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Are Suppliers happy to give savings on existing deals?

 

Author: Mark West

Let’s face the music.  Business is a game of give and take.  At the end, whether it is for the shareholders, or for ourselves as a sole proprietor, the measure of the business is the profit margin.  Only two ways to really increase the profit:  Sell more and/or buy better.   So we prod our sales people to create sales, and beg our procurement people to find savings.  Actually here in lies the problem.  To get more sales, you need more leads.  More leads, generally means more marketing.  More marketing, means high costs.  Now if all this worked like clockwork, that could be fine, but it doesn’t.  We all know that only a small percentage of the prospecting we do actually turns into leads.  This is not the fault of the Marketing industry, it is just the nature of the beast.  As it was once said…you need to knock on a lot of doors to make one sale.

Let’s leave the sales side for a moment.  After all, finding new revenue can be elusive and a result of many other factors than just how many sales people you have on the job.  But, the other side of the equation…finding savings is relatively straightforward.  I said straightforward, not easy.  Anyone that needs to work out a personal budget to fit their monthly income knows it’s not easy, but straightforward.   

Up until now, you could either just delete the whole line item…no more company cars for example, or you could have your procurement people find better prices on what you need.  The later of these is a tug-o-war between you and your Suppliers.  You need savings, but your Suppliers don’t want to give up their own profit margins.  This is the part that is not easy.  Finding ways to get your Suppliers to give you what they value most.  What if there was a much easier way to get the savings, and allow your Suppliers to keep their profit?  Would you give it a try?  

There is a significant counter intuitive way of getting savings from your existing Suppliers, on your existing contracts that is opened up by a new online platform called INNOVO.   INNOVO facilitates business-to-business (B2B) commerce.  At its core, INNOVO turns the instigation roles in traditional commerce around with B2B Buyers publishing their requirements on INNOVO and the Suppliers responding.  By doing so, Buyers are closing the “information gap”  - that Suppliers do not know “when” a Buyer is ready to buy.

Through INNOVO, a new cash value comes from the Supplier though the Buyers’ willingness to close the “information gap”.  Suppliers are able to make cash based savings from their activities as a direct result of Buyers informing them of when they are ready to buy.  From this collaborative behaviour, on the part of the Buyer, the Supplier can share some of the savings that it makes with the Buyer.  The sources cash value for the Supplier include:

  1. Reduced spend on Sales and Marketing (S&M) for this particular sale – as it has come about as a result of a Buyer request on INNOVO, thus no S&M cost has been incurred. 
  2. Reduced wasted capacity – an additional sale has been made, that would otherwise not have been made, as the limit of sale price point reduction and S&M investment has led to this capacity sitting idle.
  3. Reduced procurement spend on the Supplier’s own inputs – all B2B Suppliers are Buyers in their own right and can benefit from INNOVO savings on their purchases. 

So, in the end, you as the Buyer save on your costs, and the Supplier is happily sharing, what amounts to new found money with you for bringing them more business.  

I know what you are saying…sounds great, but I don’t have the time or the manpower to make this happen in my company.  Not really an issue.  If you do the math, with the potential of what you can save on just one major ticket expenditure, you could afford to hire a Communications company and they could undertake a Buyer Communications programme for you, which would entail them reaching out to your existing Suppliers with the offer to make significant savings, as noted above, and to share some of these with you, their existing Buyer.

Could this be a truly new opportunity for your business in to increase your profits from leveraging the age-old marketing industry?  I’ll let you make your own decision.  But it does give you a completely new way to look at leveraging Communications.  

To access INNOVO for free please click here.

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