Semiconductors and other electronic components are essential to the way businesses and people operate. These commodities are vital to enabling advances across a range of industries.
Our research indicates that 66% of sales and marketing leaders in the industry plan to maintain or increase their digital advertising budgets.
Digital disruption and digital transformation could not—and cannot—happen without them.
The great irony is that the businesses in this electronics industry are themselves often digital laggards.
Banking, consumer goods, and financial services are all much further ahead in thinking about buyer journey orchestration across different channels of engagement; driving digital engagement all the way through to an ecommerce transaction; providing self-service options that address customer needs; and using different forms of intelligence to optimize that process.
There is general consensus in our space that the semiconductor and electronic components industry is trailing behind other sectors. But we wanted to get a better look at this vital issue.
The Average Maturity Score Suggests a Significant Opportunity for Improvement
To better understand and assess this phenomenon, we surveyed marketing and sales leaders from 180 electronics distributors and suppliers across the globe. (The total annual revenue of all the companies in the survey is around $860 billion, a healthy representation of the global electronics value chain.) We examined B2B digital marketing, ecommerce, and sales academic research and maturity models. And we merged some of the best frameworks and thinking across those three domains into a digital customer engagement maturity model.
Digital customer engagement maturity is about more than just technology. So, in our efforts to attack this topic holistically and comprehensively, we balanced our maturity model across the classic dimensions of people, process, technology and systems, and, to some extent, policy.
That way, semiconductor and electronic component industry organizations can use the model to align considerations around talent, organizational design, investment in technology and new forms of intelligence, and then create more different digital engagement touchpoints.
On a five-point scale, the average customer engagement maturity score was 2.4. This suggests that the semiconductor and electronic components industry is a digital customer engagement laggard, has been stalled on this front for the last two decades, and has ample room to mature.
The Jury is Still Out on Whether—and How Much—the Pandemic Moved the Needle
Industry analyst and media reports in the last 18 months noted that the pandemic accelerated digital transformation initiatives at many global manufacturers. But our April 2021 survey suggests that the pandemic was a gating factor for component suppliers and distributors, 39% of which said the environment brought on by COVID-19 delayed their customer experience and ecommerce digital transformations.
Perhaps by next year, the industry will have a better handle on the pandemic’s overall impact on this front. But what’s clear is that when the COVID-19 pandemic hit, many businesses in our industry saw the need to do more digital engagement because their traditional field sales and engineering teams couldn’t visit customer locations. That is now driving a shift to create virtual sales teams.
Changes Driven by COVID-19 May Help Break Through the Lingering Laggard Mindset
But while everyone has scrambled to adjust to the new reality, we estimate that online transactions account for just 6% of the industry’s total annual sales.
There’s also a lingering laggard marketing mindset. Many companies in this industry still think of marketing investment solely in relation to corporate brand awareness. They also tend to overlook digital engagement, how marketing can impact their sales go-to-market strategy, and how engineering content influences design cycles. That’s a really big disconnect.
Part of the reason is that companies in this industry are very engineering- and sales-driven. Marketing is traditionally an afterthought. But COVID-19 was so disruptive that it really forced sales to rethink what they have been doing. I’m optimistic that we’ll see a cluster of companies in the industry, maybe the top quartile that have the right leadership and mindset, move from level two to level three—or even four—in the maturity model within a couple of years.
Organizational Integration, Talent, and Greater Marketing Investment Are Going to Be Key
Businesses with tightly integrated sales and marketing efforts are best positioned to make this shift. Sales and marketing integration helps businesses to figure out how to tailor the right content to particular prospects, and to align with the design cycles across different markets and customers as they do this. Companies that can synchronize and scale these efforts can leapfrog from two to four on the digital engagement maturity model scale almost overnight.
But the challenges to getting there include hiring the right talent and driving greater investment in marketing. There is a massive under investment in marketing as a percentage of revenue in the global electronics industry. However, our research indicates that 66% of sales and marketing leaders in the industry plan to maintain or increase their digital advertising budgets.
That’s a step in the right direction. But progressing to a higher level of digital commerce and digital customer engagement maturity is about more than simply buying a different business system, hiring a new person, or making some other small incremental organizational change.
New Forms of Intelligence Are Vital to Drive Customer Engagement at Scale
Sales and marketing leaders—and sometimes even CEOs—need to assess where they are in terms of digital customer engagement and ecommerce maturity, examine and possibly reset their assumptions around what’s critical to their success, and lay out their vision for the future.
COVID-19 has changed the way the world works. Businesses are contending with a global component shortage. And the need for digital engagement has never been higher.
Now’s the time to position to be the supplier of choice. In today’s world, that entails more than simply having the best technology or components. It requires the best level of engagement, trust, and intelligence to meet customers every step of the way at scale. Companies that do that better than their peers will win more business, enjoy greater profitability, and grow.
Richard Barnett is chief marketing officer of Supplyframe, a provider of technology and services designed to help businesses in the global electronics industry design, source, market and sell products. Siemens AG, a global electronics manufacturer, has agreed to acquire Supplyframe and expects to close on the deal in the fourth quarter.