Luxury brands' approach to srm
STATE OF FLUX
2014 GLOBAL SRM RESEARCH REPORT
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Figure D. Percentage of respondents and proportion of key suppliers currently regarding them as a customer of choice
10% 15% 20% 25% 30% 35% 40%
○ LEADER ○ FAST FOLLOWER ○ FOLLOWER ○ LUXURY BRAND
0% 5%
76% TO 100%
51% TO 75%
26% TO 50%
0 TO 25%
© 2014 State of Flux
THEY WORK HARD TO CREATE SUPPLIER LOYALTY
important but so are the simple things like thanking suppliers for their contribution, promoting them in the industry and inviting them to join on cycling trips. This was echoed by one of the luxury clothing organisations, where their focus was initially operational starting with performance management, but evolving into better value, relationships and innovation. Some of the luxury brands have started out small, or were considered small in their respective sectors. Tony Burt, founder of East Imperial luxury tonic water shared their initial challenge to get the bottler to produce the right design, quality and volume. When they first set up, they often spent more time selling their vision, strategy and plans to prospective suppliers than customers. This view was echoed by a number of the other luxury brand organisations that were often dealing with suppliers much larger themselves, and despite the cache of the brand still, found themselves ‘selling’ to their suppliers. Figure D shows the percentage of respondents and the proportion of their key suppliers who currently regard them as a customer of choice.
One thing all luxury brand organisations have in common is they work hard to create supplier loyalty. Sunseeker are a good example of a company that go the extra mile to create brand loyalty with customers and they work very hard to extend this to their suppliers. Initially, brand loyalty from suppliers is relatively easy to achieve given the attractiveness of the brand, however effort is required to sustain it. This involves continuing to create the right operating environment – consistently focusing on collaboration and displaying the right behaviours to reinforce this. Some organisations offered benefits to their strategic suppliers, usually reserved for staff (such as staff discounted products). Others like Bang & Olufsen focused on ensuring the supplier always left with more knowledge about design. One ensured suppliers are invited to attend customer events / activities and another offered full access to internal training courses, treating the supplier staff as members of the extended team. Rapha acknowledge the need for building trust on both sides by doing the basics well and keeping the relationships with suppliers human. Rapha like to take people on the journey with them. Clearly quality and performance are
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