Grainger's buy-in plan

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The idea of establishing commerce on the Internet makes sense on paper, but Web marketers are finding it can be a hard sell in reality.

W.W. Grainger knows this all too well. The $4.1 billion industrial supply company based in Skokie, Ill., thinks trimming costs by automating ordering and payment on is a no-brainer.

Yet of Grainger's 1.4 million active business accounts, fewer than 1% have registered for

a Web account. The company will sell less than $40 million on the Web in fiscal 1998, accounting for less than 1% of its total revenue.

The problem, say Grainger executives, is corporate buy-in, an issue that's affecting a lot of companies trying to make it on the Internet.

For Grainger, the problem stems from a lack of computer savvy among its core customer base of plant managers and janitors, many of whom use hand-me-down computers ill-equipped for Web browsing, if they have access to a computer at all.

To add to the problem, Grainger's 1,500-strong sales force is unsure whether a self-service storefront is a great idea.

To tackle those issues, Grainger has increased Internet advocacy as a core part of its marketing effort.

True, the company isn't putting computers or software in customers' hands, but it is doing everything it can to convince customers they ought to go get wired themselves.

To accomplish this, Grainger is turning to direct mail, an escalated effort to build e-mail marketing databases, galvanized efforts to win sales force support and public relations.

"From a marketing standpoint, this is a new environment," says Donald Bielinski, Grainger group president. "It is not like you can take the last three years of marketing best practices and apply them. We're very much in the piloting mode. But we do know that key to our business-to-business marketplace will be helping drive adoption."

Grainger is being watched closely. For example, one food distributor is wrestling with justifying continued Web build-out after getting some of its first Web marketing data, which shows just 5% of its customer base has e-mail addresses.

And Ingram Micro, the $16.6 billion computer distributor, while blessed with a Web-savvy customer base, still assigns dedicated personnel to promote its site to users.

"We don't have the issue of customer buy-in figured out, and what's funny is that nobody does," said Dean Chamberlain, VP-interactive projects for business Web site producer The Phelps Group.

"What everyone knows intuitively is that buying stuff online makes a lot of sense," Mr. Chamberlain says. "If you knew exactly what you were going to save, you could invest in marketing propositions to support it."

Grainger has yet to prove that online sales will deliver results, but the company expects year-end research to indicate that its latest efforts have been successful, says Deborah Ramstorf, Grainger promotions manager.

Favorable findings might lead to dedicated dollars for Web site marketing support. Today, Grainger's Web site marketing dollars come from the promotions budget.

Promoting online strategy

Meanwhile, Grainger has gone to low-risk propositions -- traditional direct marketing, Internet direct marketing, public relations and presentations -- to promote its online strategy.

This is a marked difference from its earlier efforts. A banner advertising campaign started in May 1997 on such sites as Yahoo!, CNN and the Weather Channel brought traffic but not buyers to the site. The biggest bugaboos were faulty methods for tracking dynamically generated pages.

"Advertising online might prove good for a new brand, but with our company, the traffic wasn't all that necessary," said Ms. Ramstorf. "We've matured and gone on to more of a mix between traditional and new media to drive results."

Grainger's strategy to emphasize direct mail and targeted e-mail makes sense for a user base that might be slow to adopt the Internet as a sales tool, experts said.

Yet there's also a risk. It's just as easy to spend big dollars on a direct marketing piece that miserably fails in bringing buyers to a site as it is to waste money on a banal Web banner.

"The approach is something I might recommend for Grainger, but this is not a universal situation," said Bob Bly, author and marketing consultant. "Banner advertisements, Internet direct mail or presence on an Internet mall are all still in play as business marketing vehicles, and right now no one knows which one will be dominant."

When it comes to the internal side of its problem, Grainger has soft pedaled its Internet push to its sales force, identified as a key factor in winning user acceptance.

Managers of the Internet site still regularly attend regional sales meetings, where the No. 1 concern seems to be whether the Web site will eventually hurt compensation.

"If I took our account managers and asked how many honestly feel comfortable getting on the Internet, let alone what it means to our business, I don't think there would be a 100% response rate," said Mr. Bielinski.

Still, the company is getting a lot of benefit from the newsworthy nature of the Internet. Strategically, the company started a managed campaign with public relations company Bozell Kamstra to get the message out.

"Grainger is convinced the digital channel is a superior way for business to interact," said Mr. Bielinski.

"The catch-22 is what the adoption curve will look like. I can tell you the longest it is going to take is the amount of time it will take my 12-year-old to enter the work force. There's no way he'll enter the work force without using these types of systems."

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