What Are the Wider Benefits of Supplier Marketing?
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The Benefits of Supplier Marketing
As the various use cases from our previous article show, the underlying principle when it comes to supplier marketing is simplification. It should be as simple as possible and as frictionless as possible for suppliers when they are doing business with you. Greater simplification for them creates more simplicity for you on the enterprise-side as well.
While this is one direct benefit, it also translates into more general, wider benefits for the enterprise, which can be summarized into four areas:
- Greater efficiency
- Higher fill rate
- Better returns on investments in technology and tooling
- Much improved chance of becoming customer-of-choice
In this article, we will explore these tangible benefits in more detail.
Greater efficiency
As recent macro social, economic, and political challenges have shown, relationships with suppliers, including those in the long-tail, are not just solely transactional anymore.
Indeed, as Elouise Epstein has stated, suppliers represent both the biggest risk to your organization, but they are also “your biggest source of innovation.” This observation applies right down to some of the smallest, and what would traditionally be considered as ‘long-tail’ suppliers. The reason for the shift from a purely transactional relationship comes down to an increasing need for mutually sharing information between the entities. Additionally, the scope of those from whom we require information is also continually growing.
This will have an efficiency impact on the business, whether it is planned for or not.
When it comes to planning, a supplier marketing approach provides at least one framework on how to deal with the impact in an upfront and organized way. It requires structured thinking and deliberate decisions to be taken around what technologies should best be used in which scenarios, how to ensure suppliers engage with those technologies and how to make sure that data is collected via the most efficient mechanism for the task, one which is simplest for the supplier, and consequently, the simplest for you.
Fill rate
Let’s consider a common scenario: You need to gather specific information from 100 identified suppliers, and you need all 100 to do it within a specific timeframe. If you are very targeted and careful about engaging with those 100 and, crucially, that those 100 are not also bombarded by other parts of your organization during the same time, then there is a higher chance that they will complete that piece of information. Suppliers, of course, want to help – there is no resistance from their side and there is a natural willingness to engage. You remain a customer and the qualities of that relationship are still true.
However, suppliers cannot know your priorities without help. Therefore, if you are targeted in your request for the information that is urgent, (with the implication that they do not have to worry about other noise), then fill rates will go up.
Again, this is akin to techniques used in marketing. For example, advertising. In advertising, if the goal is to encourage people to read a piece of content, and if that content is specifically related to procurement, then a ‘segment’ is created to target people who specifically work in procurement – it will clearly yield a much better conversion rate. You could, of course, advertise to everyone in any sector, but dollar for dollar, a far better result is achieved when activity is targeted. Otherwise, the advertising is too broad and can be lost in the noise. Exactly the same principle applies when deciding what surveys (and what size surveys) to send to suppliers. It requires planning around other activities, similar to drawing up a ‘journey’ or calendar of interactions, so that you know what you are asking from which suppliers and when.
Be focused, targeted, and the fill rate (or the number of people who take the action you want them to take) will rise.
Better returns on investments in technology and tooling
Of course, deploying technology and tooling to make the life of a buying organization more efficient requires investment in those tools. Taking an example, let’s say an invoice visibility tool or supplier enquiry ticketing service is to be launched. It is likely that the business case driving the acquisition of the technology would have been articulated as, ‘There are numerous supplier enquiries in this area, and it is not cost effective to continue resolving these as phone calls due to the costs associated.’ Therefore, to solve this, a new invoice visibility portal or supplier ticketing system is implemented. However, if none of the suppliers adopt it, use it, or engage with it, then it becomes a waste of money. You still must have the telephone-based help desk and the associated pain and cost. The value of the new tool diminishes.
If, on the other hand, you think about how to target cohorts of suppliers to adopt that new tool, in a similar manner to how a marketer would consider how to encourage customers to take a certain action, then more suppliers are going to adopt it and engage – thus the anticipated return on investments can be better realized.
Becoming customer-of-choice
If an organization is easier to do business with, if it is more efficient, and if there is a lot less friction in the relationship, particularly with regards to everyday administrative tasks, then suppliers are much more inclined (and able) to do their best work for it. There is a high chance that that organization will be thought of as a ‘customer-of-choice,’ which itself yields wider benefits.
Our recent research, the Voice of the Supplier Survey, revealed that for those organizations that achieve customer-of-choice status with their suppliers, those suppliers will ‘go the extra mile’ for it. They are more likely to give a better price, they are more likely to share innovation with you and they are more likely to supply you in times of constraint. In short, if you are a customer-of-choice, you stand a much higher chance of being at the front of the queue. As the survey showed, if a key customer is also a preferred customer, orders will be prioritized, according to 70% of respondents in the HICX study. 73% would go the extra mile for one designated customer-of-choice.
The advice therefore is: Think of your suppliers as organizations which have choice, influence that choice, make yourself easier to work with – and that will translate to you becoming customer-of-choice, which creates tangible benefits for you as an organization.
Conclusion: Find a focus and iterate
Just as in marketing, realizing the wider benefits will be an iterative process – it is best to start with one challenge or pain point, focus on that challenge, test which approaches achieve the best results (and which work best with which groups of suppliers) and gradually add new use cases over time.
In order to find those initial use cases, it is worth: auditing all the systems and tools in your landscape; determining which suppliers have or need access to which tools; reviewing the vendor onboarding software solutions and processes for those tools; checking the adoption and engagement rates within those tools for different types of supplier; mapping out known information requests, surveys and data collection activities for the year; and creating a calendar, evaluating response times and investigating response rates for those initiatives. In each case, consider both the priority for your organization and also how it would translate into an end user experience on the supplier side.
It will then be possible to identify the biggest wins or improvements that could be made. Start with those, track the results, and then add more sophisticated layers of supplier marketing over time with a focus on the activities known to have the greatest impact.
