Grainger's sales declined to $6.2 billion last year from $6.9 million in 2008. But this year started on a positive note as sales increased 6% in January compared with the same month in 2009.
Oler, who joined Grainger in 2002, said the company used the downturn to increase its market share, in part through acquisitions. In a wide-ranging interview with CMO Close-up, she discussed how the economy has affected Grainger's marketing strategy, including how the company leverages its relationship with Mike Rowe of the Discovery Channel's “Dirty Jobs.”
CMO Close-up: How has the economy impacted Grainger's marketing strategy?
Deb Oler: We're not a company that helps you grow your sales directly, but we do help people reduce operating expenses. Our focus has been on helping customers see, by partnering with us, that we can help them where they're spending money and also where they don't need to be spending. With what happened (in the economy) over the last 18 to 24 months, some businesses have been very focused on what their costs are and how to take those costs down. When it comes to MRO (maintenance, repair and operations), we show them how consolidation or just-in-time inventory can help. With a lot of products they should not spend any money putting inventory on their shelves until the day they need those products.
CMO: Grainger is using Mike Rowe from “Dirty Jobs” as a spokesman. How is that relationship working?
Oler: We've worked with Mike over the past few years. He's spent time both with employees and customers. We've used him in some of our traditional vehicles. He was on the front page of our catalog this past year along with a couple of customers. Mike has a passion for hard work; he has a tremendous passion for people who work hard for a living, which you can see through the work he's done on “Dirty Jobs.” He believes that there are not enough skilled laborers for the future, that we're not doing the right thing to replace these skilled workers who are nearing retirement. That fits with the work we've been doing, helping to grow the number of skilled workers in industrial and technical fields. We have our Tools for Tomorrow program with the American Association of Community Colleges (which provides scholarships for second-year technical education students).
CMO: How has the Internet changed your catalog strategy?
Oler: Our way of doing business revolved around the big red catalog coming out once a year. Our new catalog comes out (each year) in February, and it really sets the stage for our customers and what products we offer for essentially the next year. It's the largest bound book in the world. It still amazes me when someone says, “Can you look at page 3,566? There's something I want to ask you about.” Now, the Internet has given us the ability to offer more products to our customers. The Internet has also given us the ability to have detailed information on products and to constantly add products throughout the year based on the needs of our customers. We can also create custom online catalogs for customers who only want to see certain groups of products. We can offer more technical support information. If you want to get a diagram of a fan you're buying, you can find that online. The Internet has become a huge opportunity for us, and it requires search engine optimization. We have 900,000 products [worldwide]. It's important that when someone searches for one of those products that we always come up in the search results first, or second or third.
CMO: How has Grainger used online marketing?
Oler: SEO is really important; so are banner ads. E-marketing has proved to be very successful for us. We want to find out where our customers are when they are thinking about the things that we do. We can find the places where they hang out (online). We know out customers visit ESPN.com. That's not a big surprise. But when they're there, are they open to getting a banner from Grainger or do we need to be on a site like Plant Engineering? That's something we don't have the answer to yet.
CMO: Where do you plan to spend your marketing dollars in 2010?
Oler: We're looking at TV; we're trying to see how that will work for us. We'll be testing some new things with radio. We'll be taking a look at outdoor. We're looking at print. For TV, we're looking at a number of different dayparts, mostly the kind of evening daypart when our customers hang out. It's a lot of sports and things like that. For radio, the a.m. drive time has been our sweet spot. We think that will continue to be our sweet spot, along with sports talk.
CMO: What was Grainger's experience with its NASCAR sponsorship?
Oler: It was a great way to increase visibility with a key subsegment of our customer base, but we stopped in 2004; that was the last year we were affiliated with (NASCAR driver Greg Biffle). We still do root for him. That subsegment of our customer base really appreciated our sponsorship. People still remember it years later. I still get a bunch of questions about why we did it and are we going to do it again. At the same time, when we look at the dollars invested, we think we can make those dollars reach a broader and more diverse group of customers and prospects (through other means). For us, expanding the brand is a huge issue. As much as we love NASCAR—and if you're M&M candies, it's a great place to be—for us it wasn't helping to expand the company's awareness.