MARKETING Fee’ Misleading: When Someone is a Marketer and a Buyer at the Same Time

Marketing fee is a reward being given to someone who generates sales transactions, i.e. marketer, on per transaction basis. It is a win-win solution for both marketer and the company, since marketers are rewarded based on their achievement and the company is subjected to only variable, not fixed, costs to trigger marketer for being productive.

But what happens in business today (esp. in Indonesia) is the misleading of the ‘marketing fee’ term. Not only to marketers, company gives also marketing fee to someone in client organization who made decision whether or not to use the solution being offered. The company that gives that kind of ‘marketing fee’ may say that the practice is permitted, due to the fact that the person is actually ‘helping’ the company’s sales. I put the quote-unquote, because making the decision is actually their duty, not their voluntary activity for other company (vendor/supplier). And another justification for giving ‘marketing fee’ to the decision maker is that the vendor/supplier actually had enough margins, even if they give ‘marketing fee’ they can still create reasonable profit.

In this case, in fact the decision maker acts as a buyer, not a marketer. They are doing their activity on behalf of their organization, a buyer organization, not on behalf of the vendor/supplier organization.

Let me give you an analogy. If you for example buy something from a retailer, as a buyer you always ask for a lower price. And as a normal retailer, as long as they have a reasonable profit for the transaction, they will give you a discount in order to trigger sales. It is the discount that a seller can gives to a buyer, not a marketing fee, since the buyer didn’t do any marketing activity at all. And indeed, buyers are not supposed to do any marketing activity at all during their transaction with the seller (when a buyer promotes the product to another prospect, it is a different case since that buyer is no longer be the ‘decision maker’ in that next transaction; and the buyer is considered doing a marketing activity to the prospect). I bet none of us have experienced being gave marketing fee by any sellers when we buy something from them. Indeed, it must be a discount.

Back to B2B sales, the buyer is the organization; and the decision maker acts on behalf of the organization. When vendor/supplier is able to give ‘marketing fee’ to the decision maker, that means the vendor/supplier is actually able to lower the price of the goods/services being sold; at the amount equals to the value of ‘marketing fee’ (for the minimum), no matter how much the value is. Then it is the organization that deserves the benefit, not the decision maker since he/she only acts on behalf of the organization. The benefit that the organization deserved to have can be considered as lower purchasing costs that has a direct impact on organization profit and owner’s return. And another benefit is derived from the quality of the goods/services being purchased, since the marketing fee sometimes makes the decision maker being not objective in making the decision.

Speaking about ‘owner’, every organization has an owner(s). For a private company it is clear that the owner is a person or group of persons; while in public company the owner refers to a larger group of persons, or can be considered as public as well. For governmental organization, it is clear that the owner are the whole citizens of that country.

What happen when we give marketing fee to the decision maker (in general is the purchasing division) is actually we cheat the owner of the organization. We cheat the owner, because we convert the benefit that the owner may gain from a lower price, to a kind of ‘marketing fee’ that benefits only the decision maker (while he/she is not fully own the organization, if it can not be said not to own the organization at all).

I have a dream that one day in Indonesia, there will be no more ‘marketing fee’ being rewarded to the decision maker. In that condition the competition will be more fair; since even the ‘marketing fee’ is given after the transaction and no commitment made before the transaction, it will create non-objectivity on the next procurement.

Vendor/supplier can not fully blame the decision maker, that sometimes asks for the marketing fee to vendor/supplier. Imagine that all of the vendors/suppliers are not willing to give any marketing fee, then the decision maker would have no choice. And in the end, the decision maker had to objectively choose solution which is best and has maximum benefit for the organization, without any interference from ‘marketing fee’.

Will that condition be happen in Indonesia? The decision is ours!