What is Long Tail Spend? Definition
What is Long Tail Spend? Definition
What is long tail spend? It’s a term used in business and procurement that refers to the aggregate of low-volume, indirect purchases that a company makes. Long tail spend is often 10-15% of a company’s total annual spend, but can be as high as 30-40% for certain industries. While long tail spend may not be the most glamorous part of business, it’s important to understand and manage because it can have a big impact on your bottom line. In this blog post, we will provide a definition of long tail spend and explain its importance in business.
What is long tail spend?
As its name suggests, long tail spend is the spending that occurs at the “long tail” of the purchasing cycle. This is the phase in which buyers are considering a purchase, but have not yet made a decision.
During this phase, buyers are researching their options and comparing products. They may also be engaging with salespeople or customer service representatives. Long tail spend usually occurs over a period of days or weeks, and can represent a significant portion of a company’s total spending.
Companies often focus on reducing their short-term, or “head” spend in order to save money. However, this can be pennywise and pound foolish, as long tail spend can actually represent a much larger opportunity for savings.
In order to effectively manage long tail spend, companies need to first understand it. This means tracking where and how much is being spent during this phase of the buying cycle. Once this data is collected, companies can work to optimize their processes and reduce waste.
Some common strategies for reducing long tail spend include:
-Improving communication between marketing and sales teams
-Reducing the number of steps in the purchasing process
-Offering more self-service options for buyers
-Making it easier for buyers to compare products side-by-side
How can you optimize long tail spend?
There are a few key ways you can optimize your long tail spend:
1. Make sure you have accurate and complete data. This includes both historical data as well as current data. Having good data is the foundation for making good decisions about where to allocate your long tail spend.
2. Use a spend analysis tool. A spend analysis tool can help you understand where your money is going and identify opportunities to save.
3. Work with a long tail spend expert. An expert can help you understand the nuances of long tail spend and how to best optimize it for your company.
What are the benefits of optimizing long tail spend?
When it comes to optimization, long tail spend can provide some significant benefits. Here are a few key examples:
First, when you optimize your long tail spend, you can achieve greater efficiencies in your overall procurement process. This is because you can find and work with suppliers that offer the most competitive prices for the goods and services you need. In addition, by optimizing your long tail spend, you can also streamline your supplier base, which can further reduce costs.
Second, optimizing long tail spend can help you improve your negotiating leverage with suppliers. This is because when you have a smaller number of suppliers, each one is typically more important to your business. As a result, you will be in a better position to negotiate better terms with them – including prices, payment terms, and contract terms.
Third, optimizing long tail spend can lead to improved quality and service levels from suppliers. When you have fewer suppliers, they will often be more responsive to your needs and more invested in ensuring that they deliver high-quality goods and services.
Fourth, optimizing long tail spend can give you greater visibility into your overall supply chain. When you have fewer suppliers, it’s easier to track their performance and identify any potential issues. This visibility can help you resolve problems quickly and avoid disruptions down the road
How can you reduce long tail spend waste?
There are a few ways that you can reduce long tail spend waste:
1. Review your long tail spend on a regular basis. This will help you identify any areas where you may be overspending.
2. Make sure that you are only purchasing the items that you need. Don’t purchase items just because they are available at a lower price.
3. Consider using generic or alternate brands for some of your purchases. Generic brands can often be just as good as the name brand products, but at a fraction of the cost.
5 Ways to Optimize Your Long Tail Spend
1. Invest in quality long tail keywords.
2. Research your competition and know your audience.
3. Create compelling content that ranks well for your chosen keywords.
4. Use effective SEO techniques to get your content seen by more people.
5. Monitor your results and adjust your strategy as needed.
Conclusion
In conclusion, “long tail spend” is a term that refers to the total amount of money spent on low-volume items. This can be contrasted with “head spend,” which refers to the amount of money spent on high-volume items. Long tail spend can be difficult to track and manage, but it’s important to consider because it can have a significant impact on your bottom line.
