promotional spend - amazon web services...an effective promotional spend management platform enables...
TRANSCRIPT
By Jason Black
President and CEO, Boundless Network
How to connect buyers and save up to 40% on branded merchandise you are already purchasing.
BRINGING YOURPROMOTIONAL SPEND UNDER MANAGEMENT
Determine how much is being spent. Estimate the amount of unmanaged spend and how much could be saved by applying spend management practices.
Connect buyers. Give individual buyers and departments visibility into what branded merchandise is being purchased company-wide and enable group purchasing around similar product needs to realize volume discounts.
PROMOTIONAL SPEND MANAGEMENT
What’s Inside
Executive Summary
The Imperative: Bring Promotional Spend Under Management
How Branded Merchandise Drives Revenues
The Hidden Pitfalls of Promotional Procurement
Why Buying Branded Merchandise is Decentralized Within Companies
Why Spending on Branded Merchandise is Underestimated
The Company Store Approach: Broken and Outdated
What Procurement Can Do Now
Spend Management Technology: Rapid Impact, No Hassle
The Power of GroupBuy Illustrated
The Boundless Network Spend Management Solution
Key Benefits by Department
Do You Need the Support of a Spend Management Platform?
Getting Started is Easy: Three Simple Steps
Case Studies
Loews Hotels
Super Suppers
About Boundless Network
1
Executive Summary
The IMPeRATIVe: BRING PROMOTIONAL SPeND UNDeR MANAGeMeNT
Do you know how much your company spends on branded merchandise? You’re not alone if you are unable to answer this question easily. Widely used branded merchandise includes logoed apparel, writing instruments, awards, trade show give-aways and more. Every division within a company, ranging from the executive’s office to marketing and HR, has representatives that are actively purchasing branded merchandise to support their customer and employee initiatives. The total spending for branded merchandise is often underestimated. It is reported that companies spend between 1-3% of gross sales on logoed products.
The problem is that your promotional spend is not under management.
It is unlikely that there is a “Branded Merchandise Buyer” job title within your organization. Rather, purchasing branded merchandise is a task of individuals supporting strategic programs in every department. As a result there can be hundreds or thousands of “buyers” across divisions and groups making individual product purchases for their respective departments and programs. As a result of this decentralization, organizations lack visibility and control and end up overpaying on branded merchandise by as much as 40%.
This whitepaper addresses the key reasons that organizations find themselves overpaying on branded merchandise and unable to control their brand. More importantly, it examines the value of a new spend management platform that connects your buyers and enables you to begin proactively managing your promotional spend and protecting your brand.
will be spenton branded
merchandise in
2008.
$18billion
– Aberdeen Group
58%of enterprises have
increasing spendunder management
as a top priority.– Aberdeen Group
Stop overpaying • on branded merchandise.
Accomplish the unique needs of each department and •protect the brand.
Connect buyers to realize • volume discounts.
READ ON TO LEARN hOw TO:
2
hOW BRANDeD MeRChANDISe DRIVeS ReVeNUe
There are several reasons that companies use branded merchandise to achieve business goals. Branded merchandise, as part of a planned campaign or program, is highly effective when the assets are procured cost-effectively and are aligned appropriately with the demographics of the recipient and the objectives of the program. In order to have a positive financial impact, branded merchandise must be used with an understanding of overall marketing objectives. Building brand loyalty, customer satisfaction, customer acquisition and employee retention top the list. Many procurement groups pressure their vendors to identify low cost goods to the detriment of their branding or marketing objectives.
A key metric that applies to both procurement and marketing is Return on Branding (ROB). ROB is the customer or employee loyalty value minus the cost of branding efforts. The use of branded merchandise needs to be correctly defined for the objective, demographic and the estimated value to achieve a positive Return on Branding.
Prior to the use of a spend management platform, the alignment of procurement and marketing was a challenge. An effective promotional spend management platform enables marketing to purchase the unique products that align with its program goals while satisfying procurement’s imperative to obtain the best possible price.
Return on Branding (ROB) defined:
Customer or EmployeeLoyalty Value
– Cost of Branding
=Return on Branding
The use of promotional products needs to be correctly defined for the objective, demographic and the estimated value to have a positive Return on Branding.
Purchasing outside of a spend management platform:
Decreases marketing’s control of the brand •
Decreases procurement’s visibility and cost controls •
Decreases Return on Branding (ROB) •
Increases chance of poor product quality and selection •
Branded merchandise increases:
Brand loyalty •
Customer satisfaction •
Customer acquisition •
Employee retention •
3
The Hidden Pitfalls of Promotional Procurement
Why BUyING BRANDeD MeRChANDISe IS DeCeNTRALIzeD WIThIN COMPANIeS
Unlike most commodity item purchasing, the procurement of branded merchandise is highly decentralized and spread across an organization with hundreds or thousands of individuals assigned the task of purchasing branded merchandise. Connecting groups of branded merchandise buyers with similar product needs may not seem beneficial at first glance, but in fact, buyers across organizations often have the same product needs without even knowing it. If buyers across departments were aware of their similar needs, purchasing together would enable them to realize a substantial volume discount while still achieving their individual goals.
For example, HR may need t-shirts and pens for employee initiatives, while sales and marketing may also require t-shirts and pens for client leave-behinds or trade shows. Unfortunately, buyers within these respective departments may not know each other, are not connected and do not have an efficient way to communicate and capitalize upon their similar needs.
Individual buyers also have only limited purchasing power that is likely used across a variety of vendors, further decreasing the ability to leverage the supply chain. If those assigned the task of purchasing branded merchandise throughout the organization had visibility into branded merchandise orders that were similar and relevant to their needs, multiple groups could purchase from a single order. Both groups would receive the product they need and the company would benefit from a substantial volume discount.
The pitfalls of individual purchasing:
Individual purchasing costs organizations up to 40% more than volume • purchasing.
Individuals purchasing from multiple vendors leaves procurement unable to leverage •supply chain.
Best practices and ideas cannot be shared across groups and buyers. •
Research from Aberdeen Group has shown that enterprises have been
able to achieve
5-20% cost savings
for each new dollar of spend brought under
management.
Best-in-class enterprises
are managing more than
70%of their total spend.
-Aberdeen Group
SALES
MARKETING
OTHER DIVISIONS
HUMAN RESOURCES
EXECUTIVES
Figure 1: hundreds of buyers of branded merchandise working in silos results in lack of cost and brand control.
DeCeNTRALIzeD BUyeRS
4
Why SPeNDING ON BRANDeD MeRChANDISe IS UNDeReSTIMATeD
We’re back to decentralization and many divisions with multiple buyers, especially in the case of large companies. Often branded merchandise is not a specific line item in a budget, but part of an overall marketing promotion program. Buying branded merchandise is frequently a last-minute deliverable that drives higher prices per unit and high shipping costs. The specific spending is not always accounted for, and reporting is minimal—program managers often use spreadsheets to track departmental spend. This reactive (and typically unmanaged) process makes gaining efficiencies very difficult for the procurement executive and some efforts have been made to centralize procurement of branded merchandise, including the company store approach, but it has largely been doomed to failure and lack of use due to its inherent limitations and inability to fully capture promotional spend.
The COMPANy STORe APPROACh: BROkeN AND OUTDATeD
Back in the early 1990s, there was some innovation in the form of an e-commerce based company store—a place where buyers across the company could purchase and drop-ship pre-approved products. Marketing and procurement gained some centralization, and there remains some use of this approach, but the reality is that it is outdated and only serves a small portion, an estimated 20% or less, of the company’s branded merchandise needs.
The company store only supports quick-turn, low inventory requests, with a finite number of product options. The majority of buyers still purchase outside of the company store, often with their own personal vendor relationships that offer more relevant product choices. As a result, 80% of the promotional spend remains uncontrolled, occurring outside of the company store.
Limitations of a Company Store:
Limited product options in inventory may not be relevant to campaign and •program needs.
No collaboration among buyers means average order sizes are “fixed,” and •supply chain leverage is limited.
Buyers work independently of one another, resulting in high soft costs and •inability to leverage best practices.
Owning store inventory is costly. •
Cost per unit is more expensive via the company store solution. •
State of promotional spend:
20%Company Store
80% UnmanagedAd-hoc, one-off orders are disconnected.
Buyers across organizations often have the same product needs without even knowing it. Connecting buyers around similar product needs produces substantial volume savings.
$550Before GroupBuy
$385After GroupBuy
Buyer #3Marketing
$4,000Before GroupBuy
$2,800After GroupBuy
Buyer #2Sales
$14,000Before GroupBuy
$9,800After GroupBuy
Buyer #1HR
2000 Items 500 Items 50 Items
30%companysavings
5
What Procurement Can Do Now
Boundless Network is the first company to address this opportunity and both challenge and enable companies to bring promotional spend under management.
SPeND MANAGeMeNT TeChNOLOGy: RAPID IMPACT, NO hASSLe
A new approach is changing everything. Boundless Network has created an e-procurement and spend management platform that connects buyers within enterprises to leverage their collective purchasing power. The Boundless Network spend management platform gives enterprises a streamlined way to purchase, manage and fulfill branded merchandise. Boundless Network’s background as a branded merchandise company combined with a patented technology solution enables organizations to gain more control over their promotional spend with access to hands-on service needed for effective branding.
The POWeR Of GROUPBUy ILLUSTRATeD
To illustrate, let’s say three individuals in different departments of a company have campaigns that require a branded give-away. They visit the Boundless Portal to find out what recommended products fit the campaign and the demographic. In this case, all three groups have selected USB storage drives that are ideal for their programs. When purchased independently, their collective purchasing power is not leveraged and opportunities for volume discounts are not capitalized upon. As a group purchase dramatic savings are achieved—up to 44% (Figure 3).
Figure 3: Connecting buyers, increasing savings through
group purchasing.
GAIN CONTROLGain more control over
promotional spend.
hANDS-ON
Access hands-on service for effective branding.
Giving individual buyers and departments VISIBILITy into what branded merchandise is being purchased COMPANy-wIDE enables group purchasing around SIMILAR PRODuCT NEEDS and the ability to realize VOLuME DISCOuNTS.
Boundless is truly
making a difference in
the promotional products
industry. Their technology,
best practices and sales
professionals have helped
us optimize our promotional
spend processes across
sales, marketing, purchasing
and HR. From apparel
programs to company
stores to individual orders,
Boundless consistently
delivers impactful solutions
within our budget and
our quality standards.
Boundless is a true full
service promotional product
company.
Alan WongASD Sr. ManagerHitachi America Ltd.
6
The Boundless Network Spend Management Solution
There is no up-front investment to start working with the platform. A simple three-step process puts organizations on the way to connecting buyers and leveraging their group purchasing power to get their promotional spend under management.
Key features of the spend management platform:
Self-service portal personalized for buyers, managers, marketing and •procurement personnel
Ability to purchase approved company branded merchandise via smart search •catalogs
GroupBuy technology that alerts and connects buyers with similar product needs •to produce volume discounts
Brand protection features like the ability to share brand standards, approved •company logos and more
Robust metrics, order approval and reporting •
Find promotional best practices, program ideas, case studies and more •
The Boundless Network customized branded merchandise portal
GroupBuy volume discount offers
7
key BeNefITS By DePARTMeNT
PROCUReMeNT
Significant cost savings (20-60%) •and greater purchasing power
Better Return on Branding and investment •
Increased visibility and reporting •
MARkeTING
Better control of the brand •
Improved Return on Branding while •supporting individual group needs
Reduced impact on marketing budget •
SALeS/hR/exeCUTIVeS/
OTheR GROUPS
Access to highly effective branded •merchandise for target recipients
Lower costs and lower impact on budget •
Higher return on investment •
Sharing of best practices and creative campaign •ideas for more planful, effective campaigns
DO yOU NeeD The SUPPORT Of A SPeND MANAGeMeNT PLATfORM?
Review the following, and if you answer yes to one or more of these questions, your organization could benefit from Boundless Network’s spend management solution:
Is saving time and money a key initiative? F
Is protecting your brand a key initiative? F
Do you have distributed buyers in multiple departments, divisions and locations? F
Does your organization suffer from a lack of reporting and F
visibility on branded merchandise spending?
Do you repeatedly purchase a core group of branded products? F
TOP COMPANIESutilizing Boundless Network’s
promotional spend management platform:
8
GeTTING STARTeD IS eASy: ThRee SIMPLe STePS
There is no up-front investment to start working with the platform. Boundless Network uses a simple three-step process to connect buyers, leverage purchasing power and enable companies to start getting promotional spend under management.
GroupBuy has given
our staff a level of autonomy
that they didn’t have before.
In addition to field staff being
able to purchase the items
they want and that are in their
budget, the development
and marketing office is not
burdened with guessing
what items people will use
or with the responsibility of
maintaining inventory. I would
recommend this process to
anyone who has staff at many
different locations and with
many different needs.
Melissa SimonDirector of DevelopmentCommunities in Schools
STeP 1: IDENTIFY CORE
PRODUCTS
Identify commonly used branded merchandise across the entire organization.
STeP 2: DESIGN AND
LAUNCH
Following a quick buyer survey regarding use of core products, Boundless Network designs a program for optimal savings and launches the program to your organization.
STeP 3: USE AND OPTIMIzE
As more buyers participate in the program, savings increases across the organization. Visibility into spend and product performance serves as a foundation for optimizing the program.
123
CONTACT BOuNDLESS NETwORK TODAyReady to get your promotional spend under management?For more information on what the Boundless Network spend management
platform can do for your organization, please visit:
www.boundlessnetwork.com/groupbuy or e-mail [email protected].
9
Case Studies
Leading enterprises such as Loews Hotels and Super Suppers rely on Boundless Network
to align marketing and procurement, protect their brands and dramatically reduce costs.
Loews HotelsLoews is a leading boutique hotel chain that operates 18 luxury hotels across North America, specializing in corporate travel and meetings. Their goal was to launch a new Loews Loves Teens loyalty program.
They faced several challenges, including:
Difficulty centralizing promotional marketing programs •
Lack of brand and messaging consistency •
Independent and distributed buyers •
Inefficient order processes •
Lack of visibility and predictability •
The Boundless Network solution was to connect buyers and do the following:
Identify unique products based on teen demographics •
Product: 2 song music download card •
Implement a quarterly GroupBuy campaign for hotel buyers •
Negotiate special price with supplier to further reduce costs •
Program results:
Loews had 22 buyers participate and over 50K music download cards were ordered. •
The groups had autonomy to participate, but the spend •management platform provided more visibility and control.
The company realized savings of $20,900. •
Loews established a consistent, efficient process for the future. •
Boundless Network saved
Loews hotels more than
$20Kthrough buyer collaboration.
27%savings
$78,730Before GroupBuy:
$57,830After GroupBuy:
10
Super Suppers
Super Suppers is a leading meal assembly brand and franchise. They have geographically dispersed buyers and over 300 locations. To help with cost savings, they implemented an inventory program to help with small orders, which resulted in high product costs. The franchises not only had problems with the high costs, but also the static, limited product selections for branded merchandise and the limited capacity for product personalization and localization. They needed a better alternative. The solution was to work with Boundless Network to connect buyers and increase flexibility.
The franchises had problems with:
High product costs •
Limited product selections for branded merchandise •
Limited ability for product personalization and localization •
Their approach was to:
Identify most popular products among the franchisees •
Implement GroupBuy campaign for top products •
Provide branding customization for each independent franchise •
Provide independent billing and shipping for each order •
Program results:
Super Suppers had over 40 franchises participate, with measurable results. •
They saved 40-51% on their orders. •
The franchisees were thrilled with the flexibility, results and the ease of the program. •
Additionally, they connected with other franchisees to collaborate and •share ideas and best practices that work for their business.
Volume
SavingsPrice
10% savings
20% savings
30% savings
40% savings
50% savings
Price with GroupBuy
Price with One Order
1 Franchise Multiple Franchisees
“This group buying stuff
is great! So glad someone
finally got this set up! Placing
my order right now!”
“These are great bags - get in
your orders so we can all get
the best price possible!”
- Super Suppers employees
Super Suppers saved
40-51%using Boundless Network’s GroupBuy technology.
11
About Boundless Network Venture-backed Boundless Network is transforming the $20 billion promotional marketing industry through a highly trained, professional sales organization and proprietary technology that empowers companies to proactively manage their promotional spend. Our patent-pending technology platform connects buyers across organizations to create efficiencies of scale and reduce the cost of branded merchandise by as much as 40 percent. BoundlessNetwork’s award-winning professional development and training opportunities help the company to attract the top 1 percent of sales professionals. Headquartered in Austin, Texas, Boundless Network is one of the fastest growing companies in the promotional marketing industry.
To learn more about Boundless Network, visit boundlessnetwork.com/groupbuy or send an e-mail to [email protected].
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