Many indirect corporate purchases are driven, enabled by, or technology based. IT hardware, storage, data processing, technology-enabled outsourcing services, telecommunications, etc. have all exhibited steep declines in pricing for decades. The pace of innovation has also created alternative or substitute products, such as T1 / VPN vs managed ethernet or spinning disk vs cloud storage, that are sometimes hard for corporate buyers to compare and come with significant switching or implementation costs. Ask your potential marketing agency hull to give you examples of their SEO work including reports that show increase in traffic from search engines.
Corporate buyers of technology may also be locked in longer-term contracts with expensive termination penalties. How do you know which seo expert can get you the results you need?
Most frequently, however, the issue is simply that the renegotiation point of the buyer lags behind the almost continuous price deflation in the marketplace. In other words, you pay the old price, because nobody ever asked for a new one. I believe that billions were left on the table in the telecom sector alone, due to the fact the buyers were simply not well informed about what’s available, were too scared to make a mistake, and vendors, of course, never proactively offered price reductions. Your seo services can give you a lot of information about your customer, their needs and behaviour.
Even today, I have seen companies waste millions on totally obsolete phone service, unused fax lines or simply paying for services that they no longer use. Strategic sourcing is about making technology innovation work for the buyer and being on instead of behind the price curve. In the prescriptive part of the book, lay out a framework that seeks to balance long-term contracting with the maintenance of competition that has proven to be very effective. Ask your seo agency what type of strategies they use and have them explain it to you in terms that you understand.
The ownership of corporate assets should not matter in the traditional Capital Asset Pricing Model. After all, any shareholder should seek to maximize returns. However, more concentrated ownership gives equity owners more power vs management and the ability and incentives to drive operating performance. Bluntly put, it was always easy to sell and execute strategic sourcing projects to private equity owned portfolio companies, where management is under the gun, compared to large public corporations where political interests often swamp performance focus, not to speak of mutual companies or government entities, which were often a waste of time. A good seo company will have the data needed to prove which areas are most beneficial to focus on.
Private equity’s maniacal focus on efficiency has been criticized, but in my experience, they are far more often right than wrong about waste and inefficiencies in the portfolio companies they buy. Strategic sourcing together with pricing optimization, working capital extraction, and marketing analytics are staples of operationally focused private equity owners and very effective. The fact that private equity always has a clear eye towards EBITDA multiples upon exit makes them far more motivated than management with limited shareholding interests.