What do Suppliers Think of ‘Customers of Choice’?
As the economy starts to rebound and leverage positions change, becoming a ‘customer of choice’ is being discussed in many procurement conference rooms. You would think that us sitting around discussing how to be the most fabulous customers possible would be music to a sales person’s ears!
When procurement talks about being a customer of choice, it may mean focusing on value rather than price, taking costs out of the relationship rather than saving on products/services, or working with our suppliers to develop future requirements and product lines. Because this implies a more relationship-intensive arrangement, we can only strive to become a customer of choice for a select number of strategic suppliers. In return for our goodwill, we expect returns like creative input, prioritization of our requested functionality or service additions, and help should supplies start to run short.
What do our suppliers, and more specifically our sales reps think of this dynamic? I haven’t found a source yet where they describe us as customers of choice, but I have found plenty of posts on strategic relationships and customer loyalty. Reading about their perspective will help us understand how to make the dynamic work and what they are looking for from the arrangement.
In a recent post on ‘Leveraging Loyal Customers’, Patrick Gibbons from Walker Solutions (a privately held consulting firm specializing in customer strategy) describes loyal customers and the value they represent for a sales organization:
“truly loyal customers are those that are positive in both their attitude and behavior. In other words, they have every intention of continuing to do business with you and they have a positive attitude toward your company. They like working with you and are more likely to increase their spending and recommend your company to others.”
In Gibbons’ opinion, the best things loyal customers can do for suppliers include serving as testers of new offerings and solutions, functioning as references for prospective clients and helping turn around what he calls ‘trapped customers’ or those who don’t have an alternative at the time being but aren’t happy.
The most important thing is having the conversation up front to see if what you are willing to do for a supplier and what they are willing to provide in return makes a good match. While you do have to select which suppliers to try a customer of choice relationship with, it may not require a formal supply base segmentation process. Instead, if you see an opportunity to benefit by working more closely with a supplier, that may be a good indication that it is worth considering that supplier for a strategic relationship.
The next challenge of course is how to get started and how to make the relationship a success. We reached out to The Sales Guy, our resident (undercover) sales expert for some advice:
“In my opinion, the best way to establish these strategic relationships is by bringing the executives on both sides together to explore the possibility. It isn't enough to want the outcome. The needs on both sides must be met and there needs to be compatibility. Procurement and sales can lay the groundwork but the executives must forge the agreement, and in order for the relationship to thrive, those executives need to stay involved.”
The Sales Guy’s suggestion that executives on both sides of the relationship commit to its value and then stay involved, is another way of prioritizing and limiting how many of these deals you try to forge. Going through the early work of making a case to get your own executives involved will also take you down the road of proposing the framework for a customer of choice relationship to your supplier.