Banner revealed the new model in a press release yesterday following a six-month development period after Costin and his team successfully pitched the idea to the company’s board and shareholders at the end of last year.
Speaking to OPI yesterday, Costin said the driving force behind the idea was to set Banner apart in an increasingly cut-throat and commoditised marketplace.
“Everyone has warehouses and vehicles and claims to have the best salespeople – we’re all so similar,” he said. “When you look at the open procurement model we have, it’s about openness, transparency and honesty. The question was, how could we move it forward to the next level?”
The answer is Banner’s new ‘all-inclusive’ procurement model which features an agreed monthly fee based on a customer’s product needs, servicing costs and the number of employees to be serviced.
“We say we’re a services-oriented industry, so why not offer a management fee?” says Costin. “That way we’re viewed as a valued partner as opposed to just a commodities supplier and, in time, we can bolt on more products and services and become a consolidator.”
One important component of the model is that the management fee will be recalculated at the end of each quarter and flexed accordingly – with a guarantee by Banner that the fee will be less than previously paid on a like-for-like basis.
Costin accepts that certain people will be sceptical about this approach, but insists that it is not a question of smoke and mirrors. “The ‘old way’ of working encourages non-compliance and driving non-core spend, and that’s wrong,” he argues.
“This is about a commitment to reduce a customer’s spend, not about the price of a pen.”
This is an interesting move by Banner. We’ve talked for years about how the industry has to combat commoditisation and shift the discussion with clients away from the price of a Post-it or a box of copy paper.
In fact, I was in Paris last week at the annual conference of French trade association UFIPA where guest speaker, business strategist Maximilien Brabec, raised this very point.
He talked about taking complexities away from the client and selling savings, not costs. That sounds like what Banner is trying to achieve.
Obviously, it’s not a tried and tested model yet – only a limited number of customers are transitioning from open book to a monthly fee – but Costin doesn’t view it as a risk.
“The general volume is declining in office products and we have to evolve and diversify. If we don’t take these types of initiatives, the industry will probably just die slowly, and there is no way we can afford to do that.”
Autor: Andy Braithwaite, 18 July 2016