Last month, I completed a productive business trip to Orlando, Florida. I’ve been there a few times but one of the events I remember most about any of my trips to Orlando happened the first time I visited that fine city.
During that first trip in, oh, about 1996, I remember waiting in line for two hours at the rental car counter.There was just a crazy crowd of people there, all waiting to get their rental cars.The agency had even hired a Mariachi band to keep the people in line distracted from the agony of their insane wait.
BTW, hint to businesses: If you have to hire a Mariachi band to entertain people waiting in line, you may want to improve your processes so that your lines are shorter. Just a thought.
Anyway, with my 2011 trip to Orlando, I was hoping that I wouldn’t have to endure such a nightmarish wait. After googling “car rental in Orlando,” I saw that little had changed. People all over the Internet were ranting about waiting 45 minutes, an hour, two hours, etc. for their rental cars. This was not how I wanted my trip to start. Like any busy CEO, I feel that my time is too valuable to waste standing in line.
I was searching for potential solutions to this dilemma. Then, I found one that I thought just may save me from the fate that I so desperately wanted to avoid.
What I found was a program from National Car Rental called the “Emerald Club.” This program allows customers like me to bypass the counter at the airport, go straight to the garage, and get right into the car of my choice.
Sounds great, right? Is there a downside?
Well, I see vehicles – especially rental vehicles – as tools to simply get from Point A to Point B. I don’t need anything fancy. Or big. So I usually go with the smallest or next smallest (i.e., least expensive) rental car option available.
With the Emerald Club program, you have to reserve a midsize car at the midsize price even though you have the option of selecting a larger vehicle, if available, when you arrive at the garage. Midsize car rental rates are generally $1 to $10 (US) per day more than rates for compact cars.
But when it comes to saving two hours of my time in order to save, say, $10? That’s a no brainer! And my experience with National Car Rental in Orlando was awesome. As a new Emerald Club member, I’m looking forward to continuing to do business with this company who seems to truly understand their customers’ hot buttons. After all, I rent my share of cars.
I’m sure that your company’s executives would feel the same way as I felt about use of their time vs. the company’s money. Which got me thinking about some things.
In procurement, we often look at just cost and not value.We sometimes fail to see the benefits of buying a premium product or service at a higher price.And that’s not totally the fault of procurement professionals – our performance is frequently measured by senior management solely on cost savings.And it is easier to shy away from more expensive alternatives when the differentiating factor – in this example, National’s “bypass the counter” process – is something that is not shared among all suppliers in the marketplace.
Most of the times, we aim to have “apples to apples” comparisons. So, we would compare National’s standard (not Emerald Club) service to other providers’ standard service and the “premium” service – despite its value to internal customers including, possibly, the company president – would be ignored.
Here’s a fact we don’t always recognize in procurement: Some companies actually want to pay more for a product or service because of the emotional effect on its employees, even though it may not seem like a smart decision from a purely financial perspective. For example, companies may want their top performing sales people to enjoy perquisites (perks). For a little insight on this, I’ll share a CEO’s thought process by quoting some excerpts from an article entitled “How to / How NOT to Treat Your Salespeople” by “The American Entrepreneur,” Ron Morris. In this article, Mr. Morris writes:
“I think that most business owners would agree with me that the most important people in their organizations are their salespeople. Those of you who have read my columns or listened to my radio show over the years know that, and historically, the people who create an organization’s revenue are also the people whom that organization can least afford to lose.
“Coincidentally, these people are also the highest-paid individuals in the company.
“If you run your own business, you know exactly why this is so. And, if you’re questioning why I’m saying this, you probably have never had to make your own payroll.
“Because it is the sales people who enable you to make that payroll…What would you say is the single most important thing any great salesperson needs? If you guessed ‘strokes’ I congratulate you! In fact, you just earned your sales manager wings.
“Because, that is exactly what salespeople need most. They need attention and they need recognition.
“In fact, and until I came to understand my golden retriever, I didn’t think there was any living thing that required more attention than a high-producing salesperson.
“So, give it to them. Give them recognition…There are many other things you can do to keep your salespeople happy. Included among them are ‘perks,’ such as mini-trips, keys to the company condo in Florida, corner offices, free dry-cleaning, and one of my favorites – a ‘tab’ at the local saloon. Man, do they love showing this kind of power off to their clients.”
In procurement, we may think that choosing a more expensive hotel chain for an enterprise-wide contract, or a crystal vs. glass plaque for a sales award, or a premium car rental service for an executive’s business trip are examples of not managing spend optimally. In truth, they may be very strategic choices.
I think our field has a lot to learn about how to handle perk and premium procurement matters. So how about your organization? Do you give different consideration to these types of procurement situations?
To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer
Next Level Purchasing, Inc.
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