CEO of Musical Strings Manufacturer D’Addario Talks about Digital Transformation

D’Addario is a family-owned business whose lineage goes all the way back to the 1600s in Italy. The company, which is headquartered in New York, manufactures guitar and orchestral strings, as well as other musical instrument accessories, including drumheads, reeds, mouthpieces and a list of acoustics here. The business is well-known in the music world, and counts among its clients Dave Matthews, Keith Urban and Lenny Kravitz.

The manufacturer sells its products to consumers online, through distributors, and at 4,000 retailers across the U.S. D’Addario also exports to its wholly-owned subsidiaries in the UK, Canada, Australia and China. The rest of the globe is handled through exclusive distribution partners. D’Addario said the organization has more than 7,000 SKUs and “stiff competition,” and they are still learning how to build stronger relationships with their highest value and most growable customers.

Keeping up with technology
Rapid advances in technology have changed not only the company’s products and the manufacturing process, but the way the firm operates and interacts with its customers. And one of the organization’s most important initiatives in recent years has been driving growth through digital strategy, CEO Jim D’Addario told Chief Executive.

As the head of the company’s digital transformation committee, he said one of the primary challenges is in bringing all departments together with a cohesive approach. Because most organizations have grown up with traditional siloed departments, digital transformation often can call for big shifts in organizational structure.

“We’ve been heavily involved in re-looking at our technology stack and reorganizing ourselves in a more modern way by [obtaining] targeted data that can be used for both B2C and B2B,” said D’Addario.

He added that, while the organization is aware of the importance of analytics and digital strategies, its confidence level [in its ability to use those tools effectively] is “pretty low right now.” Like many organizations, D’Addario expects the firm can attain additional growth through digital initiatives with technologies and strategies that have only recently become available.

On the manufacturing end, D’Addario advanced production by designing and building its own machines. While strings may seem uniform, various sizes, styles and materials can create hundreds of options. It’s a mechanized process, but requires humans to feed string winders, as well as load, remove and package them. D’Addario said digitally-controlled winders have computer controlled speeds and allow workers to wind multiple strings simultaneously. Precision data on production also allows them to boost efficiency and reduce waste.

“Everything is now made with digitally-controlled equipment and we use the Six Sigma principles to track quality and yields. We’ve had great success with digitization in that aspect. Now we have to take that same kind of thinking to global marketing,” said D’Addario.

Revolving around the customer
Integral to the company’s ability to understand its customer is a centralized data source. Last year, D’Addario launched the Players Circle rewards program which has enabled it to learn more about its customers. D’Addario said they already have 30,000 members and can better target marketing efforts based on customer interests and the types of instruments and music they play. “Now we can target them when we have a new product. We can send them an email with an offer or a coupon. We’re going to be doing an extensive amount of that type of digital marketing,” he said.

D’Addario is in the process of installing a new e-commerce system to better serve its B2B and B2C markets, which will be tested and launched in the second half of 2017, as well as new management and product information systems to increase functionality. D’Addario will then be able to more easily update content, immediately translate it into multiple languages and push it to distributors and online retailers almost instantly.

“The combination of our rebranding and increased digital outreach has catapulted our string brand significantly in a category that has been flat or declining slightly,” D’Addario said. “The digital project is a long-term investment and we are predicting significant results from these efforts until 2018 when our e-commerce system is functional and we tackle the job of building new websites for all our brands.”

D’Addario has hired a consultant as its acting chief digital officer. He is helping the firm define what the ‘enhanced’ digital sales, marketing and technology team will look like going forward. In the interim, the company has deployed its existing resources toward continuing to build its business intelligence software and backend.

Understanding that transformation is a journey and not a destination, D’Addario said that its digital strategy and implementation will never end. “We are going to re-imagine our company as one that is designed to function at a high level in a digital world,” he said. “Right now, we look at digital as a planet. As we make progress, digital thinking needs to become our North Star; something we follow, not something that follows us.”