Interview With Scott Thomas: The Modernization of Building Materials Distribution
Scott Thomas, the marketing director for Parksite, believes the most valuable aspect of NBMDA membership is the face-to-face networking potential it creates. "I think it's good for our industry to provide opportunities for executives to network," he said.
He points out that, while details may differ, most businesses face similar problems. "I think it's interesting to see how other companies may address things like profitability, marketing challenges and modernization of their business," Thomas said. "Are they using advanced warehousing? How do they structure their sales teams? You can start having those conversations with people, but only by building face-to-face relationships over time."
Thomas believes that both serving as an elected official in the organization and attendance at NBMDA conferences provides the best opportunities for these interactions. Parksite, headquartered in Batavia, Ill., has a rich history of involvement in NBMDA leadership. "I know that several people in our company have sat in various roles there. Matter of fact, my co-worker [Brian Schell] down the hall was president of the NBMDA not too long ago," Thomas said.
Thomas believes the biggest challenge facing the building industry is modernization. "There's a lot of tools out there today," he said. "You can't just rely on a sales rep driving around doing a dog-and-pony show to deliver your information. It's too slow. You better have multiple outlets for your customers and other participants in the channel to access information. Content needs to be in a variety of digital formats that can be easily shared such as video, interactive online learning tools, blogs, social media posts and PDFs. People want to access information when they need it on any device they prefer to use. I think companies that only try to compete in the traditional way will slowly fall behind." While Thomas does not believe companies will go out of business because of it, he thinks that companies will lose market share over time if their competitors consistently get their information to the masses faster and provide more convenient ways to get business done.
While Thomas appreciates that many businesses know they must modernize, he believes that they don't necessarily have the internal skill sets to do so. "There's not been, that I can see, a lot of heavy hiring of technical leaders that can go in and adapt current businesses to modern technology fast enough," he said. "The type of people they need to hire to optimize their businesses are not the same type of people they hired 10 years ago."
Thomas foresees industry changes over the next three to five years will consist of forced adoption of new technologies and will come to the building industry through the builders and contractors. "They're going to expect the delivery of the information they need to come through those [social media] mediums and expect support for those types of mediums," he said. "From a social media standpoint, the trades have leapfrogged the rest of the channel, out of necessity, because their client is the consumer." He points out that consumers increasingly gather information from social media networks such as Pinterest, Houzz.com and Facebook. He also highlights the importance of a Google+ page, which factors into a company's position in search results. "I think that consumers expect to be able to do most of their research before the salesperson gets involved," he said. "So if you're a manufacturer with a brand and consumers research your brand, or if it doesn't come up near the top of the web search results, then you're missing business."
Thomas also mentions the new dangers that the Internet poses to brand reputation. "It's a pretty much transparent deal, and if you're not playing by those new rules, someone can crush your brand in a couple of clicks," he said. "It won't go out to a couple of phone calls; it'll go out to thousands of people." However, there are tools to help mitigate this threat to brand reputation: Salesforce owns a company called Radian6 which allows you to monitor your brand on all of the social network sites.
As far as how companies will change in response to new information technology, Thomas believes that traditional silos within companies must be broken down and information shared quickly and easily. "You're seeing the emergence of enterprise social networks. Things like Bloomfire or Chatter from Salesforce are starting to replace email," he says. "It's the idea of social technology used for work purposes--if you can picture Facebook, but for your business." He believes that companies must adjust to going beyond email to real-time collaboration to compete. "You'll have too much internal concrete to sludge though if you're still doing email as a process."
Thomas expects these changes to manifest externally as well, through cloud-based centralized systems like customer relationship management (CRM) or enterprise social networks. A salesperson on a call will have hundreds of megabytes worth of documents, video, and rich media files available on their tablet. This has the effect of adding consistency to the marketing channel. "The manufacturer trains the distributor. Then the distributor trains the dealer. Then the dealer trains the contractor. Then the contractor presents it to the homeowner. Today, it goes straight to the homeowner. That's the way it needs to happen. If I'm the manufacturer, I don't want anybody touching my content, other than delivering it as I set it. It's an important thing that people miss. There's a huge dilution of information because of the way this industry transfers it."
Roles within companies are changing as well. As far as sales people, marketing people and IT people, those are no longer unique roles, according to Thomas. "If you're a salesperson today, you need to understand marketing. You need to understand mass communication. You need to understand social media. And if your only value is to regurgitate product features, you're not useful, because Google does that." As far as changes to marketing and IT, Thomas says he is a perfect example. "A lot of what I do is what used to be considered IT. Just because it's on a computer, it doesn't mean IT needs to manage it or lead it. IT should be involved, but most of the new stuff that's coming out today needs to be driven by the heads of sales and marketing to make it work."
As far as CRM, Thomas thinks it is a misleading acronym. "People think it's simply contact and opportunity management, or a sales process, and the big picture is it's a platform to manage all types of processes, end to end." Potential applications are tracking, managing and streamlining marketing, capturing voice of customer and tracking leads all the way to sales. He believes the return on investment from CRM comes not only in sales applications but in streamlining processes to reduce waste and "salary leak," which he defines as "salaried individuals chasing information they should already have." He believes that salaried individuals lose 25 percent of their productivity because there is no system in place that centralized key processes and key documents. CRM is that system.
Thomas sees improved customer portals as an emerging trend within the industry, places where customers can gather information in real-time, such as a company's inventory, to gain transparency into the channel. While these are not new, he expects they will become more effective and vibrant. Further, he expects to see the rise of "smart machines," computerized machines such as GE's jet engines that report data to their owners and operators. "What if your forklift could indicate to you, via email or through your CRM, that it's ready for some sort of maintenance? How much savings would you have in preventative maintenance if your machines could tell you in real-time?" He admits that smart machines may seem distant, but is certain that they will become more prevalent. "I've seen refrigerators that'll tell you your milk is expiring."
For final advice, Thomas offers: "You can hide from technology, or you can try to get ahead of it, or at least keep pace. Be a ground-breaker, and embrace technology for what it can do rather than fight it. Companies that invest in the tools will be the leading companies in the future."
Thomas will present on CRM at the NBMDA Annual Convention, Nov. 12-14, in Chicago and recently presented alongside Mark Dancer at the National Association of Wholesaler-Distributors conference earlier this year, providing practical experiences in support of Dancer's findings in his new book "Getting the Most Out of CRM – Best Practices for Wholesalers and Distributors," written for NAW. Thomas contributed as a subject matter expert for many parts of the book.