Friday, 31 October 2014

Competition works! But only if customers want it - guest post

This is a guest post by Vlado Prosenik from Efekto Pro. Efekto Pro are our consultancy partner in Slovenia.  They help customers make purchase more efficient. You can read the original article here

Competition works! But only if customers want it.

The Slovenian Consumers' Association (ZPS) has demonstrated that a fresh approach can save money. In cooperation with external partners ZPS conducted an auction for the purchase of electricity and natural gas for households. The result was an average 21% reduction in electricity prices and a 15% reduction in the price of natural gas. 24,000 households joined the "change and save" campaign and will benefit from significant reduction in their energy bills, with the same service level they are used to.

Reverse auctions have become available to both businesses and individuals.

10 tips for creating savings with the reverse auctions:

  • Choose the right partner and the right tool for the execution of the reverse auctions
  • Select goods or services which have significant value and several providers are able to supply
  • Make the auction attractive to providers
  • Do not give providers details of the other suppliers who will be involved in the auction
  • Do not give special treatment to any suppliers who may not wish to participate in the auction
  • Use a weighted auction, where the price is not the only criterion for supplier selection - specify other important criteria and weight accordingly
  • Think carefully about how long to run the auction, and whether to offer a dynamic close period, which ensures suppliers will always be able to respond to the offer of their competitors
  • Think carefully about  the minimum and maximum price change you will allow
  • Help providers to understand the principles and techniques of participation in the auction and to provide ongoing support
  • Assign the contract to the winner of the auction

Auctions by the EFEKTO PRO perform for our clients usually bring savings of between 10 and 40%.

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1 comment:

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