellers to implement radically different compensation plans for their sales personnel.
New key performance indicators for the reseller's sales team must be established that are closely aligned with a series of new digital metrics negotiated by the manufacturers in order for resellers to qualify for their rebates. Everyone here (manufacturer, distributor, reseller and reseller sales teams) must be dancing to the same tune!
I've explained all the key components necessary for a digital transformation elsewhere in this series and now I'll present a framework for how a rebate plan could be structured to help incentivize resellers to transform their businesses into the digital world.
1,000 resellers tweeting 5 times each per day to a relevant Twitter audience of 2,000 each, can collectively be expected to generate 100,000,000 impressions per month!
The Twitter example above is presented in order to highlight the power of amplification and to open some eyes to the potential of an orchestrated marketing (i.e. OEM conversion) plan at this level of audience magnitude. Note, this example applies to just one social media platform, so think also about the additional audience amplification leveraging multiple platforms such as Facebook, Google+, and LinkedIn alongside Twitter!
Performance metrics can quite easily be established for each of the major elements necessary for a digital transformation. Certifying the validity and accuracy of the performance for the purposes of calculating rebates is a little more challenging but, technically, not that difficult to accomplish.
Just imagine how much improvement a small to medium sized reseller of office products (with, for example, four salespersons) may be capable of if each of the salesmen carried a quota structured along the lines of the one shown in the table below.
|Channel||Start||Mth. Quota||Annual Quota||4-Man Team||+ 12 Mths.|
Just imagine if 1,000 resellers were all aligned in their goals and launched similar strategies and achieved similar results. This would result in a combined [relevant] audience of nearly 7 million!
Now, that's an audience of sufficient scale to make a difference so long as it's targeted with a clearly orchestrated campaign with clearly defined objectives. One reseller working its socks off in a local market and it's all but impossible to generate industry momentum. A thousand resellers working their socks off in their respective local markets, backed by a consistent and orchestrated marketing message, targeted at educating consumers on the aftermarket value proposition, is another matter. It should suffice to say, a lot more possibilities open up in terms of the ability to increase general awareness of the aftermarket value proposition when leveraging a combined audience of 7 million!
Once the sales team is aligned with a compensation plan for achieving audience development goals then the manufacturer (or payer of the rebates) must demand the reseller set other, top-level, corporate goals such as web-traffic, domain authority, and social shares. The manufacturer, now knowing the reseller's sales reps are aligned with the digital plan, can then restructure the old volume-based rebates far more heavily toward the digital components of the plan.
These digital components may be combined to form the weighted component of a compensation plan that can still be structured to include elements of the traditional sales and profit plans. For example, maybe 70% of the compensation plan is structured toward the digital goals and the remaining 30% tied to sales performance versus quota.
In this compensation plan structure, a smart salesperson will quickly be motivated, not only to focus on developing his or her relevant social audience but, also to start to understand how to use the power of social platforms for researching prospects and their key decision makers well in advance of any direct contact being made.
Take a fresh read of the blog I wrote a few months back on a fictitious office products reseller and its value proposition which explores a scenario for how these tactics may be made to work in a real selling environment.
Nothing's plain sailing and there are always issues and problems to overcome with the development and deployment of new ideas.
- Unfortunately, the existing sources of cash [Tier-1 manufacturers] and the potential new sources [Chinese manufacturers] required for this concept, is currently not likely to be dispensed in accordance with a completely new set of digital metrics because, as we've seen, the cash dispersers themselves haven't mastered the digital world. How on earth can they negotiate a new rebate plan with resellers based on something they themselves clearly don't understand?
- The aftermarket manufacturers, on the hook for paying the rebates, will incur short-term risk because there's an unavoidable time lag between audience development, engagement and the subsequent conversion into new customers and revenue.
- Changing reseller compensation plans will be resisted. Although the rebate payers have leverage, the proposal and implementation tactics must be carefully developed and presented.
I don't believe these issues are insurmountable so long as sufficient positive thought is applied to overcoming or mitigating them. We're at a pivotal point in the development of the office products industry and, in particular for the future of the independent resellers. In order for there to be a sustainable future for the aftermarket segment of the office products industry, we've reached a tipping point where there's no alternative but for the industries leadership to step up and assume its leadership role for its own sake as well as that of the resellers.
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It's complex, it's difficult, and it takes time. Unfortunately, none of these three characteristics are good omens for smaller, relatively unsophisticated resellers to deal with. One-thousand independent resellers (or five-thousand or five-hundred, or two for that matter) should not be expected to solve each of the issues (necessary for a successful digital transformation) independently of each other.
Let's assume for a moment while staying with the one-thousand unit sample size, that there are twenty major issues or roadblocks in front of a successful digital transformation. A "go-it-alone" approach by one-thousand resellers would require them to solve a collective total of twenty-thousand issues. Of course, that hasn't happened and it's never going to happen unless something else changes to facilitate it.
A concerted top-down approach from the industry leadership in providing a turnkey solution that solves each of the twenty issues currently blocking reseller's transformations, combined with a set of financial incentives designed to motivate the resellers to go down the digital transformation path, is the only realistic way the required transformation can be achieved.
These actions would form the foundations for change that are necessary for the beginnings of a digital revolution in the office products reseller community to take place. In establishing these foundations suddenly, and quite simply, a viable path forward would be available to take!
If you missed my recent eight-part series on the office supplies aftermarket tipping point, please check out my new eBook, it's just published, it's FREE, and it contains a thorough examination of the office supplies industry and a path to the $20 billion growth opportunity for independent resellers.