Talking with a senior corporate marketing executive, he mentioned changes the past few years in how procurement strategies are influencing the buying process for marketing services (i.e., consultants, advertising agencies, marketing research firms, etc.).
A continued intense focus on reducing costs and increasing shareholder activism are creating this phenomenon. Even the highest level executives are accountable for significant overall budgets and delivering business results while being micro-managed by other internal departments with procurement strategies focused on nearly every spending detail.
These factors result in slower decision times, stops and starts before key initiatives launch (if they ever do), a reluctance to work with new outside marketing partners, many more hoops to make progress, and a significant amount of time on low value activity not directly benefiting the business or customers.
His inside assessment of how marketing executives are dealing with aggressive procurement strategies was very valuable.
Comparing his assessment to when I was a VP at a Fortune 300 corporation reveals slower, more hesitant decision making among corporations. Small multi-thousand dollar expenditure decisions a manager or director (and above) used to be able to make with minimal review now require a committee to authorize. This extends even to purchasing decisions driven by Senior VPs and C-level executives.
Procurement Strategies – 5 Ways Marketing Executives Can Be More Effective
Based on experience in comparable situations with heavy procurement involvement, here are suggestions marketing executives can pursue to function more effectively and make sound business decisions in these types of environments.
1. Build a strong relationship with the head of purchasing.
Marketing executives need good allies who truly want to do the right things for the business and realize that, in most cases, “procurement” ISN’T the business. That means reaching out and proactively building strategic relationships is vital.
2. Ask for the right person to be your internal contact.
You want someone who has an inkling of how marketing is trying to grow the business. The person also needs to be willing to learn more about marketing. Ideally, see if there is a “math and music” person in purchasing you can work with directly. They will be in the best position to translate between the two worlds.
3. Involve your internal purchasing contact early and thoroughly.
To make a rigid purchasing process work better, involve your purchasing contact at the earliest stages of initiatives. The individual will learn more about why marketing is important and how you develop strategies and recommendations. Invite questions and idea sharing so your internal partner has a stake in making the outcome successful.
4. Identify flexible outside partners who can work with you in multiple ways.
Flexibility is important because you will need outside providers to expand and contract and pursue unconventional strategies to succeed amid rigid procurement strategies. There has to be something in it for your outside partners, so understand what’s important to them. Your best strategy may be to work with outside partners where you can interact directly with the most senior person on a regular basis who can make quick decisions.
5. Use numbers to keep everybody on the program.
If you’re a more creative than analytical marketing executive, boost your confidence and familiarity with the numbers-side of marketing. Having a strong handle on budgets, ROI forecasts and tracking, and quantifying the impact of trade-offs and opportunity costs serve you well. You can combat an overly-detailed internal process by showing you’re spending more in dollars on managing the process than the absolute size of the decision the process is meant to address.
Making the Best of Procurement Strategies
There’s no single fix in this list, but combined, they will help you get business done better and faster for the good of customers and of the company. – Mike Brown
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