Luxury brands' approach to srm
STATE OF FLUX
2014 GLOBAL SRM RESEARCH REPORT
18
TTTTTTTTTTTTTTTTTTTT TTTU LUXURY BRANDS' APPROACH TO SRM
Special feature
Luxury brand organisations are likely to spend more time with their suppliers and understand them at a personal level. They are also more likely to enjoy stronger working relationships because of the high levels of trust and brand loyalty they create.
THE VALUE OF SRM IS CLEARLY UNDERSTOOD
However, there is still work to be done to put governance and structure around how the luxury brand organisations manage their supplier relationships. Our SRM research this year included a detailed look at how luxury brand organisations approach SRM. Luxury brands build their reputations on creating an exceptional customer experience and building brand loyalty with customers. We wanted to see if they do anything differently with their suppliers, and if they recognise the concept and the value of being a customer of choice. Because they are experts at creating brand loyalty, we also wanted to know if they put as much effort into their supplier experience and building supplier loyalty as they do with customers. As a group, the luxury brand organisations were all strong in the relationship development aspects of SRM, however they were less mature in the areas of governance and process. Their results were interesting – 65% were in the followers group and there were only 12% that we would regard as leaders. However, analysing the results further and incorporating the interview and workshop notes, we saw a number of impressive attributes displayed by the luxury brand organisations on SRM and a couple of areas for improvement.
It’s about getting suppliers engaged. If they’re there with you on the journey then trust and loyalty will develop. Dom Tribe – McLaren Automotive
We asked the organisations if they had developed and documented a clear value proposition or business case for SRM. Figure A clearly shows that luxury brand organisations have a better understanding of the value SRM brings to their organisation, and how it aligns to the organisational strategy, than even the SRM leaders. They were also able to document this. In fact, we observed that the luxury brand organisations are often more focused on the customer of choice benefits rather than savings benefits because of their need for quality, exclusivity and cutting-edge technology – which aligns to their luxury strategy and focus on the customer experience. Not all luxury brand organisations found it easy to start. A luxury mobile phone manufacturer explains, “We had resistance as our executives wanted to see the results before we started; but you can’t get the results without the initial impetus. Our marketplace is difficult; we have very fast turnover and the technology is continuously changing. We would get bumped by our suppliers if a large competitor came knocking, so we need to make sure we have the best relationship to ensure we remain a customer of choice.”
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