Revenue Drivers and Return on Investment

Brian Beck:
Hello, everyone. Welcome to Session Three of my virtual book tour for Billion Dollar B2B Ecommerce. My name is Brian Beck and I'm the author of the book you see here. I wrote this book because I wanted to arm B2B companies with a playbook really. Just so much has changed in the world with COVID-19 and other things happening in the world. It's really been a dramatic call to action for all of us on the B2B side. You can learn more about the book here at billiondollarb2becommerce.com.

Brian Beck:
You can also buy the book now at Amazon.com. It's available in paperback, ebook and also, in audio book. Before we get into this, I want to thank my sponsors, particularly our platinum sponsor, Elastic Path for this virtual book tour session. Here's our series at a glance. All the sessions will be available at 8AM, Eastern Standard Time.

Brian Beck:
The first two of our sessions, Leadership and Alignment with Johnstone Supply and Building an Ecommerce foundation with Keysight Technologies are both now available On Demand. This session will also be available On Demand after we air it. Today, we're talking about revenue drivers and return on investment. It's a pretty important topic. I'm thrilled to be joined today by Dave Grimm from Illumina and Andrej Maihorn from Elastic Path. We're going to get into the Fireside Chat in just a few minutes.

Brian Beck:
First, I'm going to provide some context. I do have a bunch of additional sessions coming. As you can see here, we're going to be covering a lot of different important topics for B2B companies as they look towards their digital transformation. Today, we're going to talk about revenue drivers and return on investment. This is Chapter Three from Billion Dollar B2B Ecommerce.

Brian Beck:
I have a lot of detail in Chapter Three about the importance of putting the customer first and some of the return and even unexpected returns you can get from ecommerce. The cost and other things you need to consider when you build a business case for your leadership team. I'm going to start by providing a little bit of context. I can't do too much today. You have to get the book to see all of it. I'm going to give you some context.

Brian Beck:
The exciting thing we're doing today is we're going to dive into some of these details about how Illumina brought these things to life in their business. We're going to have some Fireside Chat and a little bit of Q&A as we go. Virtual show of hands. How many of you know who this guy is? This is Jeff Bezos. He's the CEO and Founder of a company called Amazon.com, which most of you are part of through your Amazon Prime memberships. Arguably, Amazon has the most successful certainly e-commerce company.

Brian Beck:
Potentially, you could argue a company in recent history as it relates to how they've evolved and transformed businesses. The mantra that Mr. Bezos has been really expounding since Day One is it's all about the customer. He attributes that to being the reason for Amazon's success. I believe him. This is a quote. They have Jeff-isms at Amazon where it's his sayings. Here's a nice Jeff-ism. We're not competitor obsessed. We're customer obsessed. We start with what the customer needs and we work backwards.

Brian Beck:
I'm challenging you to do the same thing for your business. It starts with an understanding of your customer. I highlighted this a bit in Session One of our tour. Millennials will be 75% of the workforce by 20205. Many companies don't know that. These folks are digital Amazon natives. They expect the same experience from you in their B2B work purchases as they get in their consumer lives. They won't settle for using a fax machine or dialing up or using an email or a call center. They want e-commerce.

Brian Beck:
I challenge you to rediscover your customer and really set aside your current understanding of your customer and open your mind. These are new customers. How do you do this? How do you learn? You talk with some. It sounds simple. Motherhood and apple pie, right? This is actually surprisingly one of the things that many companies do not do well or consistently. How do you do it? Customer surveys. One on one interviews. Focus groups. Data and analytics.

Brian Beck:
Use the data the way your customer's interacting with you to learn what their needs are. Your sales team is right in front of your customer everyday. Those are the things that we need to look at as we put in the customer first. Dave's going to talk about some of these things as we go through and how they successfully did these things in their digital transformation. The key in B2B ecommerce is making your buyer's job easier.

Brian Beck:
Once you do that, once you make it easier for them to interact and order from you and do routine tasks like looking up order status, you've got them. They want it. They don't go back to less efficient channels. It's the key to success unlike retail shopping, which is more about adventure and engagement with brands and things like that. Why do B2B buyers use ecommerce? This is a great survey I have. This is cut right out of the book from Forester.

Brian Beck:
What is your chief reason for shifting more work purchases online from offline? What's fascinating about this is two top reasons. More convenience since online sites are open 24 hours a day and a faster process. Worst price, not until three. I talk to a lot of B2B companies. There's a misconception that price is really the reason B2B buyers are going to use ecommerce. I want a better price. Guess what? It's not true.

Brian Beck:
As Dave will talk about and as we've seen in the book and those case studies in there about this, you can earn higher gross margin by simply enabling the buyer to do their job more easily. It's fascinating. Meeting these needs drives ROI. These are three concepts and I'll give Dave Grimm credit because I took these from his lingo. Lift increase sales from new customers and existing customers. Shift, which is shifting your dollars, your revenue dollars into higher profit channels.

Brian Beck:
We're going to talk about that during this session. Third is the enablement. Organizational efficiencies. Think about the customer who wants to check their order status. They go online. They don't have to call their sales rep anymore. That's a simple example of enablement. Repurposing your staff to hire and better usage of your time. These are really powerful levers. They drive massive improvements in enterprise value when they're done well. We're going to learn more about that in a few minutes.

Brian Beck:
ROI, I wish it was but it's not free. We're going to talk about this, too. There are upfront investment requirements. Things like resources, getting the right people on the bus, agencies, infrastructure, software, ecommerce platforms, hardware, your servers. Your cashing, all the things related to performance of the site. Data and the product catalog. This is often underestimated by B2B companies. I've got a product name and a couple of bullet points. Am I good to go? No.

Brian Beck:
You need to go deeper than this and prepare your data for ecommerce. Fulfillment capability, capacity. Many manufacturers for example are not set up for shipping small quantity orders to customers. They're just set up to ship in bulk. Fulfillment capacity. Ongoing costs. It doesn't just stop once you're live with an ecommerce site. There's also costs to support it. Resources, they don't go away once you're live.

Brian Beck:
You have to continue to develop the website, develop your capabilities for personalization and other things. Ongoing marketing. Your marketing has to evolve. Once you have ecommerce, you can launch digital marketing for example. We have a section on that coming up in the series. Infrastructure, your cost will continue there and need to be considered.

Brian Beck:
Operations and fulfillment including not only the fulfillment cost in your warehouse but even things like accounting and new ways that you need to support the channel and document the channel in ecommerce. Finally, establishing accountability structures is really important. This is another cut out from the book here. This is an example ROI model. When you get into this channel, it's important to measure. You need to measure some key performance indicators as well as the performance of the channel.

Brian Beck:
One of the ways to do that is with a profit and loss statement like I'm showing you here. Where you're looking at the profitability of the channel, the growth of the channel based on your goals. It's just like managing another sales channel. Keeping track of it is really important. It also helps to keep the organization accountable. With that, I want to get into introducing our guests. Again, my name is Brian Beck. I wrote this book.

Brian Beck:
In addition to my work here, I also am Managing Partner of Enceiba, which is an Amazon consulting firm. We have a specific practice oriented towards B2B companies. Mr. Grimm, I'm so thrilled you're joining us today. Would you be so kind as to introduce yourself?

Dave Grimm:
Hi, everyone. Thank you for joining us today. Very happy to talk to Brian and Andrej about ecommerce, about digital transition and about moving your businesses forward. Quick introduction of myself. As you can see on the slide, Former Senior Director of Digital Experience at Illumina. I am currently transitioning to a new brand. I'll be starting there in June. Drum roll on the appointment coming up in June. I'm going to hold off. I'm going to hold off.

Brian Beck:
Okay.

Dave Grimm:
I have a pretty long experience with digital. I've been described as a digital native. Those of you who have been around since the late '90s and have worked in digital the whole time, that's what a native means. Today, you can go to grad school and get a Master's in User Experience Design, Ecommerce, all of these different elements that have developed over the last 20 years. For me personally, I've worked for very large international brand. Illumina being one of them.

Dave Grimm:
We operated in 130 geographies. Every currency you can imagine. 24 hours a day, multiple languages to very small startups. My first startup position was with insurance in San Francisco. I was Employee Number 60. Now obviously, Esurance is still a ongoing brand and it's a successful company purchased by Allstate a few years back. I've gone the spectrum from B2B, B2C and back. Very happy to talk to you all today and give you some of my insights based on Brian's questions and how the discussion goes.

Dave Grimm:
Thank you all.

Brian Beck:
Yeah. Dave, I'm so thrilled that you're joining us. You and I have known each other for probably five, six years now. I've watched how you've implemented things at Illumina. You have a lot to share that's really valuable here. Andrej, I love that you have a fire behind you because this is a Fireside Chat.

Andrej Maihorn:
That's right.

Brian Beck:
Please introduce yourself.

Andrej Maihorn:
Thanks again for collaborating with me. It's great to be back with you, Brian. As you know, I've spent my entire career in ecommerce. I've had the opportunity to lead teams for several multi-billion dollar companies. What has always been key to me is to follow the fascinating trends in our market. For instance, the trends we are seeing currently as a direct result of COVID-19. It's just a world of opportunities out there, Brian. Thanks again for having us talk about this today.

Brian Beck:
Of course. Of course. With that guys, let's just go straight into our Fireside Chat here. Andrej again, thanks for the fire.

Dave Grimm:
My firepit is outside.

Brian Beck:
Yeah. I was wondering. Where is it, man? Dave, Illumina. It's been called the smartest company on the planet. I walk in the office there and I don't have a PhD behind my name. I'm in the minority. Everyone seems to have a PhD. Very smart. It's a bit of a complex business to understand. Can you break it down for us? What is Illumina? What does Illumina sell? Who are Illumina's customers?

Dave Grimm:
You're right. The science, the physics and the chemistry of the business are very complex. However, there's a very simple metaphor to understand the Illumina business. Now, I'm in the transition of I have to stop saying we because I don't work there anymore. Excuse me if I do. Fundamentally, the business model of Illumina is very much like HP printers. We sell capital equipment up to a million dollars per unit. That capital equipment then uses consumables chemistry.

Dave Grimm:
That chemistry is used to sequence biological material. Blood, tissue, insects, you name it. In the end, what that produces is what's called a genomic sequencing read. It's a series of ones and zeros that make up the identity at a DNA level of any organic life form. The best example I have is if you think about 23andMe, most people are familiar with 23andMe. 23andMe is actually a customer of Illumina.

Dave Grimm:
When you go through and you receive that kit and you put saliva in the little tube, what they're doing is a very simplistic view of your genome. That will tell you your gender, your history, people you're related to, all sorts of things. That's something very small end of the genomic technical spectrum. The other end of the spectrum is whole genome sequencing where every single part of you is sequenced and laid out in a very long strand of ones and zeros.

Dave Grimm:
That's the type of thing that's used in cancer research. The type of thing that's being used to combat COVID right now.

Brian Beck:
Right.

Dave Grimm:
The original COVID genomes that came out of China were done on Illumina technology. That data has been shared up for the world to use. Every researcher in the world, microbial, biologist, virologist, they're using those data sets and the ones that are being collected every day to try and find a way to combat this virus and to track the virus overtime. It is a complex business. In the end, it touches all of us. Over time, it's going to become more and more present in your visit to the doctor.

Dave Grimm:
It's a brave new world when it comes to genomics.

Brian Beck:
That's amazing, Dave. It almost makes ecommerce sound like child play. Right?

Dave Grimm:
Are you running the business?

Brian Beck:
No. The amazing thing is, and you guys are case study in the book. Actually, there's two case studies in the book. The amazing thing is ecommerce can enable any kind of business really. This is a great example. It's not the typical candidate. You're not selling apparel or whatever or sweatpants or what have you. This is an incredible story here. Tell us about your role. What was your role or your responsibilities? You were there for six years? Five, six years, right?

Dave Grimm:
On seven actually.

Brian Beck:
Okay.

Dave Grimm:
Six years, 11 months, right on the cusp.

Brian Beck:
Okay.

Dave Grimm:
Let's see. I was recruited into Illumina to bring B2C style user experience, digital interactions and design to a B2B. My prior brand prior to Illumina was USAA financial services. If you're familiar with anyone in the military, absolutely is. They were at the forefront of bringing user experience design into digital interactions for the customers. My tenure there, we flipped the business from majority offline to majority online.

Dave Grimm:
My last year, I believe we ended at 13 billion and 23 billion in terms of ecommerce transactions, contracts, insurance policies, all that good stuff.

Brian Beck:
Wow.

Dave Grimm:
When I went to Illumina, to your earlier point around the level of education there, I do not have a PhD. I'm a business person. I was interviewed by a litany of scientists and researchers. Every single one of them, I said, "You do realize I'm not a scientist." The response was, "We have a thousand PhDs. We don't need another one. We need someone who understands the business. Understands how to do business electronically." It was a great welcome into the business but as we'll talk about later, the culture changed.

Dave Grimm:
It's necessary. If you work from sales to support to marketing, it's significant. It takes time. It's a multi-year journey to do an effective digital transformation.

Brian Beck:
No doubt. You guys had some amazing results there. I know during your seven-year tenure, you took this thing a long way. This is the ROI session. We got to talk about some ROI. Let's take the first letter, an R. Let's talk about R. What kind of results did you see? Let's cut to the chase on that and we'll back into some of the other pieces. What was the return?

Dave Grimm:
Let's go to the shift, lift and enable concept and balance that with the R. With shift and that's taking your offline business and moving it to online, I don't see that really as return other than labor savings and efficiencies that you get. The lift component is where you really get the return. Now, when we launched our ecommerce platform, we paid for the entire project to capital expenditure in six months with our lift.

Brian Beck:
It wasn't a dollar, was it?

Dave Grimm:
No. No.

Brian Beck:
A lot more than that. Yeah.

Dave Grimm:
A lot more than that. In order to be able to do that, you have to have the analytics, discipline and the proper structure of your site and sites in order to measure the acceptance of offers given to your customers. In the Illumina business, there are eight primary segments. Think of a microbial researcher as a segment. A microbial researcher is interested in Petri dishes, microbes. Very different than someone who works in agrigenomics.

Dave Grimm:
If you think about those two segments, their solutions are very different. When they come to a digital property or when you speak to them off domain, we use a syndicated ad network and we advertise on espn.com. We advertise on LinkedIn, Facebook, you name it because we can turn it and segment these individuals. Show them the right creative or the right message to drive them back to a digital property which continues that message. In that, we seed offers. Let's make it simple.

Dave Grimm:
Ag is a cow. Micro is a Petri dish. I should never see a cow if I'm a microbial researcher. I should never see a Petri dish when I'm an ag person. It's a very simplistic explanation. As you entice people back with content marketing and you tell stories, one of the thing that's interesting about researchers is that they're extremely competitive. Academia is very competitive.

Dave Grimm:
Not that commercial entities aren't either but it's a very, very competitive environment where you're fighting for grant money or you're fighting for tenure. These audiences are interested in hearing about how are other people using the technology. That's a great story to bring people in. You want to tell them what they are using to extract their DNA to get the findings that they're making. From a scientific method so that other people can repeat it. Right?

Brian Beck:
Yeah.

Dave Grimm:
The scientific method works. In that flow, we introduce the product that they're using. Our core consumables, remember we talked about the capital equipment and the chemistry that flows through. There are multiple dimensions to that. We were able to show when we show this ad and someone clicks on it and adds it to cart and checks out. Next, lift revenue. We showed them something they haven't purchased before. Maybe they have and it's a repeat buy. They are buying again.

Dave Grimm:
Sales absolutely accepted that motto with full traceability and finance followed us. When we talk about the investment side of the ROI model, you have to have really good financial buy in. Meaning, your finance partners are with you along the way. They are tracking against your expenditure as well as your return. You have that third party arbiter inside of the business to validate what you're doing.

Brian Beck:
No doubt. Really, you really were applying B2C-like principles.

Dave Grimm:
Absolutely. Absolutely.

Brian Beck:
When we talk about segments, you mean, customer segments. Applying a certain ad and as they click through, they're seeing relevant offers and products relevant to them. That's so important. I think it could be so powerful in B2B because you know who the customer is. That's awesome. That's awesome.

Dave Grimm:
You were talking about Jeff-isms earlier. We had an 80/20 rule, which was my retailers by title, people whose job was retailing, they were only giving 20% of the targeted impressions for the customers. The storytellers, the SEO people, the writers, they received 80% of the impressions. The reason is, we want to look like we were simply pushing product. I mean, we're a commercial business. The engine is to sell.

Dave Grimm:
Driving with the content and what's meaningful to me as a customer and a user and a researcher and a scientist or someone who operates a lab, that's what's compelling to people. People can see through a transparent ad model. Ultimately, there's a second click. The story that you're interested in resulted in someone buying your product. Here's the product they bought. You look at one way really people need to think about it from a B2B perspective.

Brian Beck:
That's awesome. Clearly, you grew revenue. The lift you talked about. Tell us about the business case you made. You had to go up and make a case to senior management that this was something worth investing in. You were spending more than a dollar. I know that for a fact and a lot of zeros. When you make an investment like that though, what does it look like? What does the business case look like?

Dave Grimm:
The first part of it is it's a multi-year roadmap. It's not a single-year roadmap. By having a strategy like that, you can size the investments at a level that is comfortable for your capital budget. You can earn the trust and the respect of senior leadership. My first year, I didn't walk in asking for the entire package. I showed them what it was going to look like based on industry averages and my personal experience. Explain to them what we were going after first and why.

Dave Grimm:
We actually started on the web. Just web at large. Really quickly, my first day at Illumina, our website went down. Yeah. Literally, after I exited new employer orientation and the gentleman behind me in our cubicle role, I said, "What's going on?" He said, "Well, that happens about once a month." We need to prioritize this. Ecommerce isn't going to work if you don't have a stable storefront and digital presence.

Dave Grimm:
Fast forward, we built out a very stable global publishing environment using AEM and associated marketing platforms before we made the investment in ecommerce. Now, the beauty of it is you make those investments. You get it working. Your leadership can see the difference. It's motor responsive. It's always on. Look forward to show the growth in traffic. You then come back with that larger investment and that business case is here's what we're going to shift.

Dave Grimm:
Here's how much labor you're going to save. 24-hour activity. Illumina is unique and that we have technical service people, technical support people who actually had PhDs. They're answering questions with research scientists. That's a really, really expensive phone call to reorder a consumer.

Brian Beck:
Yeah.

Dave Grimm:
Because it transitions that way. You solved my problem. By the way, can you take this order for me? You just don't want people like that on the phone call. Now, the customer wants to buy, of course we help them. You want to give them that online option so that they can buy when they want to. Now, we are a 24-hour business. Even in a single geography, you could see volumes of transactions after six, seven, 8PM at night. That you simply don't want to staff someone to sit there to take a phone call.

Dave Grimm:
People are buying on their own. In the current time zone that I am in, not the UL or APAK time zones that are coming up.

Brian Beck:
It's the first data I showed in that chart at the beginning. It's 24 hours a day. Yup.

Dave Grimm:
Yeah.

Brian Beck:
What risks did you think about, Dave? What are some of the risks you considered?

Dave Grimm:
Really, the biggest risk is the adoption. Inside of that is the sales organization. We are still, I keep saying we. Illumina is still a sales force centric company. That's completely appropriate when you think about the capital pathways and the relative complexity that's involved here. However, once that sale is made, you really want your sales people to be focusing on the next opportunity. Having deeper conversations with the customer.

Dave Grimm:
Getting the customer into user experience testing programs for your next platforms rather than simply transacting the same thing that they bought last month and the month before and the month before that. That change that has to occur is a big risk. It's a difference in behavior. We'll talk about change management a little bit later. It trickles throughout many, many parts of the company especially those that are directly customer facing. In your statistics before, the customers are already there frankly.

Dave Grimm:
You need to change your behavior as a business to meet them where they are. Because frankly, if you ask people of faxing things to purchase, you're really behind.

Brian Beck:
Yeah. Yeah. Agree. Great. That still happens all the time. Right?

Dave Grimm:
Absolutely.

Brian Beck:
Yeah.

Dave Grimm:
You're behind.

Brian Beck:
Let's go back to that Jeff-ism. Putting the customer first. I was involved with you when you were doing this. We helped do some of these things with you. You involve the customer in the process. You put the customer at the center of this. Tell us how you did that.

Dave Grimm:
There are several dimensions of it. Now, Illumina is a global company. The needs by region are very, very different. If you're fortunate to only work in the US or AMR, it's much more simple. Not just the time of day. It's literally what is needed in order to purchase. For example, in Europe, they have a different tax structure than we have in the United States. They have a value added tax. Academic institutions can get exemption from that value added tax. It is significant as a percentage.

Dave Grimm:
If you're talking about a $2 million purchase and I can change my tax rate at 30% plus, you absolutely need to be able to handle for the VAT, value added tax in the transaction. There's no similar concept in the United States. Someone who has a US background is only focused on ecommerce in the United States. They get a global role but they're not talking to customers in Europe and their similar models and aid back. What do you need in order to be successful? You go live.

Dave Grimm:
You're going to fall on your face. Because what they need to save money doesn't exist inside of your flow. We work a lot with channel partners distributors globally. The needs of import export in China, the documentation that's required is different than what you're going to find in Lat Am and Latin America. You need to actually talk to these distributors. You need to talk to the end customers. Ask them those open ended questions. What do you need to succeed? What are the basics?

Dave Grimm:
Would you get that in place than you get to the delighters? Wouldn't it be great if? You allow them to think about either great experiences in their B2C lines or can benefit as a really good solution that you can emulate.

Brian Beck:
You guys had a customer advisory board and formed a formal structure for this as I recall.

Dave Grimm:
When we started with ecommerce, we didn't. We do now. They do.

Brian Beck:
Yeah. Andrej, anything you want to add to this? You got the fire and the quiet.

Andrej Maihorn:
I know. I think the customer is really important. I'm a big proponent of everything starting and ending with the customer. It would be I would say an approach. At the end, if you cannot provide the services that they need at the convenience that they cannot expect. They will find it elsewhere. You talked about it before. It's a click away. That's why I think the voice of the customer really establishes that forum as to why the law.

Andrej Maihorn:
It's important to understand really the role that the virtual channels play and should play. At each step of the customer journey, knowing B2B, there are so many roles involved. It's really complex in how you engage with the customer. Doing the research and understanding that complex decision-making process well then at the end try the adoption by the customer. It's really recognizing the reasons why a customer uses one channel versus another. Identify what's not working.

Andrej Maihorn:
Can the customer find the products they need? Was there product information missing? It helps you to really map out a journey. It can be different by a customer segment. Dave, you talked about how you have different types of customers and what they're interested in. It might be different purchasing as well or how they engage. It's really important to understand each stage. I think there are many companies out there right now that thinking what a customer, what their preference is.

Andrej Maihorn:
The launch of app sites and the adoption is not quite there as expected. We wonder why. I think it's super critical to take this outside end approach and get their honest feedback.

Brian Beck:
Great points, Andrej. Thank you for that. We've been talking a lot about the R in the ROI. How about the I? What are the investments, Dave? Again, it wasn't a dollar. That investing capital, ongoing costs, other things. Can you talk a little bit about the I?

Dave Grimm:
Absolutely. There's a technical component to it. Meaning, I think one of the fundamental questions or strategies that people need to think about is do I buy at stack or buy best in class, best in group by stack? Depending on your level of investment, you buy a stack. It's cheaper typically. You can buy starter stores with an ecommerce backend. That will give you a breed. It doesn't mean it's best in breed though. We very much had a best in breed strategy.

Dave Grimm:
We wanted the best in each of the verticals. When you do that, you then need very strong stable Minaware. That's the hardware, software you were talking about earlier.

Brian Beck:
Yup.

Dave Grimm:
The software component, the licensing costs are higher when you go best in breed. You get better return. You get better lift. Right? Relatively, the cost is not that much higher to go with best in breed over time. When you think about a three or a five-year return rate like in your model there, I think a five. It gets quite inexpensive over time. You can capitalize those dollars and depreciate them over time.

Dave Grimm:
Getting the return against them five years out, 10 years out, the initial investments disappears if we do it right. Now, that being said, there are different ways to go about it. The company where I'm going now, they're fully bought in the digital. They have already laid out a budget over time. I'm excited about that because I'm not going into a position where I have to fight for the dollars. The dollars are there. It's more about how and when do you spend the dollars.

Dave Grimm:
If you're in a more mature situation, the how and the when, you do the how and the when based on what you're going to get back or what you're going to save. Front load those things that are most critical. Maybe it's solving your biggest pain point from your customers. As you stagger that investment, you put the rate out at the right time. The other part of it is the op ex side. You need people to run these platforms. Use interns. I think that's a line you had in the chapter. My stories are in your book.

Dave Grimm:
That's not a way to succeed. There are digital experts at many different dimensions of commerce. We haven't really talked about punch out and EDI and those levels of interactions with customers. There are definitely experts in those domains that you need to source and bring them in. Now that being said, I personally am a huge fan. I'm using implementation partners to bring in platforms and technology. Hire someone who has done it before, is familiar with the technology, has gone through it.

Dave Grimm:
Bring your people into that fold. Help them learn the platform as they install it and hire against that platform. When you go live and you've gone through your hyper care and things are healthy and stable, the implementation partner rolls off. You have a fully trained staff who are there not just to keep the lights on but to grow and improve the channel overtime. In our next session later, the subsequent session, we're going to talk about that.

Dave Grimm:
What it means to optimize and get a force multiplier of the platforms you pull in so that one plus one is three, not two.

Brian Beck:
Yeah. Dave, you're coming back. I had you come back for another session at the end here, our eighth session. I'm excited about that one. Talking about the future and what's coming next. I'm super pumped about that one. During our prep calls, we're talking about investments that have been made. You just finished appreciating your first investment in ecommerce and the platform.

Dave Grimm:
Yeah.

Brian Beck:
Decided to do it all again. That must not have been a fun discussion with the executives or maybe it was. Obviously, if you're thinking about doing that, you're doing a lot of things right. Tell us about that. Yeah.

Dave Grimm:
Okay. IBM as many people know decided to sell off their web ecommerce platform to a smaller implementation partner. The risk profile of that was pretty significant. As we looked at the business at Illumina over time, the majority of revenue will flow through commerce for the company. Now, that doesn't mean the sales process flows through ecommerce. At that business, there is a personal sales interaction. There's a complex transaction. There's complex negotiation.

Dave Grimm:
That's the starter but the tail over time, and the pull through of those consumables, the chemistry that goes to the capital equipment dwarfs the initial sale. Over time, what that means, more and more of the revenue of the business goes online. We wanted to be on a platform that we were confident was going to be around in three years as we were growing the business. That's why we went back and re-platformed.

Dave Grimm:
Literally, we had finished capitalizing the prior investment a month before I went back in to ask. It was a colorful conversation. I had no intention of doing that anytime soon. That's part of being in business. The battlefield changes and you need to respond to it.

Brian Beck:
No doubt.

Dave Grimm:
Yeah. Illumina's very interested in going to a headless solution like Elastic Path because that gives you so much flexibility. That's the future of commerce in my opinion. In our next session, the eighth session, we'll talk about what that really means and how the transaction itself falls away. It's what about that transaction? Help the customer. What else can we do to smooth things for them? Take data from that transaction and to improve their next session? Be predictive and helpful.

Dave Grimm:
Give a really targeted recommendation of what they should be buying based on what they've done in the past.

Brian Beck:
That's an ad for our Session Eight. Because you're going to learn more about that there. Andrej, you spent a lot of your life in this. Elastic Path is clearly a headless platform. Do you have anything to add on that point?

Andrej Maihorn:
Yeah. No. People that read platform is an interesting discussion overall. In the past, when you buy a platform for a certain number of years and then you might consider a new one. I think what's important to understand is really the world right now is changing. You audit a new technology that is driving the evolution of digital ecommerce.

Andrej Maihorn:
Right now especially with COVID-19, we see an acceleration during the called impacts because we have a different way of customers and buyers and the active companies. The adoption was already happening fast. I think that is accelerated right now. If you look at how we interact with those technologies, our kids don't even know a world without mobile devices. You receive notifications on your smart watch.

Andrej Maihorn:
You use Alexa and hopefully, she doesn't go off here in the background and Google through the act of voice. Automated reality and virtual reality not just for gaming but really interactive product experience. Especially in B2B with more complex products and stuff and IRT. They eventually have a few years. They became so cheap and it's being applied now in instruments, machinery and other products. You really live in this digitally connected world. I think we have to act to that.

Andrej Maihorn:
Because of that customer expectation is evolving, you use virtual augmented reality to figure out more complex products or use these explored views to identify a spare part without knowing the problem or what is it called. Use voice to check status, inventory or price. Automatic replenishment by your team. All of those actually, they don't benefit just the buyer and make their life more convenient as part of the whole process.

Andrej Maihorn:
I think you can identify clear return of investments via shared wallet, via custom approach that is optimization. Customer satisfaction overall, retention, brand loyalty, what have you. I think that being said, considering that you need this flexible and adaptable platform to really react to these changes. React to how competitive some of those technologies and what's expected by a customer. The technology shouldn't be a limiting factor. It needs to be the enabler for your business.

Andrej Maihorn:
That's why I think it's really critical to look at it. Actually, this will be into the follow up question because you mentioned it. Headless and how Illumina wants to be more agile and effective and working out some of the capabilities. I think you've done a great baseline. You do great business. The potential right now and so headless and API driven commerce platform was the consideration as you explained.

Andrej Maihorn:
What are some of the benefits especially when it comes to ideas that you actually go in that direction.

Dave Grimm:
For me, it's multi-dimensional. We talk about that strategy of buying a single stack or going best in breed. When you go best in breed, that allows you much, much more flexibility and creativity with how you interact. If you are capital restricted, this is a B2B conversation. If you're a small company and you're $200 million in revenue a year, you're not going to go out and spend $50 million in digital transformation. Let's be realistic. What that means is you're probably going to go single stack.

Dave Grimm:
You're going to get the best out of what you purchased. If you are a multi-billion and you have many different customers and many different product types, it behooves you to go best in breed. Because then what you can do is differentiate the experiences for each of those customers. With a headless solution, it's fundamentally just injecting the ecommerce function into the interface. Whether it's mobile responsive, web, if it's app, if it's website channel agnostic.

Dave Grimm:
For me, the return that you get is only limited by your creativity and how you structured your outbacks and your talent. If you go bare bones and let's say you install a headless solution but you give it a skeleton crew match. You have a skeleton crew working on your retailing operations, they're only going to do enough to get by.

Dave Grimm:
If you staff them appropriately and you set aside as part of your business case, the outbacks and investment overtime, you can build return each year against your outbacks. I am a big fan of paying for myself in a business. I work for a really, really guy named Chris at Esurance years ago. Hi, Chris if you're watching. He said to me very, very early on, he said, "You either make money or you save money for a business. If you do both, you're a rock star." That's what I focus on, doing both.

Dave Grimm:
With a headless solution in the context of ecommerce, you can do both. You can save money and you can make money by using that type of backhand and injecting it in well-designed interfaces. It isn't magic. You have to have a practice and a program, a strategy.

Brian Beck:
Andrej, I'm so glad you asked that question. Dave, thanks for that color. I actually have a case study in the book. A couple of them but about how companies and Dave, you're one of them. Another one's Bosch for example where they embedded into their tools. They embedded tracking so that their customers who are big contractors building high rise buildings and such can track their assets, their tools against where the labor is deployed.

Brian Beck:
They've created a whole solution for their customer and a new revenue stream around that whole location-based services. They call it their BlueHound I think technology. Anyway, it's a fascinating case. Anybody who's in the field like Illumina or Bosch or others that have equipment, it really just opens up all kinds of new opportunities to that commerce. The technology, Dave, that's the easy part. Right? You're laughing.

Dave Grimm:
Not when you're doing it.

Andrej Maihorn:
Quite random.

Brian Beck:
Yes. Thank you, Andrej. Well said. It's the transformation of the business. It's the digital.

Dave Grimm:
It's a digital business. It's not something you hang on. It changes the way you operate.

Brian Beck:
Tell us about that. Yeah. It's the hardest part. Tell us about that. Give us your experience on the actual process evolution and digital transformation of the whole company. You guys have done it.

Dave Grimm:
It's still a work in progress, honestly. Where Illumina was three years ago versus today, it's a transition. I like the examples. A great example is we sell capital equipment. Maybe we sold that capital equipment online but we didn't. We actually do lots of sequencers digitally. That piece of equipment shows up at a lab. Depending on the size of it, some of these require an HVAC system, three-phase electrical connection. It's a heavy piece of machinery. It needs to be balanced, calibrated, tested, washed.

Dave Grimm:
If you don't include this part of the introduction to the customer of your technology, "Hey. By the way," this is the My Illumina platform. I'm talking about that in Session Eight. Here's how you can with the internet of things. I remember just talking about. Here's how you can track this thing while you're at home. Here's how you buy from us. Here's how you re-buy from us. Here's our ecommerce platform and our offerings.

Dave Grimm:
Here's how you can connect to your organizations a procurement platform if you choose to do so. Building that into the process seems obvious but you have to change the behavior of all these people in the field. You have to give them the assets to build it into their training. You're talking about globally hundreds and hundreds and hundreds of people. Building and they will come doesn't work. It will give you something but it's not as powerful as organizing people against it.

Dave Grimm:
To say, "Yes, we have built it. I trust that it works. I think my customers are really going to like it. I'm going to introduce them to it regularly." The other part of it, too is what I found in my career is you'll have a customer who from any number of reasons is against doing business electronically. Okay. While the person who manages procurement, that's their opinion but then they quit. You go back and ask the new person, "Absolutely. That's what I did at my last company."

Dave Grimm:
Why aren't we doing it here. You always have to have this constant follow up and deed of interacting with people and checking their pulse. When I talked earlier about the e-procurement process and having true specialists who manage that part of the business, the e-procurement connection is very much like a sales pipeline.

Dave Grimm:
What we see in concert with th sales person, "Hey. We think your customer is a good candidate for e-procurement because of their volume, the amount of dollars they're spending, the transaction itself and total dollars." With the sales person, we get an introduction. They're not interested. They're not ready. They're going through an SAP update. Who knows? They just laid off some people in IT. They're not ready. The IT folks are busy. That's fine. You move on.

Dave Grimm:
What we find is six months later, knock, knock, knock. They come back and they're ready to go. That's why you need those teams who are dedicated to those functions to build their own pipelines to be ready for those connections when they come down the path.

Brian Beck:
For you, that also included a whole adoption plan. I know you involved the sales team in the process and across the board. Right? Yeah. That's so awesome. Dave, I asked this question of everyone who joins this virtual tour of ours. You've been through this process. Seven years in Illumina. Prior to that, USAA. If you were talking to the CEO of a company that is just starting this, that hasn't even started it yet. He's trying to figure out where should they start.

Brian Beck:
What would be one or two pieces of advice that you would give to them?

Dave Grimm:
It's a reiteration of some things that I've said before. The first one is you don't flip a switch. There's a change management function that has to occur. Because you will be changing the behavior of your employees and you'll be changing the behavior of your customers. It's important to understand though. Your customers are already there. Just not with you. That's a big one.

Brian Beck:
Right.

Dave Grimm:
What's that?

Brian Beck:
Yeah. Right. Exactly.

Dave Grimm:
The other is that it's not cheap. Now, you make a strategic decision. Are we going to do single solution? Are we going to go best in breed? It's a really critical strategic financial solution, both dimensions. For a CEO, I would say be purposeful. Think about how you want to go to market overtime and how much you want to spend. Be very, very realistic about the outbacks cost because you can't turn a thing on and walk away. You need to curate it and manage it and optimize it.

Dave Grimm:
That's part of the return. You need to have staff there. Now in some businesses, we add people here. We take people away here. Because you do stop the inbound phone calls. You do stop follow ups. You do stop the where's my order? I can check it myself. I don't need to call anybody. There is a dimension there. You look at your organization and say, "Can we really see what I'm only here? Can we take these people and move them towards enablement?"

Dave Grimm:
It's something we haven't really talked about to move business forward. For a CEO, be strategic. Be purposeful. Really figure out how you want to invest and then be ready for multiple years. Because people have to learn. They have to go to the market, address customers. Test your internal but over time, you will see the shift. This is an extremely established business model especially on the B2C side and more and more on the B2B side.

Brian Beck:
Yeah. Agreed. No. That's great. Great input. Andrej, anything you want to add to that?

Andrej Maihorn:
Yeah. The one thing I want to reiterate because not everybody does it. Define clear actionable business goals. Really outline how you measure the outcome. Again, one of the best ways to gain executive buy in is really show how an approach can potentially pay for itself. We've discussed in the first session. Do you think nothing might be a challenge. It might be just because you don't outline the return. The companies get stuck because they think investment is so massive.

Andrej Maihorn:
Also to add to Dave's point, obviously long term initiatives, there should be also a structure innovational pieces. They should go hand in hand where you continuously provide the customers. I think it's important to incorporate it and really harvest that return. Match out the results and really apply it. Talk to the customers and what works, what doesn't work. If I take a step further, your companies are afraid of some of the more innovative things.

Andrej Maihorn:
If they take the IS and make some artificial intelligence, how does it apply for my business? How do you make it useful? I think there are so many used case already out there of companies have leveraged items that you don't immediately think of but can provide massive return of investment. That can be and quite realize as right now. Again, we are at this product one we realize that doing nothing and not spending at all will most likely also have an impact. It's a negative impact.

Andrej Maihorn:
Like customer return and losing opportunity. That's something. It's not just about if you spent money and as an investment. It's actually doing nothing is going to have negative impact. I think it's important to realize that we have to use market share to the likes of Emerson since we have bases are down.

Brian Beck:
Go ahead, Dave.

Dave Grimm:
Brand frankly.

Brian Beck:
What was that, Dave? One more time.

Dave Grimm:
I think it damages your brand if you don't modernize.

Brian Beck:
Yeah.

Dave Grimm:
It really does. Especially if you're in a commodity environment. If you're selling things that other people are selling, that's a really tough environment. If you're not going to embrace digital or-

Brian Beck:
Yeah. It can be scary though, guys, for some companies. I give a couple of case studies in the book about it's just getting started. If you're a CEO and you don't know. This is a new area for a lot of folks who've been in business for a long time. Just getting started. Andrej, your point, Dave, your points as well. Okay, guys. I want to thank you both very much. It's been fantastic. Andrej, I'm still not convinced that's a real fire but I believe you.

Dave Grimm:
That's real.

Brian Beck:
He's going back and putting it up to convince us. No. That's great. Guys, you've been fantastic, both of you. Here is some contact information for myself. Again, you can go to Billion Dollar B2B Ecommerce to see the book. There's my email and cellphone number. Dave and his LinkedIn and Andrej and yours. Thank you, guys again. In terms of next session, our next session is going to be with Pella, which is a big building products, windows and doors company.

Brian Beck:
We're going to talk about the organizational evolution. That will be live on July 8th. We got a number of additional sessions including our digital future and Mr. Grimm is coming back to talk to us more about the really exciting things they're doing at Illumina with personalization and really customizing and meeting the needs of the customer to a whole new level. Some questions down here at the bottom. If you have questions, you can email Meg or myself. Meg's at Elastic Path.

Brian Beck:
Look forward to hearing from you. Really hope you join the rest of our sessions. I hope you found today to be engaging and interesting. We'll see you next time on the digital tour.