You know this employee. He’s in a branch office, or maybe a partner group. He never runs out of “urgent” or “spectacular” opportunities which inevitably require printed sales kits specific to his geographic market, or better yet, a banner tailored to the trade show he didn’t think he could attend this year. He’s also quite willing to order his own materials. In fact, he typically does. He may even move things along quickly because he “knows a guy”. Finance knows him well; he’s a reporting and tracking headache.
He has gone rogue!
This employee is a repeat offender when it comes to asking for forgiveness rather than permission. He’s beyond certain that the extra costs he racks up are more than worth it, and he might even plead that the end justifies the means.
Staff who are closest to your customers are the action-arms of your business, the “doers”, movers and shakers. They bring in sales. When they need marketing aids they seem to need them immediately. Unfortunately, these individuals don’t always play by the rules.
HOW DOES ROGUE SPENDING HAPPEN?
A recent Employee Spending Survey among 500 American office workers found that 54% of employees admit to “going rogue”, or making purchases without advance approval.
Sadly, this is probably happening because it can, with a foundation in at least one of these issues:
- Lack of knowledge – He just didn’t know there were resources available or he didn’t understand the current processes. His manager suggested he “work out the cost for a couple of options” and that sounded like permission to order. Processes and approvals which are unclear (or hidden entirely) are not followed.
- Lack of confidence in the process – He is frustrated with either the timelines for procurement, support in head office, or the tools (or lack of) at his disposal.
- Location – The rogue spender might be removed from the hub of your business: the marketing control centre. He is quite possibly a franchisee, dealer, branch office member or a partner.
- Unclear (or no) budget – A budget is a plan, controlled by permission levels and spending authorities. Without them, it can be open season on print, promotional products, and corporate apparel.
- Distinctive needs – It had to be customized for the local market, a new product, a special event, or a second language. The rogue spender believes this means starting from scratch.
HOW ROGUE SPENDING IS HURTING YOU
Permitting your brand ambassadors to access, create or order the materials they need should not come at an excessive cost. Companies can spend up to 35% more for marketing materials when rogue spending occurs. This comes from higher unit prices and greater overall spending.
You probably don’t know what you’re actually spending.
Reporting nightmares are almost guaranteed. Data from all those one-offs are decentralized, and hidden. The real truth is somewhere in an expense account, branch or regional office figures, or on a company credit card. Out of control costs are damaging, regardless of what the line item is. Finding the real costs, allocating them and evaluating them can be a monumental task – which in itself costs more money.
Rogue spending transactions don’t even need to be large. Little by little, spending in a scattered way adds up to a lack of economy for your business.
Materials are likely being duplicated, which is obviously wasteful. You’re paying more than once for promotional materials, and probably incurring fulfillment and warehousing expenses. On top of it all, the time and effort Marketing has spent producing quality content, or sourcing suppliers, is being under utilized.
When rogue spending on promotional materials continues, you’ve also likely lost control of brand standards, and corporate objectives.
And while the rogue spender is creating or sourcing inconsistent materials and duplicating existing collateral, he’s not focusing on his own job.
The type of business matters little when it comes to rogue spending. It cannot be excused based on location, special circumstances or who the spender is. It’s out of control and needs to be reined in.
Online Company Stores
CONTROLLING OR PREVENTING ROGUE SPENDING
Unfortunately, the hard truth is that rogue spending happens because you’ve allowed it to happen.
The turnaround requires greater control while enabling your employees, reps, branch offices, partners and distributors to access what they need to promote your operations, within a budget that you establish. Industry estimates suggest that as much as 20% could be saved when marketing expenditures are coordinated centrally.
If a process is not consistent and repeatable, it will inevitably cost more over time.
So what if everyone was connected, at all times, to everything they needed? And access came with pre-approved spending permissions.
It will come as no surprise to hear that, like so many things in business today, technology holds the answer.
An online company store uses a central ‘catalogue’, with built-in spending limits to relieve the burden on finance for purchase orders, processing and oversight. Your marketing assets are catalogued with pre-approved budgets for users with access.
This tailored tool puts tighter control on marketing spending so your sales staff and partners can get back to your customer while you manage what’s spent. Employees are encouraged to purchase within a controlled budget, from preferred vendors, and purchases are automatically verified. It’s a fine example of ‘digital inclusion’. With a budget of his own, controls on the rogue spender are automatically tighter.
THE “BOTTOM LINE” ON ROGUE SPENDING
In an ideal world, those who represent your brand are focused on connecting with your customers, responding quickly but still within your control. It’s understandable that they should want tools to help them along in their daily work. But taking matters into their own hands, circumventing process and going “rogue” with spending, ultimately hurts your business and your brand.
The process should be clear. Access should be easy. And spending should be controlled.
Online company stores, have built-in approvals, which allows you to strategically create and adjust budgets. It controls access to resources and tracks spending centrally to give you the true cost of your marketing efforts, so you’ll know what’s working and what is not. It is the most effective Marketing Materials Management system available.
Sources:
http://www.enhancedonlinenews.com/news/eon/20130723005593/en/spend/spend-management/employee-spending
https://blog.tradeshift.com/3-ways-rogue-spending-erodes-cost-management/
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