How You Can Help Procurement Professionals Focus On Value Not Price

rows of rubber ducks

Salespeople and procurement professionals tend to be diametrically opposed. Salespeople want to maximize profit and procurement officers want to minimize price. The result has been the commoditization of many promotional products—everything from drinkware, apparel, tech products and even rubber duckies. Because of the price pressures, our industry has responded by importing more and more cheap goods to meet the growing demand.

While these procurement pros have received what they asked for, there’s also been a host of unintended consequences: Products that contain harmful chemicals, are not ethically made nor manufactured in an environmentally friendly manner. For Fortune 1,000 companies, these are critical issues that can seriously damage their brand reputations.

At the 2018 ProcureCon Marketing conference held in San Diego, California, this is one of the topics that was eagerly discussed by both attendees and exhibitors alike.

 

Illuminating The Issues

The process of employing RFPs and RFQs seems reasonable enough. Why not systematically be able to evenly evaluate vendors? Yet, has this procedure backfired when it comes to marketing and, specifically, purchasing promotional products?

Procurement professionals value their brands, and they sincerely want to work with the marketing department to get the best value and performance from their vendors at the most reasonable price. “Yet there was a surprising takeaway from conference attendees in that they acknowledged how the RFP and RFQ have backfired in some ways when it comes to marketing,” says Tim Brown, QCA’s executive director, who attended the event. “Now there is a drive to right the way and look for more value adds and less commodity focused thinking.”

So what changed? Why are these buyers reconsidering how they do business? Clearly, brand value is paramount for these organizations, especially the Fortune 1,000. They have put considerable time and even more money into building their brand awareness and reputation. They cannot afford for an inexpensive promo item to create a negative media storm when there’s a problem or a recall. Several of these companies have already had to deal with negative fallouts from different reputational hits to their brands from various forces. Thus, they are keenly aware of the impact on their brand from negative publicity, and they are now taking steps to reduce the risk. Moreover, that means looking deeply at the procurement process.

So while some promo pros may see this as a threat in that these companies may forgo branded merchandise altogether and divert their marketing spend elsewhere, there’s actually significant opportunity for those companies who can consistently deliver safe, high-quality, socially compliant and environmentally conscientious merchandise—and have the documentation to back it up.

 

Evaluating On Value, Not Price

For such a shift to happen, there must be significant buyer education. Another opportunity!

Seeing this opening, Stran Promotional Solutions, who is a part of the QCA Distributor Advocacy Council (DAC), decided not only to exhibit at ProcureCon Marketing but was also selected to be a breakout session presenter. Its session titled “What Is Your Brand Worth?” focused on how procurement teams should evaluate branded merchandise vendors on a value model instead of a price model.

“Too often large companies see the promotional products industry as ‘trinkets and trash,’ something that they must do but can really buy from anywhere because the products are just commodities,” says Howie Turkenkopf, Stran’s director of marketing. “We presented a number of different ways promotional products distributors can be evaluated through the value that they can bring, and brand safety is a key element in the value model.”

The message of brand safety through responsible sourcing resonated extremely well with this group. “Throughout all the education sessions, including Stran’s, it becomes more and more apparent that these buyers realize how procurement has commoditized marketing mediums to the point that it is hurting their organizations,” Tim says. “Many expressed a lack of respect for promo and view it as nothing more than a commodity. Yet, there were many discussions around how to undo the ‘commodity damage’ and do a better job of gaining real value from all marketing mediums and vendors.”

Within these discussions, both Tim and Howie were able to talk to buyers about QCA, what the organization offers and how they can reap the benefits.

“These buyers want and expect more value from their vendors because of the visibility of their brands, so in many of the conversations they wanted to know how the QCA Accreditation program works and how it assures ongoing accountability,” Tim says. “The message of brand safety and accountability was well received, and the fact that it does not create additional work on their part makes it even more appealing. By simply working with promotional products distributors who source merchandise via QCA Accredited Suppliers, these buyers can add another level of assurances to the process and mitigate the risk they could incur by purchasing elsewhere.”

Currently, there are 27 Accredited Suppliers that offer merchandise in nearly every product category in the industry. “While some of our previously Accredited companies have opted to take what they have learned and try to manage themselves, this did not go over well with these buyers, as they want continuous oversight,” Tim shares. “This kind of feedback proves that buyers appreciate what QCA offers and see the value on independent, third-party verification over self-managed compliance programs.”

Moving Forward

If you’re working with procurement professionals (or want to) at larger organizations, keep in mind that they have a unique relationship with marketing. They tend to be actively engaged with their marketing teams, with some actually sitting in marketing departments while others are invited to all marketing meetings. Either way, this enables them to partner with marketing and be part of providing solutions rather than be a blocker.

While they have good intentions and want to do the right thing in choosing the most appropriate branded merchandise, many don’t know what questions to ask to make this determination. Thus, they rely on the RFPs and RFQs of the past, and it comes back to price.

Buyers should be asking a number of questions that they currently aren’t. “Inquiries such as ‘How is my promotional vendor helping me reach my business, marketing and/or sales goals?’ ‘Does the company provide anything beyond product?’ ‘What value do they bring to the relationship?’ would provide the much-needed clarity for the buyers to make procurement decisions beyond price,” Howie says.

Moreover, from a product safety and compliance standpoint, Tim says, “Buyers must start asking distributors if they are using accredited sources of supply. If not, then they need to ask where the product is coming from and who performed the social responsibility audits. By requesting the scorecards from these audits, they can see proof of product quality processes, how workers are treated, and proper product safety documentation, which is critical when assessing and mitigating risk.”

To change the way an entire segment of buyers makes purchasing decisions may seem like a daunting task. There’s clearly still a lot of work to be done to educate this buyer on the true value of promotional products. “Too many still see this category as commodity items and, as such, they prioritize other categories before promo,” Howie explains. “They also tend to treat it like they would any other commodity item as opposed to the way they evaluate partners for other facets of marketing spend. That said, QCA can be a valuable piece of the discussion with buyers to help them see there is another way of evaluating vendors.”

While the level of brand safety knowledge of the ProcureCon Marketing attendees was a bit of a mixed bag, Tim is optimistic about this group of buyers and how promotional products distributors can work with them moving forward.

“Some really understood the importance of brand safety and responsibility, and others were still struggling,” he says. “In either case, what I took away from our conversations was a sincere desire to improve their sourcing efforts and an appreciation for the fact that QCA can help them with that.

“The quality of companies that I spoke with who were unaware of QCA and now want to learn more about us was extremely encouraging,” he continues. “When it comes to branded merchandise, this group is one of the most involved and knowledgeable of any we have met through our buyer outreach efforts. These attendees are more than buyers. They are true procurement professionals and as such take their responsibility to protect the brand very seriously. Knowing about QCA and how they can incorporate QCA as a tool in their box to protect them is pivotal. This gives them reason to reconsider their current processes—and this can only benefit our industry.”