https://youtu.be/9jLLr7IPej0

Ethan Giffin, Founder of Groove Commerce and author of Closing the Digital Revenue Gap, is driven by deep curiosity, a passion for technology, and a desire to help businesses solve problems that directly impact revenue. With over two decades of experience in eCommerce, Ethan now focuses on helping manufacturers and distributors build scalable digital revenue channels that complement their sales teams and improve overall business performance.

We explore Ethan’s Revenue Framework for Manufacturers and Distributors, a practical system for building and scaling digital revenue channels in complex B2B environments. The framework guides companies through Discover, Build, Pilot, Activate, and Optimize—starting with cross-functional alignment and strategy, followed by building the right system, testing it with key customers, scaling adoption across the customer base, and continuously improving performance. Ethan explains why B2B eCommerce is far more complex than a typical website project, how “quiet friction” can silently drive customers away, and why successful digital transformation requires long-term commitment, internal buy-in, and the right systems in place.

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5 Steps to Closing the B2B Revenue Gap with Ethan Giffin

Good day, dear listener. Steve Preda here with the Management Blueprint Podcast, and my guest today is Ethan Giffin, the Founder of the Groove Commerce, eCommerce Agency, trusted advisors to manufacturers and distributors, and author of Closing the Digital Revenue Gap. Ethan, welcome to the show.

Very excited to be here, Steve. Very excited to be here. Thank you.

Well, we’ve known each other for quite a few years, probably, I don’t know, five or six years.

2018.

So 2018. So that’s eight. Eight years.

Eight years. Yeah.

Oh my God. Okay.

Eight years.

So we’ve known each other a long time. I think you’ve been on one of the early versions of this podcast as well. But things have changed a lot since then. That was five years ago. And your business has transformed, and you have niched your business dramatically since. So I thought that it would be great to have a conversation and talk a little bit about where you come from, what you’re trying to achieve, what matters to you, and also the system that you developed, which I thought was very impactful for manufacturers. So before we dive into that, tell me about your personal ‘Why’ and how you manifesting it in your business?

How many hours do you have, Steve? How many hours do you have? I think my personal “why” is that I have a deep curiosity about life in general. I’ve also always enjoyed technology and driving technology, and I’ve always enjoyed sales. A very odd to put all of that together, but I think that’s really has created my personal “why.”

I’m just an amazingly curious person and want to continue to learn. And actually love helping people solve their problems that help make them money. It's pretty simple to me in that regard.
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If you asked people in my EO chapter, they would say, “Oh, you always ask great questions.” So I just love being curious and helping people.

Yeah, definitely. The area you’re working in is very fast-moving, with lots of changes—especially with AI happening and so much innovation in technology. A lot to be curious about. I was personally very curious about the system that you developed. You call it the eCommerce Revenue Program Framework. And we are framework junkies here on the Management Blueprint, and I’d love to learn about what that does for manufacturers, distributors. What are the main pillars, and how does that system work? How do you generate revenue for them?

That’s a great question. It’s a great question. So I’ve been building websites for well over 30 years and building eCommerce sites for, I think 22 years at this point. 2004 was my first really in-depth professional eCommerce website. Over that time, I’ve worked with a ton of different types of organizations, and a lot of common themes started to present themselves. As Groove has continued to evolve, we began to work a lot more with manufacturers and distributors who wanted to create online buyer portals so their customers could come in and buy from them.

And they call it B2B eCommerce, and it’s very different from B2C eCommerce. Generally, you have to be approved to buy. There’s just a lot of things that goes into kind of replacing working with a salesperson, so to speak, in many of these industries. And I just found a lot of common threads. I also found a group of folks who may not be as digitally mature in the eCommerce space as other folks. And I needed to lay out a system that both the CEO, the CFO, the CTO, and the CMO could all understand and work within, and have some level of accountability within that.

Yeah. Just one thing I’d like to mention here. I had a Vistage member when I started my Vistage groups who was running a distributorship, and they really struggled this idea that they wanted to sell online, but they were afraid of upsetting their distributors. They didn’t want to be seen as competing with them. So it was a very complex and politically difficult situation. You’re probably going to talk about that as well.

Well, it’s a little bit different, right? So the concept of what we’re doing is actually helping someone that has, maybe they’re a manufacturer and they sell to distributors. They’re not selling to the public. They’re selling to an approved group of their customers that are able to come in and buy from them anytime they want 24/7 without human intervention. And so that’s the concept of what we create. So we actually help them create a real digital revenue channel within their organization. And people are like, well, wait, does that mean you don’t need salespeople? No. Most of these organizations have long running sales teams, and actually the sales team can leverage the platforms to help their customers and accounts buy more, so that they can spend more time actually selling than hand-typing in orders and being an order taker.

And so it allows their customers to come in and reorder whenever they want and buy at more frequent intervals and see their pricing, have their payment terms, et cetera. Very different from, say, going to an online T-shirt shop, putting in your credit card, and they ship it to you. Sometimes customers are able to buy on credit, and you’re tracking how much credit they’ve utilized within the ERP system. A very different and much more complex transaction. We think that manufacturers and distributors should have at least 10% of their overall revenue flowing through a digital platform like that. Our average customer is anywhere between $100 million and $400 million in revenue. So that’s $10 to $50 million flowing through that channel. And so some industries with more digitally mature customers can go much higher than 10%. And it’s just a much cheaper way to operate.

So let’s say I’m a manufacturer and I manufacture widgets, and these widgets are being distributed through vendors who install these widgets into machines. Retail customers don’t really understand our widgets, so we’re not selling to retail. We’re fully salesperson-based, and we’d like to go online. We’d like to get 10% or 15% of our sales online. What does it take for us to transform our business to partially online?

Yeah. That’s a great question, Steve. That’s a great question. I’m going to walk you through it very simply. I will say most CEOs or VPs of marketing think about a project like this as just a website. That’s the wrong way to think about it. This needs to be a true revenue channel within the organization—a true top-down initiative that has accountability from all sides—because it’s much bigger than that. If you’re talking about $10, $20, $30, $50, or even $100 million going through a system like this, it’s not just about building a website. And that’s a really common mistake that the prospects and customers that we’ve gotten have often done.

Their IT might say, “Oh, we have a WordPress website. Let’s use WooCommerce for free.” Or, “I saw Shopify on Jim Cramer. Let’s try Shopify.” Most of those direct-to-consumer systems don’t have the right kind of features and functionality, nor is the process to pick the software first. So what we actually tell our customers and prospects is, “Hey, we’ve got to take a step back.” We have a five-step lifecycle that takes about three years for a company to go from zero to kind of fully digitally transformed in terms of their eCommerce. We start with what we call the Discover phase of the lifecycle.

And that is where we work, consult, understand, and build alignment between the sales team, the finance team, customer service, operations team, the warehouse, and the IT team to build this kind of alignment where all the groups of the…
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In that process, we’re helping them to pick a software to utilize, to run all of this, and that will connect to their ERP system accordingly. The next phase in the process is the Build phase, and that is more traditional—like any website—where we architect, design, and build the full system. For a modern manufacturer, that generally takes about six to eight months to go through that process. Some are a little faster, some are a little longer, depending on the organization.

But is this because there are thousands of SKUs, or why does it take so long?

Because there’s complex integrations with their accounting and ERP systems. The catalog is often not ready for prime time. Maybe it’s in the ERP, but it contains a lot of internal slang and doesn’t have photos for everything. They’re often missing data or specifications. For instance, sometimes Amazon has better product descriptions and more measurements than the manufacturer’s own website.

So these are the kind of things that we need to go to. The Discover and Build phases together can take anywhere between eight and 12 months—or longer—depending upon the size of the organization. The next step, the next lifecycle here is called the Pilot phase, and this is something people often forget about. What they don’t do is they don’t pilot these types of systems with a handful of their top customers.

Customers that would never fire them, or that are willing to go on a little bit of an R&D journey with them. They don’t pilot these systems and have them start to utilize it in a white-glove way, and they don’t often have the same kind of white-glove service with their internal sales teams to help them get going.

So this Pilot phase is very important to start seeing early adoption—both internally and with the customer.
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Sorry to interrupt, but I’m curious—how do you get those customers to actually invest time in piloting a system like that when they already have a salesperson who knows them and their needs?

Well, generally, up to this point, we’ve internally surveyed and built a system that can handle these customers. Most of your top customers want you to succeed. Quite honestly, they may already be experiencing friction in the sales process currently is holding them back and they may be like, “Oh, I can just go in and press one button to reorder my weekly order—thank God!” Most of the time, they volunteer to pilot the system. In fact, these are the ones that you want to pilot the system, the ones that are willing to do that, and you need to take them through that process with a white-glove level of service, even holding weekly office hours if you need to.

But what you want to see in that pilot is see those customers make not only their first order, but maybe their second, third, or fourth order, depending upon what their typical intervals are. And so we want to get that up and running and get some early kind of wins there and get both the internal team and the customers feeling like, Hey, this is really working for us. And then the next phase after that, we call it the Activate phase. Again, these websites are very different than a direct-to-consumer site, where they usually have an improved list of customers and they’re hidden behind a password. The next phase is the activate phase, and that’s where you want to get all of your customers in the system placing their first and second orders and getting it going. And you want to roll that out.

Generally, it might take you a good 10 to 12 months to get everybody rocking and rolling with this part of the system. But once they do, and once they start making their first, second, third order, you’ve built muscle memory over time. So this activation phase is really important. I was recently talking to the VP of marketing at a $400 million distributorship. He was telling me that they had invested seven figures in building this system, and they spent 18 months connecting it into all their financial systems. Again, $400 million. And they had only done about $200,000 in their first nine months having the system live. And what they didn’t do was they didn’t figure out how to activate their customer base. Because I asked them, how many customers do you have? Well, we’ve got about 180,000 customers.

Well, how many are in the system? 15,000. And next thing, and I’m like, well, you haven’t done yourselves any favor here. So you need a very solid plan to activate. That takes about the first two years, right?

The first year is kind of architecting and building the system. Year two is really piloting and activating the system, but by year three, you've got more mature scorecard.
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You are starting to find ways to optimize, to reduce friction in the buying process. Maybe you’re introducing more products to your catalog. You’re introducing your customers to more product offerings that you may have, or maybe you’re finding even new industries that you can easily plug into the system and generate more revenue. And we call that the Optimize phase. And that continues to just spin in a flywheel once that’s up and running.

That’s fascinating. So I wonder—how do you get the sales team to buy in? Is there an advantage for them, or they feel like sometimes that the digital channel is going to compete with them?

Yeah, well, that buy-in can come from a lot of feelings. I’ve had to stand up in front of national sales meeting audiences and talk about these kind of things. And so I would say, out of the gate, salespeople are nervous that you’re trying to take their commission away. When their customers buy through these systems, they need to get the commission off their accounts as they normally would. Maybe you raise expectations, right? In terms of what you’re looking for them to sell, or their annual quota. Perhaps you want them to sell a little more now that they have this electronic tool—but they need to share in the revenue that comes through these systems. The second part is that, according to McKinsey Consulting, 70% of all digital transformation projects in the mid-market fail to meet their original stated goal. So what happens is that people make wrong decisions, or maybe they pick software before they put alignment together.

And so the salespeople, maybe they’ve had a poor experience or two with a CRM rollout, or an ERP rollout, or a previous eCommerce rollout that wasn’t thoughtfully planned. And so you’ve got to figure out how to build that confidence and trust back with folks. And then the last piece is you’ve got to give them a voice in the process. A traditional website project may not include the head of sales for the organization, but for our discoveries, we like them to attend at least the first couple days of that.

So this is a huge project—two or three years working with a client. How important it is that you keep an eye on the pulse of the client, keep listening, and make sure buy-in continues to be strong?

Yeah, I think it’s very important. One of the best parts about all of this is everything is trackable. We can track which customers have logged in, we can track how frequently they log in. We can track how frequently they buy, and then we can leverage technology to go out and kind of tickle them, remind them—“Hey, it’s been a while since you ordered. Why don’t you come back and check this out?” It is an ongoing relationship, but that relationship changes and evolves over the course of working together. I think once you get over the kind of discover-and-build phases and into the pilot, the relationship begins to evolve and change. Clients get really excited about milestones, like the first $100,000 in orders that come through the system or the first six-figure order that comes through unattended. There’s a lot of things that you want to think about and celebrate along the way when you’re working together.

Do you find that clients are willing to think long-term and commit to three-year plans where they’re willing to invest time and money into building this channel out over a period of time, as opposed to trying to get a silver-bullet solution that will happen overnight?

I think it depends on where they are. From our client’s point of view, if they’ve bought into working with us, they believe and understand that this isn’t just a one-project kind of operation to build a 10–15% revenue channel within the organization. There’s no long-term contracts on our side to do it. It’s kind of broken up into kind of multiple phases and pieces. We actually do that so we can make sure that they’re ready to move on to the next step in that. There is some heavy lifting that comes from the first year of actually building a system and getting all the integration parts working through that —which is challenging. I get questions often about this. There’s usually a buying committee that makes decisions on these types of project and expenses, and the CFO is always a part of that conversation. And I think the transparency that we do offer a CFO to say, listen, this is what you should expect over a three-year period.

If both sides do what they’ve agreed to do here, this is what it can get to. And I believe that maybe it might cost them $50 or $60 an order for a human in their call center to actually get the order over the phone and type it in. And kind of follow along with that from an ongoing kind of basis. And it might cost $3, $4, $5 for an order of that scale to come out of an eCommerce system.

So there's definitely optimization that happens all the way around. Salespeople are able to do more, and customer service is able to focus on actually helping people, not entering orders.
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Yeah, I was wondering—let’s say my widget manufacturer, we increase, we get 10% into the digital channel in a period of three years, maybe 10-15%. How much of that is accretive to the actual sales in your experience? And how much of it is kind of cannibalizing some of the actual sales?

I think it’s a little bit of both. Customers will generally buy more from you if it’s easier to buy from you. And I think there’s a real optimization in terms of expenses and costs that happens when you bring it all on.

So there’s a little bit of top-line growth and a lot of profitability improvement, margin improvement.

Margin improvement.

Yeah. That’s very interesting. So, Ethan, you’re coming out with the book Closing the Digital Revenue Gap. What prompted you to write this book, and what is it about?

I felt like I’ve got over 20 years of stories from being on the road. And I felt like it would be a lot of the same challenges would happen over and over again on these types of projects. So I sat down and wanted to really write about these stories, the challenges, and how we made it through them, and give the reader some things to think about as they’re going through challenges like that. And just understand that they’re not alone, that other people, that other organizations have had similar challenges over the year. So I wanted to get that out on paper and have it in a holdable form. Sorry, I don’t have them. I’m still waiting for the hardcovers to come in, so I don’t have one to show you today. But the reasoning is I felt like I wanted to tell my story and the stories of the journey I’ve been on of building these types of sites and systems over the years.

Yeah. I’m sure you have a lot of war stories. Can you share one or two with us—something that was really difficult but then created a breakthrough, or a situation where someone was very skeptical and then came around?

Yeah.

I think one of the big stories I like to talk about is quiet friction. Every business has quiet friction in it that may affect their customers, and they don't even know it.
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So, here where I’m from in Baltimore, they recently passed a law where it costs five cents for every grocery bag that you use at the grocery store, right? There’s one grocery store in the area that carries a handful of my favorite things to make pizza. They carry these special pepperonis, special cheese, like all the things. And I love making pizza. And I’m always so happy when I’m going to this store to get those things because I know I’m going to make pizza, and I love it. Well, with this law coming and happening, most grocery stores that you go to that have a self-checkout will have an option.

How many bags did you use? 0, 1, 2, 3, 4, or 5. And the bags are right there. It’s on the honor system. Well, this grocery store chain at their self-checkout locks the grocery bags up, and you actually have to go get the self-checkout assistant to come over, swipe his badge, type in a whole bunch of like characters on the touchscreen, and then get a bag out of a locked cabinet and give it to you. And it’s created so much friction with me that I actually hate going to that grocery store now. And it’s kind of ruined the experience of me buying three of my favorite things to do my favorite thing. If I ask most manufacturers to say, think about your business. Is it actually hard to buy from you?

Sit and ponder that a bit. What kind of quiet friction do you have within your organization? And most of them, you can see the steam come out of their ears once they realize what’s creating those types of challenges for them. What kind of quiet friction do you have in your company that might not make people like leave immediately, but if somebody else gives them the opportunity to buy what you sell from them much easier without making it a pain in the ass, they might like, kind of gradually move, float away from you. And I think that’s where you start to just like miss compatibility with all of it.

Yeah, I love that you approach it from this angle—it’s the friction. If you remove the friction, the flow of business accelerates. It’s like widening a gorge: a lot more flow can go through, and it’s so easy to miss the friction because you don’t see it. It’s something that is holding you back. And if you remove it, the effect is probably cumulative. If you have all these little things that don’t count on their own and they are immaterial on their own, but cumulatively they are absolutely disastrous. Love it. So we live in the AI age, and I can’t avoid asking a question on AI as well: how are your clients, customers taking advantage of AI?

It’s all over the place, right? I would say a lot of our customers are using AI to help with an email here or there. Maybe they have some Industry 4.0-type IoT devices connected in their factory that leverage, or are able to leverage AI for creating dashboards. But it really is generally through the use of software that we’re seeing that kind of happen overall. But one of the areas that we found AI to be fantastically helpful these days is helping to build a public-facing catalog—being able to leverage tools within AI to stock in data from various sources and get that into a structured format that we can leverage and import into a system. So we’re doing those types of projects a lot with folks. They’re still looking for coaching and help in those areas. So AI is still an emerging area, but we’re trying to, like, every day figure out how to leverage AI more and more with what we’re doing.

Is it possible to use AI in optimizing these web properties, these eCommerce systems?

I don’t think so yet. I mean, I think AI can make recommendations about things, but I wouldn’t trust AI to just auto-optimize what I was doing. I would also say that most of the folks, unless you’re really getting 50,000, 60,000, a hundred thousand visits on a single webpage—a million visits on a webpage—you’re not getting enough to statistically create a winner in that. So it’s all about using those types of things responsibly. But we are seeing AI really come to light in terms of the traditional eCommerce search, right? eCommerce search has always been keyword-driven, but we have certain platforms and tools that we plug into sites now that are able to search PDFs and even CAD files and all types of things in terms of being able to answer questions.

That’s very interesting. So Ethan, you’ve been running a business for over two decades now, at least. That’s what I’m aware of. We mentioned 2004. I think Groove was started in 2004.

Seven, officially seven. But the precursor days before it was actually Groove.

Okay. Alright. So 2007. Still, it’s coming up on 20 years. So what is, in your experience, the most important question any entrepreneur should be asking themselves?

I would ask themselves if they have niched down enough within their industry. I would say that’s probably one of my biggest mistakes: not niching down fast enough and really focusing on a single area with that. So that would be the thing that I would want to say if I was an entrepreneur, and I have told people that, and to write a book.

Is this partially why you wrote the book?

It is.

Yeah.

Yep. Yeah, I’ve been doing more and more keynote speaking, and I knew I needed a book if I wanted to elevate myself to the next level.

So before we wrap up, I can’t hold myself back from bringing this up, but you’re also an accomplished DJ. You started your career DJing, and you still do it sometimes for friends.

Yes.

What did DJing teach you as an eCommerce entrepreneur? How do you see life differently, or the world, or business owners differently because of DJing?

Well, that’s a great question, and it’s affected me. I started DJing when I was 15 years old. I’m 51 now. And I do focus now on working with some nonprofits locally here in Baltimore, and I DJ their galas, and we put on a big show. And I would say that, interestingly, DJing has moved into digital. When I started as a DJ, I had 12-inch records that we would put on a turntable, and you’d have to have a dolly and crates of records that you would have to haul around. And now I can have 50,000 songs on my laptop in front of me, and I have these devices that spin like turntables that I can DJ on. And that—quite frankly—that transition for me to go from analog to digital was quite difficult. And I really did my own little mini digital transformation to figure out how to do that, and I was against it for a long time.

It really helped me understand more what our customers are going through as they’re thinking about that and having much more empathy. So it is that transition. I used to work at a nightclub, and we had to bring somebody in from Italy to program the lighting equipment that we had at the time in the 1990s. And now I have a light show that is driven by the waveform in the music, and it manages the lights through AI. I had it set up within an hour of getting the software. And so it’s just been tremendous to understand and see like how that has gone from analog to digital. And it’s been very helpful on the journey to teach our clients how to go from analog to digital as well.

I love it. I mean, that’s such a huge challenge with all this technological evolution going on—to keep up with that, stay fresh, and stay young with the technology, and you’re doing that. So that’s awesome. So if we have in the audience some manufacturers, distributors, or someone who is very passionate about eCommerce and wants to talk to you, learn from you—where can they go, and where can they connect? Where can they get your book? How does it work?

Absolutely. So if this resonated—if this message resonated with any of your listeners—we’re waiting for our first initial batch of books to come in, and I’ve held some back to give away. I would love to offer a complimentary book to any of the listeners of this podcast that it resonated with, as well as offer a free consultation as part of that. And if they go to www.b2becombook.com, they can request a free copy, and we’ll send it out as soon as we get them in.

Sounds good. So B2B is B2B, right?

B2B. Yep.

So definitely check this out. And if you enjoyed the show, make sure you subscribe and keep coming back, because every week I get an exciting entrepreneur on the show. And Ethan, thanks for coming and sharing your goodies and wisdom.

Thank you so much for having me. I always appreciate seeing you.

That was a great pleasure. Thank you.

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325: 5 Steps to Closing the B2B Revenue Gap with Ethan Giffin

Management Blueprint | Steve Preda

325: 5 Steps to Closing the B2B Revenue Gap with Ethan Giffin