How to Become a "Customer of Choice"

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📰 In This Week’s Edition…

Hi there,

Don’t worry. Your suppliers don’t actually hate you. At least I don’t think so… But today’s article is about ensuring they never do.

In fact, I want to make the case that having strategic suppliers that love you actually leads to the best possible business results… The trial starts now.

In this week’s edition:

• 5 procurement jobs that caught my eye

• Why becoming a “customer of choice” for strategic suppliers leads to a competitive advantage for your business

• Why your ProcureTech & critical IT vendors should be considered strategic suppliers

Please rate the article at the bottom of article and leave me a comment with your thoughts. I read every one.

Have a great week,

Joël

P.S. In case you missed it, here was my most popular LinkedIn post of the week:
ProcureTech March Madness 2024: 'Sweet 16' Group 1 and Results of the rounds of 32 and 64

☝ If you want an overview of a good chunk of the leading Procurement technologies on the market, this is a good slide deck to check out.

📋 Job Board

Here are 5 job openings that caught my eye this week:

Krispy Kreme is looking for a Director, Regional Sourcing - Europe
Full Time | Remote | London, UK

Manulife is looking for a Manager, North American Procurement
Full Time | Hybrid | Toronto, Canada | Salary: $84-151K CAD

Netflix is looking for a Strategic Sourcing Category Manager
Full Time | Onsite | Los Gatos, California | Salary: $50-240K

OpenAI is looking for a Senior Manager, Strategic Sourcing
Full Time | Hybrid | San Francisco, California

United Airlines is looking for a Managing Director, Global Procurement
Full Time | Hybrid | Chicago, Illinois | Executive Role

Are you looking for a digitally-minded procurement professional?
Send me your job posting.

🔑 Key Takeaways

No time to read the rest? Here are the key takeaways:

1. Being a “customer of choice” means you are customer who is easy to deal with (in all senses of the phrase).

2. Becoming a “customer of choice” requires you adopt a mindset that keeps strategic supplier interests top of mind.

3. The benefits of being a “customer of choice” are multiple: access to your strategic supplier’s best ideas, talent, prices and latest innovations (and just a better day-to-day overall…).

Read the full 🌙 Sunday Night Note for all the juicy details.

🌙 Sunday Night Note

Being a “customer of choice” for your strategic suppliers is an easy way for to generate more value for your business.

What Is a “Customer of Choice”?

In essence, being a customer of choice means you’re easy to deal with… It’s a pleasure doing business with you!

This position your company to gain access to your strategic supplier’s best ideas, talent, prices and latest innovations (as long as you ask…).

But why do I say it’s an easy way to generate value?

Because it’s a mindset more than a method. Once you adopt it, the value generation is on auto-pilot.

How Do You Become a ‘Customer of Choice’?

Becoming a “customer of choice” is all about widening your frame of reference regarding supplier relationships. Let’s illustrate.

When it comes to supplier relationships, transactional thinking is very common… We send an order (a “command”) to the supplier and we just want them to fulfill it optimally (e.g. price, payment terms) according to our requirements (e.g. delivery date and address). “Just get it done!”

This works fine to carry out a transaction but it’s a horrible way to maximize value, especially in strategic relationships (high volume, high value, high criticality goods and services)…

In these relationships, you need to widen this transactional relationship frame of reference. You need start thinking about the supplier’s business as your own and to treat it as such. This is true partnership.

To coach yourself, add this little ditty to your decision-making checklist:

Here’s the cheat sheet of behaviors this question should help cultivate :

• Define mutual values from the start of the relationship

  1. Design your relationship as a true partnership. Start where all long term relationships start: common values to guide everything else.

  2. The Vested approach values are a great place to start: reciprocity, autonomy, honesty, equity, loyalty and integrity

• Truly collaborate

  • Understand your supplier’s business

    • What is their mission/vision, objectives? How can you contribute in mutually beneficial areas? Read their yearly reports!

    • How is their account team structured? Take the time to meet everyone as if they were employees.

  • Define joint business processes together; don’t impose

    • Otherwise, you may be imposing unreasonable tasks on your supplier that sours the relationship then and there.

  • Be open and transparent in your information sharing

    • Sure, take the time to align internally before sharing to have a consistent message/position… But SHARE!

  • Treat your strategic supplier’s operational problems as your own (because they soon will be otherwise…)

  • Always be in “joint continuous improvement” mode, listening for festering issues

• Be firm but kind

  • Be explicit with your objectives and how you are measuring the performance of the relationship

  • Be demanding (always ask for move value) but be forgiving when you see progress being made in the right direction

  • Start at 100% trust and erode from there instead of starting at 0% and building from there.

  • Praise in public, criticize in private if you want real feedback.

• Commit for the long term

  • If the relationship itself is not dangling over supplier’s heads, it is more probably you will get straight answers instead of the ones that will keep the party going at all costs…

• Pay the bills on time…

  • Simple but crucial to be considered a good customer.

• Have a strong brand

  • When suppliers can brag they are working with you, they don’t want to lose that.

• Repeat yourself

  • Suppliers, especially at the operational level, are not used to being true partners… You’ll have to coach them into a safe space before they commit, open up and the true value possibilities reveal themselves.

What’s Procurement’s Role Here?

Often, Procurement won’t be the only person who can influence whether or not you become a “customer of choice”. Requesting business units have a large role to play as well given they are interacting with the supplier day-to-day.

Therefore, your role as Procurement may be one of education and coaching of internal stakeholders on the above concepts.

One of Procurement’s roles is to safeguard the business’ interest. This means ensuring both suppliers AND requesters act in the best interest of your company. In these strategic supplier relationships, this means coaching the business to adopt “customer of choice” behaviors… This is probably the toughest part if they are used to treating suppliers as commodities…

Why Is Being A “Customer of Choice” Even More Important for your IT/ProcureTech Suppliers?

When companies reach a certain size (e.g. > 100 employees), then Gaussian Bell Curve (Normal distribution) starts to apply… Only a small portion of their employees will be exceptional, the majority will fall in the average and a small portion will be below average (P.S. this also applies at your company 😅)

Today, technology is THE force multiplier that allows you to scale your business. Procurement needs to know which pieces of tech are the force multipliers for your business and which are not (commodities) — And ProcureTech is Procurement’s own force multipler...

Then, become a “customer of choice” with the identified IT vendors.. This is the definition of a strategic supplier. This will give you access to:

• Their A-players (Talent & Ideas)

  • IT is a knowledge-based industry. If the supplier’s A-players hate working with you, they will be reassigned to other accounts no matter how much you protest. Your supplier can’t afford to lose them.

  • A-Players, by definition, will have the best ideas. If they are not on your account, you’re not benefiting from these.

• Latest innovations

  • Everyone says they want access to innovation… However, everything needs to work perfectly right away for fear of retribution… I’m sorry but that’s not how IT innovation works…

  • If you’re a transparent, demanding but forgiving client that’s fun to work with, you’ll be the first one approached for co-innovation, pilot projects, etc.

  • Suppliers will feel safe pitching you on new ideas that haven’t been tested with other customers yet.

• Better/Faster support for emergencies

  • Your IT infrastructure is a patchwork of systems from different suppliers on different technology stacks each on their own distinct software development lifecycles.

  • When you inevitably make changes to this landscape for an upgrade, to fix a problem or add a new piece, your IT department’s job is to rehearse and plan these changes to minimize the chance of issues and impacts to operations.

  • However, they will never bat 100%. They just won’t.

  • When everything goes to hell in a handbasket (and it will…), you want your strategic partners to be ready, able and willing to move mountains for you.

  • “Customers of choice” get this kind of service.

• Best prices

  • If you are demanding but also everything else we’ve discussed so far (e.g. easy to work with and fun!), I guarantee you’ll get better prices than other customers.

  • Being kind (not nice) is not just a moral endeavor… It’s good business period.

So Where Is the Competitive Advantage?

The competitive advantage doesn’t come from a single “customer of choice” action or even a year’s worth… It comes from embedding the “customer of choice” values and principles into company culture. It’s about how you treat strategic suppliers for the long haul.

Have you ever heard of the Matthew Effect (or the accumulation of advantage effect)? If you identify your strategic suppliers (the ones that give your business the most advantage) and work on growing that advantage through “customer of choice” strategies and behaviors, you’ll wake up in a decade on a different level than others who chose to treat their suppliers as commodities.

So there you have it… I rest my case.

Aim to be a “Customer of choice” with strategic suppliers or drift into irrelevancy.

💭 Quote of the Week

📊 How Did I Do This Week?

Best comment from last week:

🤘 I don’t think you’re the only one Jared…
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Till next time,

Joël