Meercats message doesn't apply merely to home
PUBLISHED: 10:10 21 March 2011
I'm sure that, like me, many of you are amused by the adverts in which Aleksandr the meerkat implores us to use that other website if we're looking for better deals on insurance or electricity and gas.
Highly competitive market places and the power of clever television advertising have transformed people’s attitudes towards moving suppliers as a way of keeping costs down.
In fact, in some markets the benefits of customer loyalty that I write about frequently in this column are being seriously threatened, at least in the short to medium term.
I still believe passionately that loyal customers are more valuable to most businesses over time than fickle ones attracted temporarily by alluring offers; however, that debate can wait until another day.
What I do find interesting is that people who at home will search the market enthusiastically for the best deal on mobile phones or internet service providers fail to recognise the potential for savings in their businesses if they’d only apply the same diligence.
Perhaps it’s because, if they don’t actually own the business, they treat money spent by the business as someone else’s; or, if they are the owner, they simply don’t equate “domestic” activities with “work” activities.
When was the last time your business conducted a thorough review of the way it spends its money? Do you know, for example, who your top 20 suppliers are and how much you’ve spent with them over the past few years? Are there areas of spending where you buy the same products or services from a large number of suppliers? Do you measure the performance of your suppliers and provide regular feedback to them so they can improve their service to your business? Have you tested the market in several key spend areas in the past year and negotiated more attractive terms?
These are just a few of the questions that owners or managers in any organisation aspiring to good purchasing practice should ask themselves regularly. If they don’t, and they fail to appreciate the power of cost control in enhancing and protecting profits, they may live to regret the oversight.
Ensuring that costs and assets are managed carefully will add more to the bottom line in virtually any business than simply selling more. It is not uncommon to see a company’s profit margins decline at the very time they are increasing their sales significantly. This is often the result of poor cost control, which in turn can be traced to slack purchasing practices.
So, remember the funny meerkat: keep comparing and look everywhere – not just at that other website – for ways in which to obtain better deals for your business. Simples!
Paul Tholen is managing director of Visiontheme Business Mentoring; 01508 558643.