How You Can Become More Strategically Important To Your Customers

Are You A Strategic Supplier?

The question is not ‘Are you are a strategic supplier?’   That is because a ‘Yes’ or ‘No’ is generally insufficient.  There is for example no point in saying ‘we are not strategic’ and giving up in a sense of helplessness.

Think of it this way.  Becoming a strategic supplier is not a matter of flicking a switch, but rather turning a dial.  It is not an ‘On’ or ‘Off’ switch that determines whether you are strategic.  Rather think of strategic importance as a dial – one that can be adjusted up, or down.

The real question is ‘How strategic are you?’ and more to the point ‘How strategic can you become?’  Let’s start with the first question.

How Strategic Are You?

With some of your most important customers in mind, answer the ‘How strategically important are you?’ question using a scale of that ranges from 0 to 10. 

Remember to answer the question from the customer’s perspective where 10 is ‘very important’ and 0 is ‘not important at all’.

Apply it to your top key Accounts below:

Customer Name:	How Strategically Important Are You? (On A Scale of 1-10 )
1.
2.
3.

If you find yourself today at a 4, or a 6 out of 10 on the dial in terms of your strategic importance to the customer you are not necessarily stuck there.  That is the good news: you can strive to ‘turn up the dial’ in terms of your strategic importance to the customer over time. This is something we will discuss shortly.

How Strategic Are You?

For those who seek to be strategic it is ‘the ultimate quest – the search for meaning, or purpose’. That sounds like a lofty goal, but it begins by asking two simple questions:
These sound like simple questions, but they get to the very core of just how important you are to your key accounts.  For that reason we recommend you fill out the blank spaces above before going to the next page.

Why Do You Matter?

The words ‘strategy’ and ‘strategic supplier’ can get a little confusing.  So let’s strip them back to the core.  Being strategic is simply a question of how important you are to the customer.  More specifically it is about how and why you matter in terms of their performance.

Being a strategic supplier means that you support their strategy and contribute to their success (either directly or indirectly).  Indeed, there is nothing more strategic than success.  So how much youcontribute to your customer’s success is the ultimate measure of just how strategic you are. Measuring and communicating your contribution to the customer’s success is key.

At the highest level the supplier’s importance derives from its impact on the overall performance of the customer’s business and its key business metrics.  That is the zenith in terms of strategic importance and it measures success in a way that ultimately impacts on the top line and the bottom line.

However, it is not just about the top, or bottom line, there are any number of levels at which a supplier can have an important impact on customer’s performance and success.  The strategic supplier can have an important role to play at any point of the customer’s supply or value chain.

A supplier’s importance can be measured, for example, in terms of its contribution to the success of; a particular department, function, project, facility, manager, team, or user.  That is why it is important to answer the question ‘who do you matter to?’

Who Do You Matter To?

Your company may not be strategic at a board level – that may be too much to hope for.  Indeed, if you don’t contribute directly to corporate strategy and its success the CEO or CFO may know, or care little about; your company.

However, that does not mean you are not important in other ways. You may be very important to:

• Specific stakeholders, or departments
• Particular projects, facilities, or functions
• The achievement of particular milestones, metrics, or other results
• The buyer with a specific challenge at that point in time.

Just like beauty, strategic importance is in ‘the eye of the beholder (i.e. stakeholder)’.  A key question therefore is ‘who do you need to be important to?’

It is important to decide whose strategy and performance you want to contribute to and to ensure that these stakeholders have sufficient power or influence over the supplier selection and the buying decision.
There is another dimension of the expression ‘in the eye of the stakeholder’ to consider.  What matters is not whether you think you contribute to the customer’s success, but rather what they think.  Making tangible the link between your product or service and the customer/stakeholder’s success is key.

Q. How tangible is the link between your product or service and the customer’s success?

How Can You Become More Strategic?

When it comes to being strategic most (if not all) suppliers can work at making themselves more important.  There is always scope to become more important to the customer.   We call it ‘strategic scope’.

Suppliers have to believe that they can matter to their customer – not in a delusional way, but in a seeking or aspirational way.  This is at the core of competitive strategy – it is the drive behind so many initiatives in areas ranging from product innovation to customer service.  Here is how one manager put it:

‘Wanting to matter to your customers is a natural desire, indeed it is a competitive necessity. I think of our efforts in this area as our search for meaning.  We need to continually shape and redefine what we mean to our key customers.’

So ask the ‘How can you become more strategic?’ question.  This will get you thinking about:

-        The scope that exists for your company to become more strategic

-        The specific things you can do to matter more to the customer.

Even for companies in commodity markets there are always ways to become more important.  On the next page we will look at an inspirational example of this.

An Inspirational Story

A print company spotted a nationally advertised request for tenders in respect of the printing of inflight magazines for a major airline.  Printing is an industry well known for its price sensitivity, just as airlines are known to be going through difficult times.

With all this in mind you would imagine that there is little any supplier could do to position itself as being strategic in responding to this tender.  Surely, it would simply be a matter of lowest price wins.  Read on, how this particular print company approached the tender offers inspiration or us all.

The print broker spotted the publicly advertised contract for the design and print of in-flight magazines for a large airline.   So too did many others.  However, this brokers proposal separated its solution from the pack by connecting an otherwise low cost commodity item with something that really mattered to the buyer.

In its response the broker showed the airline how it could produce the magazines using lighter paper and a number of other design features so as to greatly reduce their weight.  It provided some rough calculations showing the impact that this could have on airline profitability.

Lower weight means lower fuel consumption for the airline.  With thousands of passengers and hundreds of flights per day those savings were compelling.  The print broker focused the buyer on the total cost of ownership or the total value of the solution in order to beat the competition.

The challenge we all face as sellers is to find ways to connect what we sell, with what the customer cares about most – their strategy and results.

The lesson is that if what you are selling is not strategically important, then find out what is and be creative in connecting your product, or solution to it.  In other words if you want to matter, first find out what matters to the customer.

Connecting With What Matters To The Customer

So, what is your strategy to become more important to your customers?  Take inspiration from the print broker story and explore new ways to become more important to your customers – to matter more.

With this in mind, select a key customer and identify what matters to them.  That is their definition of success, strategy for success, key success factors, metrics for success, and risks or barriers to success.

Your Importance To ‘The New Buyer’

Don’t forget to include all the relevant business functions including for example; procurement, finance and operations, as well as the end user. This is particularly important if what you are selling is traditionally being bought by engineering, IT, or other technical functions who must increasingly defer to these so called ‘new buyer’in making important buying decisions.

The shift in the balance of power in terms of buying decisions has implications for your KAM strategy. It means that you must engage with the business and economic buyer, communicating why you matter in a language that they understand. Increasingly that is the language of numbers and the business case (or economic justification for the purchase).

4 Ways To Increase Your Importance

The objective of this insight is to help you to identify 3-5 ways that you can become more important / strategic within a key account.

To help you complete the above, here are 5 strategies to help you increase your importance:

Strategy 1: Go beyond features & benefits to engage with the customer in discussions about:

• Success & how it is measured (metrics, KPIs, etc.)
• Their strategy, goals & vision
• Any risks, dependencies or challenges

Strategy 2: Influence or shape:

• the design
• the specification
• the standard/metrics used
• the project plan
• the manual
• the workflow
• the process

Strategy 3: Look beyond the customer’s stated needs to What they are really trying to achieve, including:

• The drive for efficiency, cost reduction & innovation
• Their key business drivers
• Their competitive strategy
• What peers & competitors are doing
• What is happening in their industry
• Unmet needs
• Emerging trends and requirements for change

Strategy 4:  Identify the impediments to the customer’s performance or success:

• Hassles & frustrations
• Hidden complexity
• Compliance burden
• Unspoken risks
• Politics (incl. divergent stakeholder expectations & agendas)
• Competing projects & priorities

Strategy 5: Innovate

• Solve problems that matter now
• Resolve conflicts / tensions
• Reconcile divergent views/objectives
• Bring new perspectives
• Enhance capability
• Facilitate / manage  change
• Add new value
• Bridge existing gaps
• Connect functions, or systems

References 

John O' Gorman: Buyer Seller Insights. The Quest To Become A Strategic Supplier. Retrieved January 30, 2013 from http://buyer.sellerinsights.com/2013/11/15/the-quest-to-become-a-strategic-supplier/

Tamara Ćetković
Consultant, Coach & Project manager