Tag Archives: marketing

4 Steps For Sourcing Pros To Win The Hearts Of Marketers

There are four steps sourcing professionals can take to win the hearts and minds of their marketing colleagues…

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“Once upon a time, Martians [men] and Venusians [women] met, fell in love, and had happy relationships together because they respected and accepted their differences. Then they came to Earth and amnesia set in: they forgot they were from different planets.” “And since that day men and women have been in conflict.” 

These passages from John Gray’s best-seller “Men Are from Mars, Women Are from Venus” could be applied to procurement and marketing. It can seem at times as if they are from different planets.  And the result is a relationship that is often tenuous at best. Marketers see procurement as an overbearing watchdog that must be kept on as tight a leash as possible. Meanwhile, many sourcing professionals view marketing as the poster child for undisciplined spending. This disconnect exists because of fundamental differences between the two functions. They have different goals and objectives, different mindsets and different business cultures.  So, is there a way to bridge the gap between procurement and marketing? Improving the relationship ultimately requires the commitment of both sourcing professionals and marketers, but there are four steps sourcing professionals can take to win the hearts and minds of their marketing colleagues.       

These passages from John Gray’s best-seller “Men Are from Mars, Women Are from Venus” could be applied to procurement and marketing. It can seem at times as if they are from different planets.  And the result is a relationship that is often tenuous at best. Marketers see procurement as an overbearing watchdog that must be kept on as tight a leash as possible. Meanwhile, many sourcing professionals view marketing as the poster child for undisciplined spending. This disconnect exists because of fundamental differences between the two functions. They have different goals and objectives, different mindsets and different business cultures.  So, is there a way to bridge the gap between procurement and marketing? Improving the relationship ultimately requires the commitment of both sourcing professionals and marketers, but there are four steps sourcing professionals can take to win the hearts and minds of their marketing colleagues.       

1. Make the Goals and Objectives of Marketing Job One  

The starting point for sourcing professionals is to recognize that marketing is all about revenue growth. Marketers live and breathe revenue growth and other growth-related objectives. As a result, they tend to value effectiveness over efficiency when thinking about marketing programs and investments. This creates a potential flashpoint with sourcing professionals, who are trained to focus on cost efficiency.  So it’s critical for sourcing professionals to position their role in the right way. They need to make it clear that they understand that marketing’s goals and objectives are paramount to the company’s survival, and that the role of procurement is to support marketers’ efforts to achieve those goals and objectives.  

2. Focus on “Optimizing the Budget”  

Marketers often believe that the primary objective of procurement is to cut costs, regardless of the consequences. In contrast, the objective of conscientious marketers is not to spend less, but to spend better. Therefore, it’s important for sourcing professionals to emphasize that their purpose is to help marketers optimize the marketing budget and obtain the greatest possible value from every marketing dollar that is spent.  In fact, it’s a good idea for sourcing professionals to drop the terms “cost cutting” and “cost savings” from their vocabulary entirely when dealing with marketers.  This approach is more than a communication tactic. Most marketing expenditures should be viewed as investments, not as “garden variety” operating expenses. Therefore, they should be evaluated by the return or value they produce, as well as their costs.      

3. Recognize that Marketing is Different 

As a sourcing professional, the second key to building an effective working relationship with marketing is to recognize that the marketing spend category is different from almost every other category that you encounter. Then you need to make sure that your marketing colleagues know that you know they’re different. What separates marketing from most other spend categories is the degree to which intangible and subjective factors play an important role in purchase decisions. When marketers are selecting an agency, for example, two of the most important factors in the selection process are how well each prospective agency understands their company’s brand and the quality of each prospective agency’s creative work. Both of these factors are intangible, and they must be evaluated subjectively. This is a case where proposal cost and the results on a vendor scorecard are less important than other factors in the ultimate purchase decision. There are also, however, some types of marketing purchases that are suitable for typical procurement processes. One example is the purchase of printed marketing materials. Advances in print production technologies have transformed printing from a craft to a manufacturing process. So it’s now possible to obtain work of comparable quality from several commercial printing firms. It addition, the specifications for printed products can be defined in detail, which makes it easy to compare proposals from multiple printing firms. Under these circumstances, obtaining competitive bids from a group of pre-vetted printing firms is just good practice and helps ensure that marketing is buying printed materials at competitive prices. The important point here is that sourcing professionals must recognize that many marketing purchase decisions will not follow typical procurement norms, and they must be prepared to adjust their expectations and processes accordingly.       

4. Land and Expand  

In any relationship, it takes time to develop trust and confidence, especially if some level of skepticism exists when the relationship begins. Therefore, when sourcing professionals first begin to work with marketing, it’s important to take a “land and expand” approach.  By land and expand, I mean that sourcing professionals should first seek to work with marketing on “low risk” purchases. Marketers may perceive purchases as low risk because of the dollars involved, or because the transactions don’t have major or long-term strategic importance. Once the working relationship is established – and once trust and confidence have developed – sourcing professionals will have a better chance to become involved with larger and/or more strategic purchases.  Sourcing professionals and marketers can build a productive working relationship if they make the effort to understand each other. If they are willing to respect each other’s legitimate goals and objectives, the four steps I’ve just described will enable sourcing professionals to jump start the relationship and build a successful joint outcome. 

This article was originally published on Future of Sourcing.

Is Marketing A Procurement Blind Spot?

If your marketing expertise is a little below par, don’t despair! Marketers need your help and luckily there’s a lot procurement can do…

How much do you know about ATL, BTL and TTL? Learning marketing speak is the first step in gaining support of your colleagues over the fence and establishing your credibility.

The marketing services category has always been complex one and a bit of a blind spot for procurement. The learning curve is not only steep, it’s also a moving target. We have to invest considerable time in understanding their issues and concerns before we can provide any meaningful assistance. Category managers need to continuously build and refresh internal relationships at all levels; this requires perseverance, patience and stamina. Procurement veterans are fully aware of stakeholder expectations and the importance of having rock-solid relationships with marketing professionals before launching any sourcing projects.

Problems in sourcing marketing services

  • The decision makers may have entrenched relationships with advertising agencies and media houses, with or without formal contracts
  • There are often too many suppliers for the same or similar services and purchasing outside contracts is commonplace.
  • There may be little focus on achieving value for money or measuring effectiveness of the use of their limited budget.
  • Negotiation skills may be in short supply
  • Pricing models are less than transparent. Traditional agencies have pricing structures that would test the analytical skills of the best procurement professional.   

Some good news

On the upside, there is increased pressure on marketing departments to do more with less budget and they need procurement’s help, especially getting better value for money and formalising supply arrangements.

CMOs are becoming increasingly aware of the need to competitively source suppliers periodically, even if their main objective is to generate new and innovative ideas, rather than make cost savings.

Advertising agencies in their traditional form are disappearing; integrated marketing agencies are offering full-service solutions for all marketing requirements including strategy, brand management, advertising, media buying and the full range of digital and social media services. This is a real opportunity for procurement.

Where procurement can add value

Procurement is advised to pick its battles carefully, working from a firm factual base. The basic principles of spend analysis apply: collect and analyse all the data and know the landscape before tackling your target areas

Benchmarking

  • Develop a skills benchmark for each type of service. Establish what sets of skills are needed and determine fair rates for each
  • Apply supply market intelligence to determine the financial competitiveness of existing suppliers. Evaluate their rate cards and pricing against the market. Are they competitive?

Review existing supplier relationships

  • Identify incentives to improve relationships with incumbent marketing suppliers, and consolidate the supply base
  • Negotiate and improve unsuitable contractual terms and conditions, adjust pricing models and rates in line with benchmarks

Pricing of services

Many agencies use the tried-and-tested approach of consultants: billing is based on time-plus-expenses also erroneously called cost-plus. This is an open-ended billing system based on rate cards that apply hourly or daily rates per each skill level. Problems occur when lower skills are applied to the job while higher rates are billed. Where the scope of work is unclear or subject to change it can work but a cap should be set with only a small percentage  overrun of the budget allowed. Beware scope creep.

It is crucial to gain an understanding of other fees and mark-ups such as media commissions, margins on production costs and printing costs.   Where do rebates end up?

Measuring supplier performance

Managing supplier relationships with marketing firms needs to be focused on minimising bad behaviours and rewarding and incentivising those who deliver as per pre-defined requirements. Marketing departments may not necessarily have targets for upholding quality, reducing costs and measuring process improvements, procurement teams certainly do.

5 Top tips for getting along with marketing

  1. Understand important marketing concepts and terminology and recognize how marketing decisions support the company’s objectives.
  2. Invest time in building relationships and understanding the day-to-day challenges. Category managers should reassure marketing teams that they understand the value of strong relationships with creative agencies.
  3. Pick your battles. Identify areas that procurement can really influence
  4. Know your stuff – drill down into the data and understand the detail so that you can discuss issues intelligently
  5. Procurement should share stories of how they helped other functions in the business in ways that Marketing can relate to. Find ways to translate sourcing ideas into their language.

The ability to tactfully handle supplier/marketing/procurement relationships is the key to success. There are no secret tricks, just applying sourcing and contracting best practices will pay off provided that you prioritise service and performance standards over cost savings.

Do you want to be embraced warmly by marketing?   Know your numbers, respect their skills and ideas and work together to develop solutions that will work for both functions. Many marketing functions trundle along with little or no support from procurement.

Whose fault is that?