A winning smile and a decent telephone manner will get you so far with suppliers. But working out a variety of ways to become customer of choice is the secret to getting the best deals on the terms you need.
What is “customer of choice”
It’s not always a buyer’s market. Suppliers can, and do, choose to offer material and often significant benefits to the customers who are easier, faster, more enjoyable and more valuable to do business with. Becoming one of these customers is not only advantageous for transactions and negotiations, attaining customer of choice status implies a richer relationship that brings further opportunities.
Benefits of being “customer of choice”
These advantages might include:
- Access to the supplier's best people. Whether it’s account managers with better interpersonal or language skills or more talented production staff, having the best human resources on your account is invaluable.
- Higher quality supply. This results in less rework, higher productivity, better outcomes for end customers and improved margins.
- Priority treatment in account management. Trusted customers of choice might gain visibility into cost structures, production scheduling, product pipelines – and even gain financial benefits from lower transaction costs.
- Preferential use of the supplier's latest technology. This is particularly valuable when your rivals source materials or products from the same or similar suppliers. Your gain in new product development is their loss.
- Favourable terms of supply or payment. Suppliers in China seldom offer credit terms until well into a relationship. Accelerating your journey to customer of choice will speed that up.
- Allocation of constrained resources or production capacity. In period of high demand, or when there have been problems in logistics or elsewhere in the supply chain, the customer of choice is more likely to get their job done first.
Becoming “customer of choice”
How do you go about attaining this status with suppliers? When the Poole College of Management at North Carolina State University interviewed 100 companies about being a customer of choice, they identified 8 key attributes.
These form an excellent foundation to winning over your suppliers – as comments from our own partners, customers, their suppliers and experts testifies.
1. Paying your bills. Stick to the agreed payment terms and help suppliers out if there are problems, and you’ll win them over quickly.
“We pay earlier – and then negotiate an extra discount, as well as staying top of the list in terms of the supplier’s preferred customers. Discounts are always available if you can be flexible on the payment terms – and offering cash up front really focuses a supplier’s attention.”
Anthony Hogarth, Director, Creative Distribution
2. Side-step bureaucracy. Being easy to do business with – taking fast decisions and being flexible – will win plaudits from suppliers.
“We like to be seen in the marketplace as a fast-response company. If we need to ask for a two-week turnaround on a batch of bespoke radios for a customer, the manufacturer tends to be a lot more responsive if we’re offering 50% payment up front.”
Kervin Maconochie-Labrosse, Director of Communication Specialists
3. Talk to them. Doing business via email is impersonal and open to misinterpretation. Hit the phones and, if possible, visit your suppliers to gain their trust.
“The best customers? The ones that are easy to work with – where communications are quick and clear. Conversations with customers are important – it’s something that should be regular. You don’t want the only conversation to be a bargaining session when they submit a big order.”
Punit Chowdhary, Director, Priya (apparel exporters in Delhi)
4. Set clear parameters. If you have particular needs, quality thresholds, certifications or packaging, let suppliers know. They’ll welcome the clarity and are likely to feel valued, not put-upon, by reasonable requests that show you care about their materials, products or services.
“One of our French clients is really great – they follow the contracted procedures in a timely manner. And it means we have mutual trust. In the beginning of the relationship, the customer sent a third party to check the quality of the goods. Now, they can accept goods based on photos and assurance by phone and email.”
Sunny Zheng, Yuyao Sun-Rain Sprayer Co. Ltd.
5. Stick to the contract. It doesn’t matter how tough or friendly your negotiation was, if you don’t both stick to the terms you agreed, the relationship will falter. Trust comes from certainty.
“All too often, customers on 30 day credit will stretch their payment out – to 75 or even 90 days. That means we have to limit our business with them, and we’re always ready to set hard limits on credit.”
Punit Chowdhary, Director, Delhi-based Priya textiles
6. Address problems quickly and reasonably. When problems arise – caused by either side, or without fault – work through amicable settlements. Customer service is a two-way street.
“This is about understanding the pressures on suppliers better – and taking a more strategic and mutually beneficial approach to the supply chain.”
7. Forecast better. Most suppliers, says the research, don’t trust customer forecasts. Be the exception. Establish a reputation for good forecasting and suppliers are more likely meet your needs when you then have a big order for them.
“For those suppliers, knowing that a customer can take the stock that they forecast they’d take is a huge plus.”
Anthony Hogarth, Director, Creative Distribution
8. Help them build their business. If your supplier wants to offer new products or services, grow into new markets or change their set-up, how can you help? Willingness to adopt new systems or advise on markets is a big plus.
“The information flows both ways. We keep our ear to the ground for new product opportunities and when you’re a reliable and co-operative customer, factories are keen to keep you in the loop.”
Brendon Bester, Operations Manager, The Import House