There are multiple ways companies market themselves. Each form is associated with a certain level of investment and return, within a certain timeframe. One of the most effective approaches is “quid pro quo” marketing, i.e. marketing your products or services to your suppliers/vendors. This approach can work as a business-to-business strategy, or a business-to-consumer strategy, or both.
As a business, you pay for multiple services from your chosen vendors, i.e. software, hardware, banking, accounting, stationary, mail delivery, office cleaning… Does your business offer any products or services that may be purchased by these vendors or the employees of these vendors? I worked with a company that implemented this type of Supplier Marketing Program. The program was highly successful and easily adaptable to any business.
So how do you get started? The implementation of any Marketing program has two main pieces, both of which are required to be successful, i.e. analytical review and marketing execution. In situations where your Marketing department does not have the knowledge and experience to perform the financial analysis that justifies the marketing investment, that responsibility should fall on the office of the CFO.
Prior to undertaking this strategy, a Return on Marketing Investment (ROMI) should be calculated. The formula is as follows – (Gross Profit-Marketing Investment)/Marketing Investment.
Analytical Review – Estimating Gross Profit
Identify the Opportunity – Develop a table of all company relationships. Include the supplier name; contract type; purpose; pricing; term; termination requirement. Customers should be rank ordered, i.e. highest likelihood to use the product or service you offer. Your focus should be on the best opportunity based on your relationship type; the location of the supplier and the employee count.
Quantify the Potential – Following is the standard opportunity waterfall, which changes based on factors specific to your business –
|Category||Factor||Opportunity 1||Opportunity 2||Opportunity 3|
|Total Employees (Leads)||100%||100,000||250,000||500,000|
|Employees that are Consumers of Product/Service||50%||50,000||125,000||250,000|
- Total Employees (Leads) – total number of the employees, of your suppliers, as a group.
- Employee Consumers – employees that would use the product or service you offer.
- Current Shoppers – consumers that are in the market today for your product or service.
- Capture Rate – consumers that are willing to purchase from you today.
An additional category that can be added is frequency of purchase based on your business model, i.e. tax services are needed annually, mobile phone every two years, home purchase every seven years.
Marketing Execution – Estimating Marketing Investment
The marketing process has three distinct steps –
Relationship Development – Contact the gatekeeper of the Supplier account. Present product or service benefits. Focus on value to the company and employee retention.
Endorsement – Develop marketing plan in conjunction with the gatekeeper. Determine how you will reach out to the employee base and the way you will reach them. Leave behind the appropriate marketing materials.
Account Management – Execute the marketing plan. Activities may include desk drops, attending sales meetings/events, lunch-in-learns, etc. Maintain ongoing contact with the employee base. Add value by offering personal touch services. Market directly to consumers whenever possible.
At this stage you have all of the factors needed to create a ROMI. Use this information going forward and review the actual results to plan results, to understand if this program is a success and should be continued.© Copyright 2014 Regis Quirin, All rights Reserved. Written For: CFO Tips - What you need to know, to be a CFO TODAY!