Transcript
of a BriefingsDirect on how a mid-market company saw immediate results
from participation in Ariba Discovery, eliminating the need for mailing
half a million catalogs a year.
Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: Ariba, an SAP company.
Dana Gardner: Hi, this is
Dana Gardner, Principal Analyst at
Interarbor Solutions, and you're listening to
BriefingsDirect. Today, we present a sponsored podcast discussion on ways that businesses are using
cloud and
e-commerce to improve how they do sales, marketing, and online transactions.
We'll examine how one company, Ohio-based
LLT Barcode & Label, has found powerful new ways to develop sales and leads using
Ariba Discovery.
To
learn more about how social tools and business networks are reshaping
eCommerce and how companies like LLT Barcode & Label is using
the cloud to better connect with new customers, please join me in
welcoming our guests today.
We're here with
Rachel Spasser, Senior Vice President of Marketing at
Ariba, an SAP Company, and
Kris Hart, the Account Manager at LLT Barcode & Label in Stow, Ohio. Welcome, Rachel and Kris. [Disclosure:
Ariba is a sponsor of
BriefingsDirect podcasts.]
Kris Hart: Hi. How are you doing today, Dana?
Rachel Spasser: Thanks, Dana. Glad to be here.
Gardner: Rachel, this whole concept of finding customers, developing leads using cloud, using the
networked economy and how people are linked up now more-and-more has become a function of the data that people are able to access.
Tell
me a little bit about how things have changed, say now, versus five
years ago, in terms of just connectedness, and how this is now being
brought to bear on an age-old problem, which is finding sellers for
buyers, and buyers for sellers?
Spasser: We're
talking about major changes that have gone on in the past few years. If
you think about the mantra around marketing, it's always been to make
yourself, your product, and your company relevant to potential buyers.
Ten
or 15 years ago, as the Internet was really coming into its own, it
provided significantly more data that helped us understand
demographically, and a little bit behaviorally, who our customers were
and what they were doing.
When we talk about the
networked economy, business networks, and connected commerce we're
really taking that to a whole other level, where as marketers, we're
able to hyper-target, our potential customers not just on their
demographics, but also be able to predict when they're going to be ready
to buy.
They overtly raise their hand and say, "Hey, I'm interested in buying by a connected
RFI or
RFQ process." But we can also analyze the myriad data that's available today and put both
unstructured data and
structured data
together in a way that helps us predict when they are going to be ready
to buy. That's when we can actually present them with compelling
offers. So it really does change the whole nature of the game.
What's appealing?
Gardner:
Kris Hart, do you really care whether it's the cloud or the networked
economy, or whether it's structured or unstructured data? What appeals
to you in all this in terms of the change that's going on?
Hart:
In general, you don't really care one way or another how you get it.
the cloud and e-commerce makes everything a lot easier, not just for the
seller, but also the buyer. It really helps with the relationship, and
being on the cloud is much simpler, faster, and easier.
Gardner:
Tell us a little bit about LLT Barcode & Label, so that we have
a better understanding of your business, the vertical, the challenges
that you face in terms of growing your business, and finding new
customers?
Hart: We started about 16 years ago.
It was a small company, and we're still a small company, where it's hard
to get out in front of buyers. When we started, we would send out about a
half-million catalogs a year. Those catalogs have inside them labels,
thermal transfer ribbons, and laser labels, and items like
mobile computers and printers to be able to print those items.
We started out as a small company, basically a distributor for a company that needs to ship a label via
FedEx,
UPS,
or however. They need a label on that box to be able to ship their
product. So as far as vertical markets go, if you name a company, they
have to ship something, and they'd be able to use that.
So
we play in every single market out there. We gross roughly about $12
million a year and we have about 15 people who work for us.
Gardner:
So, you're a mid-market firm, with potentially a very wide addressable
market with anyone that's doing shipping and delivery activities. How
did you do lead generation and sales and marketing before you started
the cloud methods that seemingly have been so successful?
Hart:
The way we started is that we would have a lot of catalogs printed with
our most popular items and then we would buy lists from
Hoover’s, or
somebody like that, and we would send out half a million catalogs a
year.
We were hoping that everyone who got one of those
catalogs would call us and want to buy something. But that's not the
case, and over the past 15 years, that
return on investment (ROI) has gone down significantly.
We
started out as a catalog company, and now the catalog companies are, in
a sense, dying or aren't as successful by and large. So we had to find
new ways to grow our business.
Gardner: Correct
me if I am wrong, but that was mostly you pushing your message into some
other organization, with not a lot of pull necessarily. It seems to me
that you would want a little of both, the pull and the push. How did the
cloud change that equation?
Internet has helped
Hart: The Internet has really helped. A lot of people at home are using sites like
Amazon.com and
eBay and they're getting used to just looking on the Internet when they need to buy something.
When
they go into work, because it's so easy at home, they want to be able
to do the same thing. It's a win-win for both sides. We don't have to
print lots of catalogs every year, and they can just find us on our
website or
search engine via
Google,
Bing, whatever.
Gardner:
Why wasn't it just creating website and being part of the massive index
that Google and other search engines use? Why was it better moving
towards a structured cloud environment, an e-commerce cloud, a
networked economy approach like Ariba Discovery? Why was that different?
Hart: The biggest thing with Ariba Discovery is that it's very much like
match.com.
We wanted to be in front of buyers when they were ready to place an
order. We wanted to be that company that that person on the other end is
going to come search for, see us, and give us an opportunity for their
business.
If I walk in in the morning, I already have
leads there. I already have an opportunity with a buyer who knows what
they're looking for. They're out there on Ariba Discovery, asking me,
"Can you help me?" That's a lot easier than like the catalog theory,
hoping that someone runs across your website.
You know
automatically what that buyer is looking for and where that buyer is.
You know
automatically what that buyer is looking for and where that buyer is,
and hopefully within a couple of sentences, a couple of conversations
with them, you can figure out when they need to buy.
Gardner:
Back to you, Rachel. When you hear Kris describing how they’ve come to
these new approaches, what are you thinking? What is it that occurs to
you?
It seems to me that he is talking about an
ability for a mid-market company to scale down to the individual. It's
pretty impressive, the granularity with which commerce could happen. Not
only that, but at the scale of a global marketplace, it's kind of
fascinating that it’s both downscale and upscale at the same time.
Spasser:
It is, and I think if you listen to what Kris said, the Internet has
enabled business to be done faster and for him to find new customers
faster and more efficiently.
But where the business
networks really differentiate themselves from the Internet as a whole is
that there is a common platform, where both buyers and sellers are
going to connect and find very specific commodities or services that
meet their specifications. Creating a platform that enables them to get
to that level of granularity enables them not just to conduct commerce
faster, but conduct commerce smarter.
More and more data
As
we look at the value of the business networks, over the course of time,
these networks are, in essence, aggregating more and more data and
insights that ultimately help companies like LLT Bar Code in that
mid-market that want to do business globally. At the same time, it helps
global buyers that want to buy, for various reasons, from companies
that are either local suppliers, from companies that might have green
initiatives, women-owned business, or diverse-owned business.
So
there are a lot of different criteria that go into determining who you
want to buy from or sell to. The beauty of the business network is that
it gives you the ability to both get insight and get a lot of
information on the buyer or the seller, and to connect based on very,
very specific criteria.
Gardner: Kris, one of
the things that’s interesting in comparing a web-based open-Internet
approach to something more standardized is speaking the same language,
data, metadata, taxonomy. It might be one thing for you to put up
information on your website, but somebody who's searching, or even the
search engine algorithms, might not understand the importance of certain
terms and lingo.
Is there something about going into
environments dedicated to buying and selling, where you can actually
line up the right information, description, indexing and terms, or even
just the way of doing business, the process behind doing business? Tell
me how a common understood business-oriented environment has helped with
your results as well?
Hart: Well, with Ariba
Discovery it’s great. They have postings for all sorts of commodities
and items that a buyer may be looking for. A buyer can check them off on
his screen and then send out an RFQ.
With Ariba
Discovery it’s great. They have postings for all sorts of commodities
and items that a buyer may be looking for.
The nice thing
about having that similar platform is that I set up a profile. I select
specific commodities of the types of business and the items that we
operate in. With that, a lead is automatically given to me. The buyers
are looking for specific things, and it may be in his own terms or maybe
a little bit different than how he may search it on the Internet and
possibly miss us.
I can take my list of commodities and
then it will be automatically generated. It’s going to come pretty
close. He is going to be right there for me to be able to respond to
whether or not we can help them, yes or no.
Gardner:
So those hit-or-miss semantic issues that are certainly part of the Web
are fixed and amended. Your
semantic matchmaking, as you put it
earlier, is automated and therefore that probably makes this a lot more
powerful. Tell me how powerful. What are some examples of what’s
happened when you have gone to Ariba Discovery for lead generation and
new market penetration?
Hart: We started looking
at Ariba Discovery in late 2011. We were trying to find some other way
to gain new customers and to grow the business. We decided on Ariba
Discovery in January of 2012. There were a couple of
RFPs out there, and I thought, "Why not give it a shot?"
So
we respond to a couple, and the first RFQ that I had responded to was
for some blank labels and a couple of colored labels. A couple of weeks
later I get an email from the client that had posted the RFQ, and they
want us to bid on their entire distribution, labels, ribbons, and
shipping items.
Too good to be true
And
after going through their process of RFQs, add-in items, pricing, and
everything else, we won about a $400,000 deal via Ariba Discovery. That
was for a two-year contract, and that was the first one. It was almost
too good to be true.
The great thing about it was that
we started in the middle of January, when I responded to the RFQ and we
had the contract and everything signed and they were buying from us in
April. Very quick process.
Gardner: What was your cost in acquiring this customer?
Hart:
With Ariba Discovery, you can use Ariba Discovery for free or you can
use the Mid-Level or the Advantage. And we decided to go with the
Advantage.
That had some other benefits with the
profile and things of that nature and it was only $3,000. We decided to
take some of our marketing budget and put it into that and at least give
it a shot. We were more than happy. We got our ROI right-away, and it's
a much better and simpler process than sending out a half a million
catalogs a year.
Gardner: Absolutely. Rachel,
again reacting to what Kris has said, are we missing anything in this
equation? I'm interested in this semantic match-up that takes place, the
data, and how this can be automated. Kris is obviously talking about
strong ROI. Is there more to the story here that we’re missing in terms
of how buyers and sellers are matching up in new ways?
You’re
not wasting your time. You’re not sifting through a lot of unqualified
opportunities as the seller.
Spasser: We love to hear stories like Kris’ about immediate ROI. And we hear them over-and-over again from suppliers on the network.
One
benefit, as we talked about, is the ability to define very specific
criteria as a seller as to what you sell, so that when you do get posts
that are directed to you, you know that they're relevant to you. You’re
not wasting your time. You’re not sifting through a lot of unqualified
opportunities as the seller. And the benefit to the buyer is the same.
As
the buyer posts, their posts are being sent to people who are all
qualified, who all have the ability to meet the specifications that they
have created. Therefore, it's saving a lot of time on their part as
well. When you look at the two-sided model, it really is a win-win both
for the buyer and the seller within the network.
One of
the hidden pieces of gold within the network is the data that's created
over time from all of this transactional information, as well as data
that is created individually from buyers and seller. They're providing
information on ratings and reviews of how quickly they got paid, if
they're a seller, by a particular buyer. Or it's the reverse, how
accurate and on time deliveries are if you’re a buyer looking at a
seller.
So, the unstructured information, combined with
a lot of structured data, is creating an opportunity to make much
better matches and have buyers and sellers that are much more informed
about one another as they enter into business relationship.
We
all know the more that we understand and have well-defined expectations
of our business partners, the more effective those relationships are
over the course of time.
Some structure
Gardner:
Kris, you've obviously been exploiting and enjoying benefits from the
discovery aspects of the Ariba network in the cloud. But, beyond the
actual finding of that customer, that customer might have many years of
business to be had and there needs to be perhaps some automation or
structure around that relationship.
Have you been able to find that the services around process for procurement, automating the invoicing and
PO
process, the data, even the transactions. Is there sort of a
progression here that, once you've established a connection with a
customer, there are other ways to exploit these services and make that a
more efficient customer relationship?
Hart:
Yeah, it's funny that you bring that up. Right now, that particular
customer has gone to Ariba for some other items that they are going to
start using for procurement and different items like that. What we're
hoping is that once that process takes over, then we can be in the
supplier network and possibly even set up e-catalogs for them and make
their process a whole lot more efficient and easier.
That
way, if they have any transition in buyers, someone is on vacation, or
anything like that, there are no questions about the items that they
purchased from us. There are no questions on the pricing, on who to send
the purchase orders to, or anything like that. It's all handled by
Ariba.
You can now start connecting with multiple buyers via
the network, which enables you to create even greater efficiencies.
Hopefully, we'll be able to set up a catalog,
and they'll be able to smoothly purchase from us. It already helps us
being on the supplier network and then them hopefully getting ramped up
and making everything a whole lot more smooth.
Gardner:
Rachel, it seems as if Discovery is an important part of this, but it's
really kind of the point on the arrow. There's a lot of wood behind
that in terms of more streamlining and more efficiency. How are the new
services being brought to bear on helping mid-market companies like LLT
extend their benefits beyond the lead generation into the whole
e-commerce lifecycle?
Spasser: It's great to
hear Kris talk about the benefits as it relates to efficiency from a
process perspective on the network. One of the other benefits of setting
up a catalog to do business with that one buyer on the network is that
now you have the catalog set up on the network.
As you
get additional buyers, you're using the same catalog and the same
infrastructure. You can now start connecting with multiple buyers via
the network, which enables you to create even greater efficiencies as a
mid-market seller who may have limited resources within the company to
issue and reconcile invoices.
The efficiency of setting
up one relationship is the starting point. There is much more
efficiency as you start to establish more-and-more relationships as a
seller over the network. But there are other services that we offer over
the network that also create value, and one example is our
Dynamic Discounting Program.
For
example, as a seller on the network if you would like to get paid
faster from one of your buyers, you can offer different payment terms.
Let's say your contract is a net-60 payment term, and you’d like to get
paid faster because you’d like to make some capital investments in your
company. You could offer to provide a discount for a net-10 payment.
Discount terms
We
have many mid-market suppliers who have offered those discount terms to
their buyers, so that they can self-fund growth for their own
companies. That's yet another benefit of doing business on the network.
The
third major benefit is the visibility and predictability that you have
in relationship with the customer. At any point in time, as a seller on
the network, you can go in and see the status of where your order
stands, where your payment stands, or whether your invoice has been
approved for payment.
It gives you a lot more
visibility, and therefore predictability, as a mid-size business, into
things like cash flow. You can anticipate when you're going to get paid,
instead of having to pick up the phone 16 times and say, "When is the
check is going to come? Have you approved the invoice?"
So
there's efficiency, visibility, and predictability, and then there is
the opportunity to impact cash flow by using some of the more
sophisticated tools like Dynamic Discounting to speed up payment.
Gardner:
Rachel, Tell me a little bit about some of the future roadmap that
Ariba is embarking on around a wider, deeper, richer basket of goods and
services.
So
there's efficiency, visibility, and predictability, and then there is
the opportunity to impact cash flow by using some of the more
sophisticated tools like Dynamic Discounting to speed up payment.
Spasser: One of the things that we
are doing, really focused on the lead generation side, is expanding the
services that we offer around Ariba Discovery that can help companies
like LLT Barcode & Label find new customers worldwide.
Related
to that is the ability to create multiple profiles that are very highly
targeted. So for the various products that LLT Barcode & Label
offers, they could create a profile unique to different industries. Or
if there are different industry requirements around labels and barcodes,
they can create very specific, targeted profiles that really make them
extremely relevant to buyers within various industries.
Another
service that we are offering is what we are calling "Sellers You Might
Like," and that's the ability to based on what someone is searching on
proactively suggest sellers that meet their criteria.
So
even if a buyer does a search and doesn't necessarily click on a
particular supplier, if that supplier meets those criteria from an
algorithm perspective, that suppler will be proactively suggested,
especially if that supplier has received high ratings and reviews from
other buyers on the network.
So there are couple of new
services that are being offered from the Discovery side that will
really accelerate the ability for mid-market companies like LLT Barcode
& Label to grow their business and expand the value that they
get from using the Ariba network.
How to get started
Gardner:
I'm afraid we're just about out of time, but Kris, I wonder if you
might have any 20-20 hindsight, based on your experiences so far, that
you could offer to other people who are looking to get started on this
cloud-based, commerce and lead generation activity.
How do you get started? What would you recommend for others as they embark on this?
Hart:
Definitely give it a shot. Set up a free profile and start getting some
leads generated, something that comes your way. Definitely make sure
you're in the right commodities. Don't start clicking boxes for
commodities that you can't offer. That way, your leads are more precise
and more ready to go Then see what happens for free.
Definitely give it a shot. Set up a free profile and start getting some
leads generated.
If
you want extra help and a little bit better outreach with the marketing
profile, go up the next step or even all the way to the top like we
did. We saw the benefits and doing that with the marketing help that we
have from Ariba and how to use the Discovery tool. As I said, that paid
off for us, but definitely give it a shot. If nothing else, just set up a
free profile and see where that takes you.
Gardner:
All right. Well I'm afraid we'll have to leave it there. You've been
listening to a sponsored BriefingsDirect podcast discussion on ways that
businesses are using cloud and e-commerce to improve how they do sales,
marketing, and ultimately online transactions.
We've
seen how one company Ohio-based LLT Barcode & Label, has found a
highly effective way to develop new sales and leads using Ariba
Discovery. So let's thank our guests, Kris Hart,
Account Manager at LLT Barcode & Label. Thank you so much, Kris.
Hart: Thanks a lot. I appreciate it, Dana.
Gardner: And also Rachel Spasser, Senior Vice President of Marketing at Ariba, an SAP Company. Thank you, Rachel.
Spasser: Thanks, Dana. I appreciate the opportunity.
Gardner:
This is Dana Gardner, Principal Analyst at Interarbor Solutions. Thanks
a lot to our audience for listening, and don't forget to come back next
time.
Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: Ariba, an SAP company.
Transcript
of a BriefingsDirect on how a mid-market company saw immediate results
from participation in Ariba Discovery, eliminating the need for mailing
half a million catalogs a year. Copyright Interarbor Solutions, LLC,
2005-2013. All rights reserved.
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