Many, many, many years ago I was featured on a CBC television program for an innovative Employee Purchase Plan or EPP that I developed that generated more than $1 million of high margin business over a six week period for a major computer manufacturer.
For those who may not be familiar with the EPP concept, it is quite simple. A PC manufacturer gains access to a large corporation’s employee base by offering their systems at a better than market price discount.
Conceptually it is a wonderful idea however . . . a good percentage of EPPs never deliver the anticipated sales volumes.
As someone who has always liked to figure out how everything works and then try to find a better way, this was a challenge that I had to pursue.
Rather than provide you with the long version of this story, I will cut right to the chase. The big problem with EPPs was that while the discounted pricing was attractive, for the vast number of employees it was still out of their price range. This was due to the fact that many did not have the credit to buy the systems.
About the same time, GE Capital was looking to get into the consumer marketplace. The proverbial light-bulb went off when I recognized that GE’s eagerness to penetrate a new market might make them open to what would have otherwise been considered a ridiculous idea; guaranteed credit approval for all employees.
The key was to find a way to assuage GE’s concern regarding the potential for a high rate of delinquency. I did this by working with the client company’s CFO to institute a payroll deduction program. Specifically, the (small) payment for an employee’s system would be deducted directly from their paycheck on a bi-weekly basis. As the majority of employees had been with the company for years this meant that as long as they were drawing a paycheck GE was assured of receiving payment.
Based on this new model, I launched the EPP program through a series of employee presentations at 5 different plants. Within 24 hours of the first plant presentation, the fax machine back at the office was inundated with orders to the point that the company had to set-up a second fax line to accommodate their regular business.
The lesson I learned from that experience is simply this . . . addressing the financial concerns of your target client or market supersedes everything. Or to put it another way, the computer I was providing became secondary when I figured out a way of helping the employees to finance their purchases. The computer of course had to work but, I could have been selling any brand under the sun at that point.
It is this experience that enabled me to immediately recognize the genius behind the recent announcement that Tradeshift was getting into the “factoring” business as a means of ensuring that “SMEs benefit from improved access to cash.” This is the ultimate enticement to SME suppliers to use the Tradeshift platform, while simultaneously enhancing the perceived value and financial stability of their overall supply network for their large enterprise buyers.
Once again, genius!
Is Tradeshift on Target?
The only question I have is how good is the Tradeshift platform?
After all, there is a world of difference between supply base size and supplier engagement re the percentage of overall suppliers that actually win business and at what cost.
Look for my follow-up post on this most interesting story in the near future.
30
Procurement Insights 
Market Dojo eSourcing
October 16, 2013
Tradeshift are a fascinating company to study. Starting off with a novel philosophy that goes against the grain of the dominant market players who are stiffling innovation in the market by charging everyone and everything they can – buyers, suppliers, you name it. We really support what Tradeshift is looking to accomplish.
What is also great about this article is that Tradeshift are not a sponsor of this blog and yet they get good coverage. Bravo! We have recently had our comments censored on another highly regarded blog for doing nothing more than posting a comment in support of an article. Apparently the sponsor didn’t want anyone else to contribute. Honestly? If you can’t post comments in an allegedly democratized blog that supports free press, then perhaps we’ve unwittingly fallen into a parallel world where North Korea has taken over.
piblogger
October 16, 2013
Thank you for the feedback Market Dojo. Your sentiments seem to reflect what we are hearing more and more from the general market re that Procurement Insights is the “go to blog” in terms of providing reliable, well researched industry coverage that tells it like it is.
I believe that our approach serves the best interests of sponsors and non-sponsors alike as well as the industry as a whole, which is perhaps why Media Miser recently rated us as one of the top market influencers in terms of reach (http://wp.me/p4HrB-3xd) ahead of notable players such as Deloitte. Ironically the controlled or sanitized reporting to which you had referred in your comment was highlighted in a post about Deloitte’s back in 2010 (http://wp.me/p4HrB-1Al).
In the end, we will continue to both inform and empower our readers and listeners with expert perspectives on the real events of the procurement world which will hopefully enable them to make the decisions that lead to their being successful. This and this alone is Procurement Insights’ ultimate goal!