2023 GLOBAL SRM RESEARCH REPORT
CUSTOMER OF CHOICE
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Defining terms At State of Flux, the term
and respect. And it needs to be consistent at both an individual and a corporate level. Buyers need to ensure they listen to suppliers - that way they glean market intelligence and possibly access to the next big thing. The supplier experience Most organisations rightly put a large amount of effort into ensuring their customers get the best possible experience in an effort to build loyalty and to keep them coming back for more. Too few consider the experience that suppliers have doing business with them, despite being increasingly dependent upon them.
strategies for all your suppliers, or only your key partners? Entrepreneur and investor Eric Wilhelm believes the basis of a better relationship between suppliers and buyers lies in the use of reciprocal scorecards. “There needs to be a very transparent and open discussion on behaviours,” he says in an interview on page 24. “Suppliers are afraid to tell a customer when they’re wrong, but a customer has to be open to that. And often there are silos within those companies which don’t communicate and sometimes compete with each other.”
‘customer of choice’ means a client that is given preferential treatment compared to others for reasons other than sales and revenue. Advantages to being in this coveted position, include new opportunities for growth, and reduced risk and cost. Customers of choice might hope to get first refusal on innovations; greater investment in the relationship; access to and retention of the best people; superior account management; prioritised supply during periods of shortage; and a level of commitment that is a cut above and sees suppliers going the extra mile. Boosting supplier relationships in order to become a customer of choice is not about backscratching or cronyism, it’s about treating people and their businesses the way you would like to be treated and ensuring each side reaps the benefits that such behaviour brings. Relationships should be two way, with an element of reciprocity. Over time, they should aim to deliver the requirements of both parties if the partnership is to be successful and sustainable. None of this removes the ability to have respectful and robust conversations about difficult issues - in fact, achieving a level of trust and understanding can actually help to support such confrontations. Ultimately the aim is to have suppliers wanting to work for you, wanting to give you early access to innovation, preferential pricing and the ‘A team’ (all the things the leaders in this field enjoy). The best way of getting suppliers wanting to do that is to treat them with trust
When resources are in demand, it is the suppliers who have the power to choose who they supply and with whom they share knowledge and ideas.
• To find out more about how to conduct a Voice of the Supplier study and develop the right behaviour to become a customer of choice, email enquiries@stateofflux.co.uk FURTHER READING: • Interview with entrepreneur and investor Eric Wilhelm, page 42 • Strategic Account Management Association viewpoint, page 24 • The Extended Enterprise explained, page 36 • The role of Objectives and Key Results, page 70
to choose who they supply and with whom they share knowledge and ideas. Building supplier loyalty could therefore be a differentiator. Below we’ve listed six key areas in which you could see benefits as a result of becoming a customer of choice. We’ve also outlined the actions you would need to take, and the behaviour your buying organisation would need to demonstrate, to achieve them. Each requires businesses to draw on the three critical elements of people, processes and appropriate technology to ensure they succeed. Demonstrating these behaviours and actions and earning the accolade ‘customer of choice’
is not the end of the story, it’s the start. Retention of this status requires consistency and effort across organisations. As Christopher Jensen, director, customer solutions, at Strategic Account Management Association (SAMA), says on page 24: “This isn’t a case of becoming a customer of choice and staying there forever; it’s being a customer of choice for now.” Don’t forget you need your suppliers as much as they need you - maybe more. Shift your focus to ensuring the way you manage companies that are, and could be, an extension of your business is clear, fair and fruitful for both sides.
Consider the following: How you treat providers? Do you return their messages, listen to their ideas or share updates? Do you try to build a rapport with key contacts, put in place two-way performance metrics to judge you both and request regular 360-degree feedback? What happens when they enter your building or come to a meeting? Are they treated with respect and common courtesy? Do you try to understand their goals and targets both at a corporate and an individual level, and set joint annual plans (see box out)? If you do the above, do you do so consistently and constantly? And have you set out treatment
Wilhelm, who has established a number of successful supply businesses, adds: “Customers are realising that they have to become a customer of choice. They have to be open to gain- sharing and partnering, and allowing us [the suppliers] to provide an environment that’s attractive to people. If they [customers] want to be in that upper quadrant, they’re going to have to get away from that strict procurement mentality. Quality suppliers want to provide the best value for customers, and that goes way beyond the contracted price.” When resources are in demand, it is the suppliers who have the power
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