Managing Suppliers and Other Marketing Curiosities

In episode five, we’re talking with John Haworth – the man who founded and led marketing for Fidelity’s HRO operations, worked directly for Dave Duffield at PeopleSoft, and headed up strategy, bizdev, marketing and international sales for BrassRing. He also led the BrassRing Labs innovation group. One of the most thoughtful business leaders I know.

We had a wide-ranging discussion about managing vendors suppliers and touched on some other marketing curiosities. Give a listen. Hope you enjoy.

You can listen above, or read a transcript below, which I edited very lightly.

Mark: Well, John, it’s good to be here in Newton, Massachusetts with you. And welcome to Confessions of a Marketer.

John: Thank you, Mark.

Mark: Vendor management is one of those things that is often overlooked in marketing and yet it’s a really important function. What do most companies get wrong when they’re managing vendors–whether they’re marketing agencies, technology providers, what have you?

John: Well, a lot of the problems that arise in relationships between suppliers and their clients come from mistaken alignments. And those really vary from department to department in the corporate structure. Probably, in my experience, the marketing department is a bit of an outlier in terms of the way they’ve typically embraced what might be viewed as best practice elsewhere in an organization. And they tend to do things their own way. It’s both the strength of the marketing organization but it’s also an Achilles heel if it’s not consciously addressed.

Mark: How can a company revamp the way it works with its vendors? Maybe stop calling them vendors?

John: Absolutely. “Vendor” is an offensive word. It sounds like a sort of second-class citizen. It’s not a relationship the vendor feels good about. So the word “supplier” has found its way in. “Partner” is wrong because it has legal implications for using the word. But “supplier” is a good word and it’s generally viewed as kind of the preferred term of art.

Mark: If you’re running a marketing organization, how do you imbue your staffers with the right attitude toward suppliers–whether you’re going out to procure an advertising agency, a marketing agency, whether you’re hiring freelancers or contractors to help you do your job? What’s the right attitude to take?

John: That’s a really good question, Mark, and I think it starts at the top of the marketing organization. So the CMO, or whoever the leading light is in the marketing function, needs to have a nuanced understanding of where the world is right now and what best practice really is. I think, in my own experience, the marketing function–because it tends to be on the creative side of life–has always been a little bit separate from the operational side of most businesses. And it doesn’t matter what industry we might be talking about, the marketing function tends to have more in common with other marketing functions than it does often with the rest of the company in which they find themselves. And it has to do with the kind of personality that is attracted to the marketing function. And the people who succeed in marketing have a certain orientation that makes them successful as marketers. But there’s an Achilles heel there, sometimes, with a personality type that tends to be a lot of inspiration and maybe a little bit less toward method, structure, and the kind of discipline that yields long-term, best-practice results in the marketing function.

Mark: One of the things that I thought about when I was thinking about this topic was that we would be talking about why, all of a sudden, relationships go sour and a CMO or a VP of marketing or anyone really in the marketing group could suddenly start hating a supplier. And, my takeaway from our discussion just a few minutes–before we started recording–is that there is also the other side of it: Why someone falls in love with a supplier irrationally. What’s that all about? What’s driving that and what should an organization do to avoid that?

John: That’s also a really good observation, Mark, and it’s something that I think you’ve lived and I’ve lived. Anyone who’s worked in a marketing function has seen this. I think one of the things that often is missing is an internal consensus within the marketing function itself–across all of the marketing mix and the heads of those sub departments, if you will, in marketing–and then developing a consensus around what the best direction is. And last, but not least, is to reach out into the broader organization to find out: Is there expertise in vendor management? Is their expertise in the procurement function? Are there people who have a point of view about marketing? In other words, sort of sympathetic third parties that could be brought into the process of selecting, evaluating third-party suppliers. And it is important to compete every piece of business that a marketing department does. That’s another failing, I think. There’s often a kind of falling-in-love process that is outside of the norms of general procurement best practice, which would sort of insist that you compete every piece of business. That’s not necessarily followed rigorously in all marketing departments and it would help if you were. So, what I’m getting at is, basically, compensating for some personality types that exist in marketing for good reason, which tend to be maybe heavy on the creative gene and a little lighter on the operational process gene. So, I would say, augment that gene pool a little bit with some of the process organizational types and put in some best practices and I think that will yield very good results. It has in my experience.

Mark: You know, putting out to bid every piece of business doesn’t mean every time you make a change to the website, you put it up to bid. But it means monitoring it on a quarterly basis.

John: That’s right. So, the quarterly business review, which is again the sort of best practice view of how to manage third-party suppliers, is very important. And you want to get stakeholders involved in that. You want the service providers to come equipped with data. And, getting back to a prior point you just made, Mark, about the consensus across the company. I think it’s really important for marketeers to reach outside of their own organization and get, you know, help and assistance from people in the business. Obviously, people from sales you want to have a viewpoint. People from operations–you might be making somebody’s life difficult and you might you might learn something. Similarly, I think with third-party suppliers it’s important to broaden what you are prepared to do with them. The coin of the realm in these contracts is scope and term of contract. So if you can give them more scope and a longer term you’re likely to get more interest in your opportunity than less.

Mark: But not just blindly give them business every time something comes up. You want to continually review the health of the relationship and the productivity of the relationship.

John: Absolutely. So, that’s the that’s where the quarterly business reviews come in. So, let’s say that, in an ideal situation, you had half a dozen contracts with suppliers in a marketing department and you had the good fortune of having these contracts all expiring at about the same time. You could compete across a lot of different service towers within marketing to a one-stop-shop or compete separately for all those functions. And it would be in the interest of the company to do that. But you have to get organized to do this kind of thing. In my experience, marketing departments are not lavished with resources. They don’t often have a lot of time to do this, but it could pay dividends because getting third-party suppliers–especially first-tier third-party suppliers–interested in your opportunity often has everything to do with how much scope you can give them, how long a term you’re willing to sign up for and those kinds of things. So it’s just common sense leverage in a market to make your opportunity as interesting as possible for third parties. You’ll attract higher quality third parties and you probably will help yourself with the discipline that’s required to manage such a skilled third party.

Mark: So, as someone who’s run marketing and started up businesses–you originated the HRO function at Fidelity and ran marketing there–what do you think your experiences teach you that you would tell someone moving into a CMO role or a VP of marketing on how to run a function like that?

John: Well that’s a really good question, Mark, and I think we’ve all had the experience that you wish there was such a thing as a composite marketing person–that was one part creative and one part operational genius, in both cases if you could pull it off. Those people probably exist. I’ve seen albino buffalo and I suppose they exist in the marking world. But, generally, the tendency is to hire in favor of creative. And that’s fine and that’s important. But there also needs to be the operational side that needs to be brought forward. And I think that department that’s conscious of trying to balance those two things is going to do better in the long term. And that doesn’t have to be in the same person it, as I was suggesting. Let’s say you have a senior staff at a marketing function–the top three or four people–and there’s a nice mix there between right side of the brain and the left side of the brain people. We tend to hire in our own image. I would be especially careful against doing that in marketing, where there’s a tendency to steer towards the creative always. But the operational side, the functional side, the get-it-out-the-door side, the deadline-oriented side, becomes what the function is ultimately measured by in a lot of cases.

Mark: Right, and related to the two different sides of the brain, how do you manage a situation like this? A CEO is going through an airport and sees a big billboard for a competitor and dashes off an e-mail or a text to the CMO or the VP of marketing. And, suddenly, the next morning everybody is focused on putting ads in airports and it’s a six week project, and at the end of the six weeks the CMO takes the results of the hard work and probably really good creative, and all that, takes that to the CEO and says well it’s going to cost $5.8 million to put billboards in Los Angeles, New York, Madrid, and all the airports around the world. And the CEO goes, “Well, I don’t want to do that.” How do you avoid that kind of sidetracking that happens–I’ve witnessed it–that that happens all too often in marketing?

John: Well, I think, Mark, you’ve really hit on something that we’ve all experienced. It is a kind of just-in-time function to some degree, because everyone’s an expert in marketing–not just the CEO. It can be from the C-suite–any place. Those kinds of: “I was just thinking” or “I saw our competitors doing this, why aren’t we doing that?” You know, every marketing department should probably have one or two maybe interns whose sole function it is to chase down these kinds of a kind of, “Give me the information instantly.” I think the sooner you can develop the business case, if there is one, and get that back to such a requester–and it is important to get back to them–the better off you’re going to be. So nothing speaks like data. To the degree that you could price out some of these things, that you could do a quick analysis about, you know, “Are our buyers to be found in airports or are our buyers down in the bowels of the organization and they don’t fly a lot?” You know, they’re operational. “What are we selling? Who are we marketing to?” There are some dimensions. So a thoughtful response to every one of these–and rather quickly delivered–but it shows that you take the you take the inputs seriously, I think that’s an important function for a marketing department to be prepared to handle. Because it’s inevitable. And you don’t want senior leadership, or the rescue organization, to stop talking to you. You want to be responsive and you want to get back.

Mark: So agencies, suppliers, might have been involved in that kind of sidetracked project and might, at the end of the day, really resent being involved in something like that. Maybe “resent” is a bit of a harsh word there but they may have wasted their time a little bit. So, how can an agency or supplier, freelance writer, contractor, you know, SEO expert, whatever it is, do a better job of helping a company define what it needs to do? If the scenario we just discussed involved an agency, how could an agency have come in and clarified that whole six-week process for a company? Could they have just put the brakes on at the beginning and said, “Are you really serious?”

John: Mark, another great question. I think, you know, the risk that you’re talking about I believe is the one where you’ve got an agency relationship or maybe multiple agencies and you spin them up idly for these kinds of questions that come in over the transom. And you can’t predict when they’re going to happen. And sometimes two or three can come in at once because they were all in the same airport or they’re all watching the same TV show or something. And if you waste your precious budget with your agencies on these kind of wild goose chases, if you want to look at it that way, then no one’s happy–and, especially because half of these things never come to fruition. But the ability to respond quickly, which is what I got at earlier, is important and I think it’s important to talk to the agencies and say, “Look, let’s collectively decide how we’re going to handle these. And, perhaps less is more, but timeliness will cover a lot of ground.” So, perhaps you talk with every agency and say, “Look, from time to time we’re going to get hit with these things. We don’t know where they’re going to come from. But let’s set a three-day deadline for you to turn around a high level quick response so that we can get back quickly with a green, yellow or red light kind of scenario. Usually these are executive level people and they just feel it’s their duty to ask such questions. They don’t necessarily need a long analysis. In fact, they often resent it–“I didn’t ask for a 30 page analysis of outdoor advertising.”.

Mark: “I just thought it was a good idea.” Maybe it isn’t.

John: Yeah. “I saw one of our competitors was doing it or something like that.” That’s often where it becomes more urgent. But I think a quick response, I think this is something that you can put into an RFP, it’s something you can really talk about upfront as you evaluate agencies: “Look, from time to time we’re going to get these. We want to have a quick response program with you guys. You have to be able to go and do a quick analysis and get it back to us because you don’t need this on your plate and we don’t need it on ours.” But these are questions that sometimes are quite valid.

Mark: Does it come down to kind of mutual respect and trust that you need to build with suppliers?

John: I’d say yes. I mean, it’s a trust-but-verify kind of reality and that’s why the contracting is so important. In other words, by contract, you’ve got turnaround times. By contract, you’re going to do quarterly business reviews with us. By contract, we’ve got SLAs that you’re going to meet. By contract, we’re going to have, you know, this level of contact from time to time. So I think that a good relationship with an agency is no accident. It’s not something that you kind of roll the dice and hope you come up lucky. In fact, you and I have both worked in environments where that has been the case because it was all seat-of-the-pants and there was very little formality around it. And that’s where you get into trouble. So I guess the theme I’m really trying to develop here is that a certain amount of rigor and structure is everyone’s friend–even though it’s landing in a department that is often viewed as the least structured in the least operationally minded. So that’s the dichotomy–encouraging one side of the brain to be friendlier with the other. And that will pay dividends, I think.

Mark: I’ve always thought the way to be creative is to have some kind of structure. To have a grid when you’re designing something, to have an outline when you’re writing something, to have a marketing plan when you’re planning marketing. So I think that really works.

John: Yeah. If you look at what we consider to be great artists–and we think that’s, you know, a lot of inspiration over perspiration. But you’ll find that Picasso painted every day, Wallace Stegner got up every morning and wrote 500 words whether he felt like it or not. It’s just discipline.

Mark: Inspiration is for amateurs, as Chuck Close said.

John: Well, I’ll take a little of that. But the point is true–that if that’s all you’ve got, you may not make your deadline. You have to have the discipline.

Mark: Well, this has been a great discussion, John. I really appreciate you being a guest and thank you for having me in your beautiful office here in Newton, Massachusetts.

John: Thank you, Mark. My pleasure.

 

 

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