We all love a bargain and there’s nothing better than feeling like you’ve got fantastic value for money. But what happens if you discover the product you’ve bought isn’t actually that good, and you start to wish you’d spent just that bit extra?
This is one of the challenges currently being faced by procurement professionals. It’s been a long time coming, but procurement’s involvement in marketing is increasing. Previously, procurement professionals have approached marketing with the aim of cutting costs and reducing spending, whatever the outcome. Understandably, they want to get the best bang for the business' buck. By keeping a careful eye on budget and minimising costs at every turn, it can feel like procurement is successfully buying more for less. However, it’s becoming clear that this is no longer the case.
“Because talented people are the core of marketing costs, and talent costs what it costs, the low prices actually translate into buyers buying less for less.” - Bill Duggan, Group EVP, ANA
It seems that cutting agency costs may actually reduce the value of the services being paid for. Marketing procurement need to think about outgoings in terms of their potential value – that is, as an investment, rather than a cost.
The importance of ROI
“Marketing money is limited. There is a broad, universal need for CMO’s to become increasingly efficient with the limited resources that are available, which translates into an unending pressure to do more with less. The real problem is that we have to increase marketing ROI.” - Gerry Preece and Russel Wohlwerth
ROI is the key to successful marketing procurement. If the ROI is quantified, it helps to justify marketing spend for the future. Companies can no longer afford to waste time and money on activities that aren’t working.
With this in mind, what are the key goals for marketing procurement in 2015?
1. Supplier consolidation
This will in turn reduce service costs. Suppliers need to deliver not just one service, but value added services
2. Researching suppliers thoroughly
Cost, speed to market, geography, capabilities and ROI potential and proof should all be key pre-requisites for suppliers
3. Increasing emphasis on managing social, ethical and environmental issues
Suppliers are expected to display excellent in-house sustainability initiatives
4. Importance of savings
By developing relationships and building trust with suppliers, the likelihood of saving money is increased
5. Supplier innovation
R&D departments and new product development will make marketing suppliers more attractive to procurement professionals. Added value, diversity in offering and cutting-edge developments are key.
6. Suppliers are an extension of a corporate image
The relationship is about more than just ticking boxes; it’s about representing the business in the right way.
The foundation of fantastic marketing and the goal of every successful Procurement Manager is ROI. Providing this figure is the key to success. If you would like to read more about measuring marketing success with ROI, download our free eBook “B2B Marketing ROI - Measuring Success.”