2014 Global SRM Research Report - Customer of choice

ARTICLE ARTICLE

STATE OF FLUX

2014 GLOBAL SRM RESEARCH REPORT

1. KEY CLIENT ACQUISITION AND BRAND ASSOCIATION

Suppliers would like to align to your brand or have your brand on their corporate CV.

Diminishing aractiveness

However, once the customer contract has beenwon and the corporate CV enhanced, customer association no longer drives customer of choice benefits in the sameway. Therefore, the attractiveness of this attribute diminishes over time.

TIME

2. REVENUE, PROFIT AND SUPERIOR ‘WALLET SHARE’

Diminishing aractiveness

Suppliers can either earn good revenue or margin on your account.

Inadequate financial outcomes are a de-motivator but when financial measures reach a desired level they no longer drive customer of choice benefits to the same extent.

TIME

3. CUSTOMER ATTRIBUTES – DIFFERENT FACTORS AND BEHAVIOURS THAT SIGNAL THE SUPPLIER AS A ‘TRUSTED PARTNER’

Sustained araction

Suppliers find you easy to work with and there is mutual respect.

Ease of business, collaboration, trust and partnership are all behaviours that will drive sustained customer of choice benefits.

TIME

So what can a company do to achieve this sustained attraction? The answer could lie in the well-known proverb: ‘do unto others as you would have them do to you’. Expressing this common ethical value dates back centuries to the term 'ka me, ka thee' (do a good deed for another and the favour will be returned). Unfortunately in a business context this ‘golden rule’ denoting mutual cooperation in its positive sense, now often carries more negative connotations of back-scratching and cronyism. Even the term reciprocity is nowmore often associated with ‘trading’ of business sales and revenue, and is generally regarded as something to be avoided if possible. Indeed, in some regulated industries such as energy, financial services and the public sector, it is expressly forbidden. However, this basic ethical value of ‘treat others as you would like others to treat you’ should still have a place in our business relationships today – especially when we aspire to be a customer of

choice for our key suppliers. Your behaviour could play a big part in why a supplier would see you as a customer they would value more than others. Putting this golden rule into a supplier relationship context, the concept describes behaving in a way that acknowledges that relationships need to be two-way; have an element of reciprocity; and, over time, deliver the requirements of both parties if the partnership is to be sustainable. I recognise that some people, both within procurement and the wider business, have a fear of the word ‘partnership’, while suppliers will also use it in its loosest sense. But ultimately our aim is to have suppliers wanting to work with us, and wanting to give us early access to innovation, preferential pricing and the ‘A team’ (all the things we’ve seen that SRM leaders enjoy). And the best way of getting suppliers wanting to work with us, is to develop mutual trust and treat themwith respect.