June 10, 2015

Your Co-Workers

Do you know who this woman is? 

I don't.

How often can you say the same thing about a co-worker you pass by in the hallway?

More on that in a moment.

I attended a conference earlier this year. One of the Executives at the conference said something interesting to me. We were talking about vendors. The Executive was frustrated with one particular vendor. I mentioned that the Executive could choose to spend less money with this vendor, and instead utilize a competitor. The Executive looked at me, and with the kindest possible look on her face, she issued the following statement:
  • "But their staff are like co-workers to me."
The comment carried little weight ... month after month. Until late last week. Then I figured out why it seems like so many of my messages fall flat.

In so many cases, I am challenging you to make changes that I am confident will improve the profitability of your business. I wouldn't ask you to make the changes unless I had proof (via the client work I perform) that my recommendations generate profit. But then, for you to implement my changes, you need to work with your vendor partners ... often challenging the vendor to make changes.

In other words, I am asking you to do things that may cause discord with individuals you perceive to be co-workers of yours. You might have to tell your vendor co-worker that the individual is doing a poor job. You might have to tell your vendor co-worker to create a product that the vendor co-worker isn't capable of creating, or doesn't want to create. You might have to tell your vendor co-worker that you are going to spend less with his/her brand because spending less benefits your brand more.

Why would you want to hurt the feelings of a co-worker? You wouldn't want to do that, would you?!!!

Here's a fascinating tidbit for you. Let's run a quick quiz. Which project do you think I've sold more of in 2015, by a margin of 2.5 to 1.
  1. Contact Strategy Optimization.
  2. Merchandise Forensics.
The answer is (2), Merchandise Forensics.

Why is that interesting?

How many hours per week do you, the marketing professional, spend working with your merchandising and/or creative teams?

How many hours per week do you, the marketing professional, spend working with your vendor co-workers?

Of course you're going to ask me to perform Merchandise Forensics work for you ... that project isn't going to interfere with your pre-established vendor / co-worker relationship ... even if that relationship is costing your business millions of dollars of profit per year. With a Merchandise Forensics project, we're just looking at challenging your Merchandising Team, and you barely interact with those folks ... even though they are responsible for the stuff you are marketing to customers ... even though they are truly co-workers!

In the past fifteen years, the co-worker relationship changed. A twelve-person marketing department became a six-person marketing department with two-dozen vendor relationships managed by the remaining six individuals in the marketing department. 

Marketing has been outsourced, and in the process, the working relationship with marketing outsiders is deeper, more emotional, and more meaningful than the working relationship with the Creative Manager who is seeking optimal lighting during a photo shoot in Kauai - more close than the working relationship with the Buyer who must avoid being fired by accurately forecasting the sale of 973 widgets via perfect sell-through.

This working relationship creates an unusual and conflicting set of incentives. Fifteen years ago, your entire marketing department was incented to generate as much profit as possible. Today, with 70% of your marketing department represented by outside vendors, you have a dozen conflicting objectives. You must generate as much profit as possible, requiring you to obtain products and services at the lowest possible cost ... while your vendor co-worker must sell you additional products and services at the highest acceptable cost. 

I was at NEMOA in Spring 2014. A representative from a vendor you all know and trust saw me walk into a session. She called me over. And in front of my client, she mentioned how she took my (her) client to a Boston Bruins hockey game, and took the client out to dinner. She mentioned that her organization loves her clients, and treats them appropriately, with various perks. She then asked what, specifically, I do for my clients if I don't take the client to a sporting event or out to dinner.

"I generate profit for my clients".

But profit isn't enough for many of you. Name one time your Chief Financial Officer paid to take you out for Alder Planked Copper River Sockeye Salmon followed by a Major League Baseball game? Your vendor co-workers use emotional incentives to create a bond (smart idea). It's your money they're using to create the bond, but regardless, they treat you better than many of your actual co-workers treat you, be honest!! Sometimes, your Merchandising Team just yells at you, telling you that your email marketing program is pedestrian, criticizing your catalog mailing efforts ("you have no idea who to mail, a trained monkey could do a better job"). Who are you going to side with, when push comes to shove?

And vendors can (oh yes, this happens) align their services in such a way that maximizes vendor revenue ... if you mail more co-op names, you pay more in merge/purge costs, you spend more money on paper, you spend more money on printing, you spend more money on postage. Is it any wonder, then, that at an industry conference, your vendor co-workers all pay sponsorship fees to obtain speaking assignments where they sell a message that promotes increased marketing spend? Vendors would be crazy to question a co-op, because questioning a co-op may result in a client spending less with co-ops, which then trickles through the rest of the vendor ecosystem, hurting all vendors.

Do you understand the ramifications of the dynamic I just described?

Last week, I came to the realization that so many of us have better working relationships with our vendor co-workers than we have with in-house employees. We have no idea who the woman is at the beginning of the blog post, even though we have a responsibility to work with her to increase profit for the company we work for. Conversely, we have close relationships with vendor co-workers, and those relationships are fraught with conflicting incentives. Yes, the vendor should provide solutions that increase sales/profit, thereby allowing both parties to profit, but that isn't often the case (in reality).

Is it any wonder, then, that the message marketers constantly read is an omnichannel message promoted by the vendor community? And we have an emotional incentive to listen to this message, because the folks offering the message are more like co-workers to us than our actual co-workers.

Maybe you disagree. That's fair. Your circumstances may be different.

I wouldn't share this tidbit if I didn't keep running across variants of it.

The vendor community is embedded into your marketing department, that's just the reality of modern marketing. You likely have more vendor employees working to grow your business than you have actual employees. Their incentive structure influences what they ask you to do. Their aspirations influence the tactics they ask you to execute. Their desire to innovate influences how innovative you are.

This isn't a good thing.

This isn't a bad thing.

This is just a "thing".

But it is a "thing" that must be dealt with. For if we continue to value the vendor co-worker relationship more than the merchant/creative/finance co-worker relationship, then we will ultimately execute the wishes of our vendor co-workers. Maybe this is best for us. Maybe not. But we should at least think about the topic strategically, don't you think?

Use the comments section (or email me at kevinh@minethatdata.com) with your thoughts.