Buying Complex Services – Understand the Category, Avoid the Old Banger!

(We're delighted to have a guest post on our hot topic for this month, Buying Complex Services. This comes from Jon Milton, Business Development Director of Comensura, specialists in vendor-neutral managed services).

Cast your mind back to the year 2000. You needed to buy a car, so what did you do? It’s likely you will have gone to your local dealer, seen what’s on offer, been on the end of the hard sell and ended up walking away with the vehicle that got you from a-b for the next few years or in some cases for the next few weeks!

Fast forward to 2014 and what do you do? You visit a marketplace website offering a range of cars in your price range. You refine your requirement by price, by mileage, by location and so on. You draw up a shortlist of potential car types, and then research each type based on your preferred criteria. You seek opinion from independent sources. You monitor the marketplace website until you see the car that best fits your needs. You do a quick check to make sure it’s not been written off. Then and only then do you travel, possibly 30-40 miles to buy your car. The salesman that you meet simply has to let you test drive.

In 14 years the consumer buying process has fundamentally changed and enabled the buyer to make a far more informed decision on what is one of the biggest purchases they will ever make. Why is it then that the purchasing of substantial and inherently complex spend categories like agency staff follows the 2000 model of buying a car?

Should complex spend be purchased by numbers? Do the fundamental principles of aggregation, rationalisation and standardisation really work within complex category spend, or are they an anachronism in 2014?

This really depends on the complexity of need within your business and the varying types of service purchased. Within the agency staff category there are 16,000+ agencies operating in the UK, all of whom specialise by either location, job family and/or job level (support staff, managerial, executive) and the REC are predicting a further 8% growth next year with total industry size expected at £31bn.

Agencies are motivated by profit, so are situated in catchment areas where that profit can be maximised. The more diverse your business is, the less likely it will be for a single agency, or rationalised group of agencies to meet demand.

Here are my top tips for researching complex categories such as agency staff:

1. Research the category. Try and understand the variant types of service bought and the different types of sellers.

2. Put yourself in the shoes of the end user. Why do they use the service? In what circumstances? How do they differ from other users in the business?

3. Analyse your expenditure. For agency staff, up to 95% of expenditure is pay to the worker, so try to understand what areas are addressable and where the real savings can be driven from.

4. Leverage the seller. Managed service providers like Comensura provide free analysis; guides and advice so ask for it and take what you can.

And remember, the more you understand the category, the less likely you will be to buy an old banger!

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