by Fractional CMO, Paul Morrissey
The fundamental basis of marketing procurement is still often profoundly misunderstood by companies of all sizes. It is, on many an occasion, seen as a luxury, rather than a necessity, but when you look at it properly, using it effectively means making your investment work harder and more meaningfully, especially if you adopt the attitude that a pound/dollar saved (rather than skimped) is worth more than one earned.
For example, when we were working with a large international company that had just started to invest in marketing procurement a few years ago, we found that when presenting our business plan to the board, their first reaction was a lack of engagement, or even a lack of interest. They couldn’t see the potential opportunities across the supply base for savings, innovation and managing risk.
At the time, marketing procurement as we consider it today, was a fairly new concept and we got the feeling that they hoped our team member would run along and do their procurement thing and leave them alone. After all, it seemed to be a relatively small part of the organisation – not half as interesting as the bigger and better opportunities that were surely available for saving money elsewhere.
Ask yourself these questions
So our CMO went back to the board again, and this time started by asking some simple, empirical questions about the business and who their suppliers were. For example:*
- Who are your marketing suppliers?
- How do you appear to them and are they interested?
- Will they be any good?
- How important are they (and their suppliers) to us?
- How are you tied together?
- Who do you contract with and do you have the best deal?
He also pointed out what the average daily spend was, as an organisation, when they included all their marketing, distribution and operations, and they realised it was the largest item of controllable spend.
Unsurprisingly, that got their attention, so when he revisited the questions again, they were able to identify key areas where they felt the company had opportunity. One area of the business was raised a number of times; marketing spend and the agencies they worked with.
This was exactly what he had been hoping they would understand; the company was using too many agencies across the business which meant too much duplication and a chequered history of delivery where too many projects had not been scoped properly.
He was able to get the green light from my board and the company went on to save in excess of that initial figure quoted to them, on marketing services and media through negotiating rates, aligning business into the best agency, organised delivery plans and better scope of work planning.
Do you have the best deals available?
The message here though is not that you have to spend lots of money on suppliers for it to be worth your while investing in marketing procurement services. The message is about finding the right motivator and creating a sense of urgency that must be acted upon.
In the example above it wasn’t the value of money that got the attention of the board; it was actually whether we did indeed have the best deals available, what was the true performance of suppliers and whether we were exposed by the lack of contracts and agreed terms being in place.
When it comes to marketing procurement, benefits are all relative. Even if you’re average daily spend is £1,000, asking yourself these questions can help you and your board to take ownership of your suppliers and make sure that you present a professional face to the supply market.
* From Purchasing Power – Your suppliers. Your profits by Richard Russil