excellence in managing the business-to-business customer ...€¦ · excellence in managing the...

excellence in managing the business-to-business customer relationship

by Dr Paul Frost, Chris Dutton and Harvey Ells, School of Service Management, University of Brighton

breakthrough research

Foreword .................................................................. 1

Institute of Customer Service .................................. 2

Siemens ................................................................... 2

Acknowledgement ................................................... 3

Executive summary .................................................. 4

1 Introduction .................................................... 5 • Aim .............................................................. 6 • Objectives .................................................... 6 • Terms of reference ....................................... 6 • Glossary of terms ......................................... 6

2 Business-to-business dynamics, issues and concerns ....................................... 7

3 The research process ...................................... 8

4 Research findings ........................................... 9 4.1 Perceptions of the business-to-

business environment ............................... 9 4.2 The contract ............................................ 12 4.3 Power ...................................................... 15 4.4 Dependency ............................................ 18 4.5 People ..................................................... 21 4.6 Business relationships ............................ 24 4.7 Technology .............................................. 27 4.8 Business evolution .................................. 30

5 Best and worst practice ................................ 33 • Best practice .............................................. 33 • Worst practice ............................................ 35

6 Conclusion .................................................... 37

7 Business-to-business customer service: actions for consideration by suppliers .......... 38

8 Business-to-business customer service: actions for consideration by customers ........ 40

Appendices ............................................................ 41

Appendix 1: Interviewee questions ............................................ 41

Appendix 2: Job titles of interviewees ........................................ 42

Appendix 3: About the authors .................................................. 43

Click the page number to take you to the relevant page or just scroll through the document

Contents

Siemens is delighted to be associated with this important and unique piece of research, which we believe offers some very interesting and useful insights into the relationship between customers and suppliers in the business-to-business environment.

Siemens in the UK employs more than 20,000 people and has hundreds of customers in a diverse range of industry sectors. Every day, there are thousands of interactions between our employees and our customers. We are continually seeking innovative ways of enhancing our service to customers and we aim to develop trusting and long-term partnerships with them and to add value by understanding their business imperatives. It is crucial that we deliver excellent customer service, particularly when service is increasingly the key factor that differentiates our offering from that of our competitors in many of our markets. Indeed, as the findings of this research demonstrate, service is even more important than price and most customers are prepared to pay a higher contract price to get higher levels of service.

Foreword

Underpinning our drive to ensure that customer service is at the heart of everything we do is a long-established initiative called Think Customer. This is all about winning the hearts and minds of our employees, so that they do their best whenever they interact with customers, however difficult the situation may be. Our Think Customer steering group took the decision to invest in sponsoring this important research as a way of identifying best practice in business-to-business customer service and account management. We plan to use the findings internally to improve our own processes and to share them with our customers and suppliers.

I am grateful to the Institute of Customer Service and the University of Brighton for their efforts in putting together this report. I am also especially grateful to those individuals who gave up their time to take part in the in-depth interviews, which form the basis of this report and offer us such useful insights into best and worst practice in business-to-business customer service.

Alan Wood CBE Chief Executive Siemens plc

excellence in managing the business-to-business customer relationship | 1Institute of Customer Service 2006

The Institute of Customer Service is the professional body for customer service whose primary purpose is to lead customer service performance and professionalism. We are a Membership organisation with a community of Organisational and Individual Members drawn from across the private, public and voluntary sectors.

Institute of Customer Service

Siemens was established in the United Kingdom in 1843 and employs more than 20,000 people in the UK. In 2005, our revenues were £3 billion, including exports of £500 million. Siemens provides innovative, high-quality services and solutions to customers in a diverse range of industries. We work hand in hand with our customers and partners in sectors including power, automation and control, information and communication, medical, R&D, transportation, financial services, lighting, and domestic appliances.

Siemens

Siemens has offices and factories throughout the UK and our head office is in Bracknell, Berkshire. The company’s global headquarters are in Munich, Germany.

For more information visit: www.siemens.co.uk

This research is part of the ICS Breakthrough Research programme which pioneers cutting-edge research into a range of service related issues.

A list of all ICS titles can be viewed on the ICS website: instituteofcustomerservice.com

2 | excellence in managing the business-to-business customer relationship Institute of Customer Service 2006

The authors would like to thank all those who contributed to the findings of the report, in particular the business-to-business customers who willingly gave their thoughts, experience and valuable time.

Acknowledgment

Exclusive research: commissioned by the Institute of Customer Service, sponsored by Siemens plc and carried out by Chris Dutton, Harvey Ells and Dr Paul Frost of the University of Brighton.

© Institute of Customer Service

All rights reserved. No part of this publication may be reproduced, stored in an information storage and retrieval system, or transmitted in any form or by any means – electronic, mechanical, photocopying, recording or otherwise – without written permission of the Institute of Customer Service 2 Castle Court, St Peter’s Street, Colchester CO1 1EW.

excellence in managing the business-to-business customer relationship | 3Institute of Customer Service 2006

It is critical that excellence in business-to-business customer service is an integral part of any organisation’s strategy. Success in a highly competitive environment is built on many foundations; organisations that ignore the importance of customer service do so at their peril.

This report examines the importance, value and key elements in business-to-business customer service; more importantly the report offers solutions. The research is based on the experiences and views of those who “have the power to initiate, continue, enhance or terminate the contract or relationship”.

The main findings of the research are that:• Customers like to be respected and well-treated.

They are not interested in their suppliers’ problems or internal politics; they like to work through one trusted individual who adds value and is prepared to develop the relationship

• Customers are particularly keen to work with suppliers who offer quick solutions to their problems, speak the same language, and offer support and guidance alongside a long-term commitment

• Customers want suppliers to suggest how the relationship can be developed and come forward with suggestions, recommendations and alternatives. They look for well-trained, knowledgeable and trustworthy individuals with highly developed customer service skills

• The contract and its construction are seen as the foundation of the business-to-business relationship and determines the supplier action. The negotiation process will indicate to a customer how a supplier will subsequently perform and has a bearing on choice of contract. The key elements of a contract are price and people

• Customers almost exclusively blame suppliers for the breakdown of any contract or relationship. However, for their part, customers need to pay attention to the needs and wants of their suppliers, e.g. by ensuring the tendering process for contracts is transparent and streamlined

• Existing suppliers with expert knowledge need to work with their customers so they can offer added value to the contract. New suppliers to a market are viewed with scepticism; to counter this, they need to develop high level customer service and negotiation skills

• Communication is essential and key to success; it needs to be regular, at the right level, and consistent.

Complacency, lack of responsiveness and failure to deliver lead to customer frustration and a breakdown in the business-to-business relationship

• Suppliers should have clear policies, procedures and protocols that ensure each customer is treated fairly and consistently

• Most customers will pay a higher contract price to get higher levels of customer service. Good customer service does not mean a high sales-based culture which is seen as aggressive and is not welcomed. Customers dislike organisations that ‘talk big’ but ‘deliver small’; they like those who are flexible and responsive

• Customers are reluctant to commit to one lone supplier, preferring to spread risk. They are concerned about how much ‘power’ a single relationship hands to the supplier and dislike those suppliers who abuse their ‘power’ and are arrogant. Organisations that are monopolies are feared the most.

Throughout this report, best and worst practices are identified and the findings are summarised in a series of easy to understand models. These can be used for training or development purposes; they are further supported by a number of self-help questions.

This report is intended to stimulate reflection and analysis by suppliers on how they can improve the quality of their business-to-business customer service. Equally, customers can consider the actions they can take to manage their suppliers more effectively. It is in the best interest of all organisations to continually develop and improve the capability and quality of their business-to-business customer service.

Executive summary

4 | excellence in managing the business-to-business customer relationship Institute of Customer Service 2006

In the business-to-business environment the relationships that occur between suppliers and customers are varied, sometimes undemanding and sometimes extremely complex. Where businesses buy mundane everyday products, e.g. stationery, the relationship can be a straightforward one; the purchasing businesses are in fact behaving as consumers. This research, however, focuses not on those types of relationships but on complex ones where there is a need for a clear understanding of the contractual relationship between business customer and supplier.

1 Introduction

Even though business customers and their suppliers will be guided by their own operating standards, policies and procedures, each organisation will evaluate supplier performance according to its own reference standards as customers. To examine this and other areas, Siemens plc, ICS and the team of researchers at the University of Brighton set a number of aims and objectives for the research.

Research into the characteristics of customer service in the business-to-consumer market has intensified over the last decade. Indeed, several previous ICS Breakthrough Research many of the Institute of Customer Service’s own previous Breakthrough Research projects have focused on this complex and dynamic area. By contrast, this report examines a very different market, one that draws heavily on general principles of customer service but more importantly displays a number of uniquely different dimensions. There has been little research into customer service in the business-to-business market and there are few significant publications. This lack of reliable data was the starting point for Siemens plc to commission ICS to investigate this very important, challenging and dynamic area with the aim of sharing the conclusions widely and particularly with organisations operating in the business–to-business environment.

Institute of Customer Service 2006 excellence in managing the business-to-business customer relationship | 5

Aim

To identify and evaluate best practice in managing business-to-business customer relationships.

Objectives

• To evaluate existing literature about business-to-business customer service

• To identify what selected organisations regard as good/best practice in business customer service provided to them by their suppliers

• To identify and evaluate the components of best practice from the perspective of the customer

• To examine the impact of organisational structures, processes, etc, and individual competencies and behaviours on business-to-business customer service

• To recommend a framework for action.

Terms of reference

The report is written for the professional who is involved, at any level, in business-to-business activities. The report is also written from the perspective of business customers based on their experiences of current or previous suppliers. However, the report is intended to be of equal value both to suppliers and customers. Both parties need to take ownership of their relationship as both have an equal part to play in its maintenance and development.

Glossary of terms

As some of the more widely adopted business terminology can be interpreted in a number of ways, for the purpose of this report the following definitions are used:

Customer: The organisation initiating a contract with a supplier to purchase goods or services

Supplier: The organisation providing the customer with goods, services or a combination of these

End user: The ultimate consumer of the customer’s goods and/or services

Business-to-business: The inter-relationship between two organisations encompassing all tangible and intangible elements.

Institute of Customer Service 2006Institute of Customer Service 20066 | excellence in managing the business-to-business customer relationship

No organisation works in a vacuum. There are external pressures: competitors, markets, international, national and local governments, customers and suppliers. There are internal stakeholders, managers, employees, contractors, shareholders and many, many more. Customer service influences and is influenced by all of these.

When organisations grow in size, internal communications, departmental structures and behavioural dynamics become increasingly complex. As they evolve they require increases in energy, resources and innovation to provide both stability and growth.

2 Business-to-business dynamics, issues and concerns

To a greater or lesser extent all organisations are both similar and different. Organisations self-evidently differ in how they are formed, their constitution, structure, policies and procedures and the way they are resourced and staffed. There is, however, a similar theme: all organisations want to survive and prosper. How organisations are seen by others and more importantly how they see themselves is essential to understanding the business-to-business environment. Organisations are also similar in that they are driven in their efforts to address the many issues and innovations flooding individual and organisational life. Developments in IT, communications practices, e.g. the Internet and email, and the very significant increases in willingness to travel have a considerable impact on the way goods, services and processes are provided. Such developments also impact considerably on the development and maintenance of human relationships.

Some managers may not be attuned to the outside environment and judge others by their own standards and practices. In the long run such attitudes and the associated behaviours can be damaging. The vast majority need to work collaboratively. When they come together in a business environment, competitive conflicts often arise because the common motives of profit and return on investment all too often generate the impression of a zero sum game. However, successful relationships are often based on the knowledge that it is mutual support and sharing which increases potential and opportunity.

Organisations often profess to be customer centric as a means of differentiation or to achieve better productivity and financial performance. The reality, however, is that some, perhaps too many, forget who their customers are and what their needs are. There is a real sense of a need for increased professionalism in those that work in the business-to-business world.


The research took place in a number of small, medium and large organisations from across the UK and from a cross-section of sectors. The organisations involved ranged from multi-nationals to small and medium enterprises (SMEs) employing between 25,000 and eight employees. Common themes emerged regardless of sector, region or seniority of interviewee. The findings are therefore considered representative of the study group. Identifying the ‘right’ individual to interview proved a challenge. This was due to the fact that a variety of directors, procurement managers and customer executives were involved in business-to-business customer service. To enable us to locate the most influential and knowledgeable individual in each organisation we therefore identified:

3 The research process

Each interview lasted between 60-90 minutes and was both recorded and transcribed for analysis purposes.

Participating organisations

• Airedale • Alfred McAlpine • Angel Trains • AXA PPP healthcare • Bovis Lend Lease • BUPA • Cains Amusements • DHL • E.ON Powergen • Fluor • Gallagher • H and H Classic Auctions • Johnson Controls • Lloyds TSB • National Express • National Grid Transco • Osborne • Seaband UK • Skandia • Unilever

The resultant 142,000 words of data were coded and analysed using the QSR NVivo software package 1. The research was not constructed to gather evidence to support or refute pre-determined ideas or themes. The central themes set out in this report have emerged directly from the words and thoughts of the executives and managers involved. In this way therefore the central themes to emerge are a reflection of the attitudes and behaviours of those with the power to initiate, continue, enhance or terminate the contract or relationship.

The following chapters and sections describe the detailed findings of the research and represent the collective thoughts of those interviewed. Where appropriate we have drawn conclusions to aid readers’ understanding of the implications of our findings. We have firstly summarised interviewees’ perceptions about the business-to-business environment as a whole. Following this we have grouped the findings into seven core themes before considering the best and worst practice. At the end of the report we present a plan of action, based on the findings that will aid those organisations who wish to reflect on and improve their own business-to-business relationships.

The research findings are based on extensive research in the business-to-business sector. In-depth, qualitative interviews with senior managers and executives were conducted using a series of open questions listed at Appendix 1. These questions were framed taking account of previous studies in this area and detailed pilot work.

the person who has the power to initiate, continue, enhance or terminate the contract/relationship.

1 In line with good research practice data saturation was reached with:• Interviews 1-3 indicating initial themes• Interviews 4-10 exploring initial themes and identifying other areas for investigation• Interviews 11-17 fully exploring previously identified areas• Interviews 18-20 confirming previously identified areas.

Institute of Customer Service 20068 | excellence in managing the business-to-business customer relationship

• The contract • Dependency • Power • People • Business relationships • Technology • Business evolution.

This chapter outlines those findings.

4 Research findings

In addition to their perceptions of the business-to-business environment as a whole, an analysis of the responses from the managers interviewed reveals seven significant themes relating to business-to-business relationships:

In our interviews, managers identified a number of significant issues relating to the business-to-business environment as a whole.

Supplier attributes

The key findings are that:• Customers are inclined to deem

suppliers as responsible for the success or failure of the business relationships

• The tendering process needs to be more detailed while at the same time more streamlined

• Early price undercutting and acceptance of minimal profit margins, although they may be helpful in securing contracts, can quickly undermine Service Level Agreements (SLAs)

• When contracts are up and running, suppliers need to ensure that contingency and disaster recovery plans are in place

4.1 Perceptions of the business-to-business environment

• Suppliers must be vigilant to avoid the ‘competence void’ that can exist when experienced employees move on

• The needs and wants of suppliers are not fully understood by customers.

As suppliers grow they can begin to compete directly with their customers in the same market. This can create obvious conflicts of interest. Customers are aware that there exists a tangible breakpoint where changing suppliers for material or financial gain is worth the trouble. Changes in customers’ strategic thinking and organisational structures can act as a catalyst for an almost immediate demand for changes in suppliers’ working practices. Suppliers may also have more expert knowledge and they can help customers in their procurement processes and in the pricing of their services.

Key words

• Suppliers• Market conditions• Geography• Culture• Capability• Transparency


Changing markets

A restricted market or a limited choice of suppliers creates customer frustration and a feeling of being disadvantaged. Organisations that are new to markets are sometimes viewed with scepticism as they may behave differently just to create an opportunity for entry. As the numbers of suppliers entering a market for the first time increases, the market can, in a relatively short period, fundamentally change both its structure and dynamics. This leads to customers repositioning themselves in relation to suppliers over the duration of a contract. Suppliers need to recognise this phenomenon and also the fact that if they cannot keep up with customer demands, contracts may not be renewed. Finally, with suppliers often installing equipment and personnel in customers’ premises, the long-term implications for and barriers to exit strategies need to be more fully considered by customers.

Geographical positioning

Despite the increasing power of national and global organisations, distance is perceived, at times, as a barrier to the development of business relationships. This is in part attributed to the ‘impersonality’ associated with a lack of face-to-face contact. Given the choice, customers prefer to deal with suppliers locally or at best regionally. Customers and suppliers both need to fully understand each other’s businesses including geography, trading niches, customers and strategic objectives along with the day-to-day working of distribution networks.

Organisational culture

A number of organisations are criticised for not changing with the times. This is often linked to mindsets, stereotypes or organisational cultures. Sometimes customer service is viewed as a low priority as it is perceived as a non-income generating function, although managers may argue that this is a regrettable response in the short-term to market pressure.

The less open an organisational culture, the longer problems take to surface. This in turn leads to a ‘blame culture’ building up. Some cultures wrongly assume a singular and linear relationship between control and power. The overall objective of the business relationship should be fully understood and shared by all those involved. Efforts to dominate or control the relationship can be damaging. Examples are sales-based cultures that can be perceived as very aggressive, often employing strong-arm tactics to meet targets, and local council cultures that can be perceived by the private sector as difficult to deal with, as there can be issues of both accountability and competence.

Supplier management capability

In many instances the capabilities of the supplier’s CEO or MD are cited as critical. Their capabilities can come under close scrutiny as they have such a significant impact on the way that the business delivers. Some senior employees avoid conflict situations and are not trusting of the staff who, they believe, are empowered. This leads to some suppliers, particularly small scale ones, being poorly managed. Strategic and lateral thinking are often thought of as innate, rather than skills that can

be provided through training. Many senior managers are cited as potentially benefiting from this type of development. Organisations that are complacent and/or fail to deliver may have their reputation harmed and will lose business.

Suppliers are accused by customers of being less capable of innovation when compared with themselves. In highly scientific fields, for example, the resources required to correctly interpret and accurately assimilate information are sometimes underestimated. Longer-term relationships cannot be solely built on the contract: a range of other complementary skills are required. Under no circumstances should suppliers waste customers’ time through unnecessary meetings and other diversionary tactics.

Transparency

Communication needs to be both frequent and of a consistent standard. If poor communication is felt to be intentional to cover operational weaknesses, the business-to-business relationship can be seriously undermined. Supply chains should be analysed on a regular basis. Avoiding suspicion is crucial and all organisations should keep and share accurate records. Subjectivity is undesirable due to a lack of equity. Preferential status assigned to supplier organisations must not be at the whim of a director; neither should the bypassing of clearly defined protocols when negotiating new contracts.

The key business-to-business environment paradigms are brought together in Figure 1.


Figure 1: Business environment paradigms

Cultural paradigm:

Norms and rules of engagement

Supplier paradigm:

Their perspectives

Capability paradigm:

Skills and people

Market paradigm:

Changing forces and views

Geographical paradigm:

Operation locations

Transparency paradigm:

Information for all


4.2 The contract

• Many larger customers choose to standardise their contracts through the use of Key Performance Indicators (KPIs) often conducting monthly quality audits. Smaller organisations audit less and fail to adopt the latest technology. This is viewed as limiting the transparent assessment of the supplier

Here, we report on some of the experiences of customers who have tried to manage and improve the terms and conditions of the business-to-business contract.

• In most cases contracts are regarded as: – the foundation of the business-

to-business relationship, and – providing a framework for

supplier action. In reality their function can

vary between constraining and enhancing the operation, practices and potential business growth

• When initiating contracts or going to tender, customers consider price and people as the ‘big two’ factors in procurement

• Most customers are willing to pay more if it guarantees higher levels of supplier service. Contracts should be viewed as investments as well as a means to an end

• Customers avoid suppliers that talk ‘big’ but deliver ‘small’ in the contract negotiation process as this indicates how they may subsequently perform. Poor contract negotiations often damage business relationships. Customers do not want to deal with weak managers who cannot deliver. The right people, in the right place exhibiting sound interpersonal skills are paramount

Customer reflections on contract management:

How you perform at contract negotiation indicates how you will perform against

the contract

• We monitor all our suppliers on delivery, performance, number of rejects, prices; things like that are done almost on a monthly basis.

• The price that one supplier came up with was just so attractive that we had no choice really than to go with them. But we absolutely abhorred the people that we were dealing with and this was not just a personal thing. Because of the price we then drove a very hard contract to make sure that they actually did supply the product at the price they quoted and when it was due to be delivered. If they didn’t there were very, very high penalties.

• We are assessing the supplier on how well they are performing because there is no point saying that we will work with one supplier when the operations team say actually they are hopeless and they will not give us any service.

• We want people to realise that we have got issues that they can help us with.

Key words

• Delivery• Review• Strategic• Consistent• Personal• Transparent


• In terms of day-to-day contract management, new suppliers are expected to quickly orientate themselves with both the customers’ culture and their market. They are expected to be able to articulate value down their supply chain, understand the field and have clear communication lines for informing the customer when problems arise. This is critical if the customer is highly dependent on the supplier

• When things do go wrong customers do not like protracted post-mortems; they just want the issue resolved. Minor indiscretions are usually forgiven ... but just the once

• Relatively few interviewees mentioned the legalities of the contract document although in high risk areas contracts were cited as being more complex with relatively higher penalties for non-delivery

• Some customers waive penalties giving them an advantage when negotiating tougher contracts at a later date

• A frequent reason given for customers prematurely terminating contracts is poor business-to-business customer service

• The awarding of a contract is not a guarantee of a future income stream, particularly if suppliers perform inconsistently. In the case of newly appointed suppliers, performance in the early stages is monitored more closely than at any other time

• Suppliers who are prepared to be flexible are in the most demand particularly if they are part of a wide supplier base. This is perceived by customers as reducing the risks of non-delivery to end-users. Suppliers need to achieve an acknowledged ‘preferred’ status or to work their way up relevant customer ranking tables

• Ethical issues arise when suppliers misuse their status outside the business-to-business contract. When serving both the customer and their competitors, suppliers need to be particularly careful of confidentiality, loyalty and wider competitive considerations. ‘Problem’ suppliers do not fully consider the customers’ end user.

Self-help questions

• Does the contract accurately reflect the nature and purpose of the business-to-business relationship?

• What mechanisms are in place to manage the contract once initiated?

• How capable are the designated contact personnel?

• How is poor supplier performance addressed?

• What are the merits of ranking suppliers and what criteria should be used?

There are a variety of ways to interpret the contract and how business-to-business customer service is subsequently managed. Figure 2 draws together these key elements, although the extent to which each applies will vary depending on the nature of the business-to-business relationship. Figure 2 also summarises the three key management considerations identified by the customer interviewees.

Are your communication channels clear?

Poor customer service = contract termination


Figure 2: Contract management dimensions

Contract component considerations

Fixed Flexible

Restrictive Developmental

High risk–high penalty Low risk–low penalty

Vague Specific

Supplier focused End customer focused

Profit source Investment opportunity

Cannot articulate value Articulates value

Unethical Ethical

Isolated Inter-dependent

Contract management considerations

No supplier comparison Supplier ranking

Erratic monitoring Programmed reviews

Low IT dependence Integrated IT


4.3 Power

• Some larger organisations are arrogant when dealing with suppliers regardless of their ability; the less suppliers respond to business changes, the more customers abuse their power

• Organisations with monopolies are feared the most. Some customers use their size and scale as leverage to gain better deals

A number of very significant issues were raised by those we interviewed relating to power and how this affects the way that customers choose business partners or elect to deal with and behave towards suppliers.

• Although it is recognised that customers have relatively more power in initiating contracts, they should ideally aim to use this power responsibly. An imbalance of power is viewed as problematic by responsible managers. It is seen to create degrees of uncertainty as suppliers may become uncomfortable when working with certain customers

• An ideal situation is to have both customers and suppliers sharing power in some recognised form of interdependent, symbiotic relationship. Power is less of an issue if there is choice in the marketplace. Organisations of similar size often have their power negated as they share similar operational issues and concerns. Similarly, if business objectives are shared, power is more readily relinquished. In these cases it is felt that there is a healthy ‘balance’

Power prose

Power shared = power balance

Organisations who are in a monopoly are feared the most

• We wouldn’t use the knowledge we’ve got to undermine their position against one of their competitors.

• Yes, we like to share the balance; we also like them to know that while they have got some significant business with us, maybe they are involved in our more important client relationships. By no means should they start thinking that they are so in bed with us that we are not going to make a change. They have to know there is competition, it keeps them healthy.

• The balance of power? I don’t think anybody has the power. They don’t want to lose us I don’t think and we probably don’t want to lose them. There has been a lot of time and money invested into getting a fair system by our people.

• Sometimes you end up with suppliers who are 95% with you which is very powerful in some respects because you can almost tell them how high to jump and they will do it. I think also that it is really unhealthy because if they are really not delivering and you have to say goodbye to them, there is a lot of emotion behind that because all of a sudden their cover is going to fold.”

Key words

• Balanced• Supportive• Leverage• Abuse• Fear


• Some organisations create exclusive contracts with suppliers to stop them servicing their competitors. This practice could equally be considered as either ‘unethical’ or alternatively as a natural result of ‘market forces’

• Access to privileged information (whether sales or otherwise) is a key determinant of the power-base. However, this market knowledge should not be misused

• When the complexity of goods and services required by customers increases, the balance of power shifts towards the supplier

• Customers believe that suppliers should act responsibly at all times. They do not appreciate being used as an intermediary for new supplier business unless by prior consent. Sales representatives are despised if caught behaving unethically just to reach their individual targets

• Sharing power between a range of suppliers for the same product helps to reduce risk

• Although abuse of power could manifest itself in many different ways, examples of continuous malpractice are infrequent with supplier reactions rare, e.g. boycotts

• Utility suppliers are at times perceived as, quite literally, abusing their power due to customer reliance on the commodity

• Some executives interchange the word ‘power’ with ‘pride’ indicating that there may be individual subjective elements that influence organisation leverage decisions

Self-help questions

• Where does the power rest between business-to-business customers and suppliers?

• Are we as an organisation happy with this balance or does it need to be redressed?

• What are the implications of power being abused?

• Are the power issues made fully explicit from the outset of our business-to-business relationships?

• Suppliers leave themselves more vulnerable to power abuse the more poorly they perform.

In conclusion, regardless of balance of power, where the power resides should be more openly discussed in dealings between different organisations. Power also needs to be monitored, as relative power will shift over time. The situation is by no means static. Many customers recognised huge associated ethical issues especially when dependent suppliers’ contracts are terminated.

Complex product = supplier power

Customer power abuse = poor supplier performance


Figure 3: Power in business-to-business relationships

Customer and supplier

Information shared

Stability in business-to-business relationship

Power dynamics understood

Suppliers performing consistently well

Shared customer and supplier objectives

Awareness of the scale of partner businesses

Shared power

Power abuse

• Leverage as strategy

• Shielding information

• Narrow focus

• Monopolistic

• Complacent

• Aggressive

Customer

• Unstable

• High risk

• Business uncertainty

• Looking for exit

• Fearful

• Underperforms

Supplier


4.4 Dependency

• High dependency relationships need to be managed more carefully, a process that often needs more people. As a result, if there are weak managers within the suppliers’ business they are often bypassed for a faster problem resolution

• Good succession planning for key account managers reduces vulnerability

In recent years much has been written and spoken about supply chains and their development. Organisations have invested heavily, in some cases, in building relationships within these chains. It is evident that the mutual dependency built into supply chain thinking is reflected in the views of managers responsible for business-to-business relations.

• The associated theme of dependency has emerged from the interviewees’ discussion of power. Although primarily associated with risk management there are other considerations relating to dependency and these are often linked to the development of business strategies

• Most customers prefer not to be dependent on one or two key suppliers. Failure by a lone supplier can be disastrous for the customer. Where there is no choice but to have one supplier, it is critical that customers have rigorous contingency plans in place. This is paramount when suppliers provide business critical services

Customers’ views

• It’s one of continuous improvement, we need to bring them along, we need to learn from them and they need to learn from us.

• They bring innovation, they bring their methods of working. So we wouldn’t want to lose them but equally we’ve not bought into a relationship which is so dependent that you can’t extricate yourself.

• Yes, if we’re working in a particular part of the UK and they’re the only ones there we have to use them so I suppose in those situations we’re fairly dependent. What I would say is that we’re working hard with some of their competitors to decrease that dependency.

• From a marketplace point of view we try to ensure that there is competition because at the end of the day we have to ensure that we are trying to make savings for the organisation, and we are not too complacent and the supplier is not too complacent.

Key words

• Risk• Failure• Succession• Reliability• Exit strategy


• Long-term contracts can lead to supplier complacency resulting in an over dependence on inefficient suppliers. There is a strong link between length of contracts and levels of dependency

• In potentially sensitive and competitive business areas customers become frustrated when information held by suppliers is over-protected. This is particularly true when a customer is dependent on this information. Issues can also arise when copyrights, patents and more complex legal issues are integrated into high dependency joint business agreements

• An ideal balance is where business-to-business partners learn from each other so that they are less dependent but still have a healthy relationship. Customers need to position themselves so that they are less dependent, particularly in growing markets

• A balance needs to be struck between dependency and the ability to extricate an organisation from a business-to-business relationship

• Even if the products or services provided are very basic, suppliers who provide exceptional business customer service can generate a ‘feeling’ of high supplier dependency, therefore enhancing business-to-business relationships.

The customer dependency continuum in Figure 4 highlights some of the key differences between supplying simple and complex products or services. By increasing the levels of business-to-business customer service, the feeling of dependency can become stronger therefore strengthening the business relationship. Where poor levels of business-to-business customer service are experienced, customers may feel less dependent on an essential supplier.

Reducing supplier dependency is a proactive

rather than a reactive process


Figure 4: The customer dependency continuum

Preferred direction of movement

Low dependency High dependency

Open business data Restricted business data

Lower levels of business-to-business supplier customer service gives the feeling of less dependency

High risk strategy

Longer-term contracts

Complex contract exit strategies

Higher HR input

Contingencies essential

Low number of suppliers

Potential supplier complacency

Specialist KAMs

e.g. specialist legal services

Higher levels of business-to-business supplier customer service gives the feeling of more dependency

Low risk strategy

Shorter-term contracts

Easy contract exit strategies

Lower HR input

Contingency not essential

High number of suppliers

Minimal supplier complacency

Generalist KAMs

e.g. stationery suppliers


4.5 People

• It is felt that chains of command need to be kept short with the key people being empowered to make decisions and being responsible for getting the job done

• Some large corporate customers provide training and expertise in newly adopted IT and logistics systems to assist suppliers to get up to speed in new ways of working to deliver contracts. This is particularly true when suppliers are small organisations that have a limited training facility

Staff competence and people management are key issues for both customers and suppliers. Supplier relationship managers employed by customers point to several significant issues:

• Customers see a direct connection between the way suppliers manage and treat their employees and the quality of the business relationship. Customers consider that well-defined and executed recruitment policies provide a solid foundation

• The employment of poor quality staff is viewed as disrespectful to customers and of little value in moving the business forward. At every level all employees need to have respect for the customer. Simple HR policies apply:

Recruit Train Retain

• Customers expect suppliers to have a clearly defined organisational structure and a responsible attitude to change management

• Many customers recognise that when suppliers’ employees are happy in their work they do not want to become involved in supplier ‘office politics’. It is felt that this interferes with open dialogue and direct access to key people

Positive comments about the people we work with

• We expect people to share our requirements on integrity, we want people to behave in a proper way.

• He is approachable and a knowledgeable fellow, he works hard to get around our business and gives us information we need or whatever we require, but also the directors are pretty approachable.

• I don’t think they could be any more open with us than they are being, so that is how they earn our loyalty.

• I would say the main factors are trust and honesty, doing what they say, having faith in them.

Key words

• Open• Honest• Respectful• Competent• Empowered• Focused• Authoritative


• Customers sometimes offer workspace at their offices for their suppliers. This is viewed as a positive commitment to the business relationship and is further enhanced if personal attributes between working partners are matched. Informal working lunches are also seen as a less pressured forum for exchanging ideas

• Customers highlight a number of desirable personal attributes of their Key Account Managers. First and foremost is the ability to understand the markets that they are operating in, followed by approachability and an ability to build personal relationships. Openness in business dealings is directly attributed to customer loyalty. It is perceived that good relationships facilitate quicker problem resolutions and enhance teamwork. One interviewee commented that: “if you understand the people, you understand the business more clearly”. Conversely, not liking or not fully understanding the people that you have to work with makes the delivery of business customer service much harder

• Customers feel that there is a minimum level of contact required between individuals although this is difficult to quantify. However, it is important that named contacts are consistent, in terms of their output, highly visible and possess a positive outlook. Customers find these attributes particularly reassuring

• Customers are starting to see, as part of good HR practice, that employees are increasingly being trained with consideration made for a work/life balance. Well-trained staff are viewed as a differentiating factor in saturated markets. Knowledgeable employees who want to do a good job are seen as critical. Key individuals need to be in place for the duration of a project as do project teams who need to be present from conception to final implementation.

Figure 5 brings together in a single model the results of our research into people issues. Two key areas are identified:

1. The key people practices that need to be adopted

2. The desirable personal attributes that good suppliers should possess.

Additional customer provisions are also shown.

Key account managers’ attributes

• Understands the account• Understands the market• Approachable• Builds relationships• Open• Loyal• Quick to respond• Competent

Care about the customer and the end user


Self-help questions

• How do supplier staffing structures support the people we work with?

• How do we rate our contacts within the organisation?

• How consistent are our suppliers’ people?

• Do they share our personal values?

• How can we enhance the performance of the people that we work with?

Figure 5: Suppliers: practices, attributes, provisions

Highly visible/ positive outlookAbility to

understand customer markets

Personal attributes

Range of ‘people’

skills

Honesty and integrity

Loyal to customers

Consistent performer

Customer provisions

Specialist training

Head office workspace

Informal discussion

forums

Free access to key people

Clear staffing structure

Quality recruiting

People practices

Empowered employees

Short chains of command

Responsibly managing

change


4.6 Business relationships

interests, particularly as these may change over time. Any disagreements need to be quickly put aside so that business aims remains focused. Individuals should concentrate on positive approaches to change and demonstrate that they are capable of adapting to a variety of working cultures. Relationship managers must make sure that both internal and external customers know what it is they do

• Being proactive rather than reactive enhances the business-to-business relationship. There also has to be some calculated risk-taking. The relationship will be different depending on the individuals concerned and their respective levels within an organisation. When key people change, relationships have to be re-built; the best organisations have rigorous succession plans in place

Although the focus of our research was on business-to-business customer service, some of our findings, whether at the interview or analysis stage, concerning the nature of the relationship between organisations and individuals.

There are a variety of ways that the term ‘relationship’ can be interpreted. It is very clear that a business-to-business relationship, as revealed from our research, is fundamentally different from a business-to-consumer relationship.

The findings reported below highlight the special, often intangible attributes of good business-to-business relationships in the opinion of managers with a responsibility for them.

What should good relationships do?

• Relationships should be firmly established at the beginning of a working partnership, bearing in mind of course that they cannot be written into a contract as they are ongoing and fluid, not set at a moment in time. Confidentiality is seen as implicit together with mutual respect and trust. If you are unable to be trusted or are dishonest the message is clear – don’t bother trying to work in the business-to-business environment. Our research goes some way to answering a number of key relationship questions.

• Put simply, working with another business or partnership should make you feel good. Good relationships add value and permeate organisations at all levels spreading enthusiasm and a ‘can do’ attitude as they develop

• The ideal relationship is difficult to achieve but is something that both organisations should work towards.

What are the benefits?

• Good relationships will enhance the service offer both to customers and to end users, compensating for occasional breakdowns in service by suppliers. They encourage loyalty and have been associated with better performance and cost controls. Ultimately the volume of business generated is a benchmark of a good relationship, frequently facilitated by business referrals

• If business-to-business relationships work well they have the potential to positively influence the end users’ experience. Organisations that are perceived as doing well accredit this success in part to their ability to build relationships.

How do you make relationships work?

• The best individuals should be able to step back from the relationship and distinguish between personal and business

Key words

• Integrity• Reflection• Longevity• Balance• Intangible


• A relationship is a relationship whether business-to-business or otherwise. They are two-way not one-way. Avoid being either a master or a servant and make sure that your organisational structures and job roles are clearly defined and have the potential to support relationships. Remember that relationships work better when attention is paid to detail and workloads are equally shared with nothing taken for granted by either party.

What is disliked in a relationship?

• Complacency and disinterest from individuals and organisations are not appreciated

• While business-to-business customers are prepared to tolerate a limited number of poor decisions by their suppliers, they do not appreciate organisations that are over defensive

• Personal relationships totally replacing business relationships

• Making assumptions on how successful relationships are without empirical evidence

• A poor performing individual in a specific location can let down an overall ‘good’ relationship

• As customers become more demanding, they will avoid poorly trained individuals in more technical relationships. The relationship often falters when suppliers are neither approachable nor responsive. When suppliers cannot see beyond a sale, their actions may negatively affect the end user.

As part of the research we asked executives and managers to rank a range of 10 characteristics drawn by the research team from the available literature on business-to-business customer service. We have labelled these supplier competencies as service ‘characteristics.’ All interviewees were asked to rank them from 1 to 10 using each number once only. This ensured that they were prioritised. The most common values were plotted as shown in Figure 6. It is very interesting to note that, overall, personal integrity themes come top, pragmatic issues come second and courtesy last.

Self-help questions

• Can we distinguish between the personal and business elements of relationships?

• Is there a two-way dialogue with our suppliers and customers?

• What provisions do we make for our key people moving on?

• How are we regarded externally in the way that we manage relationships?

• How do we attribute our success to our key people and publicise these?


Self-help questions

• Are the above attributes evident in all of your business-to-business dealings?

• How would you rank the importance of the above attributes in your organisation?

Figure 6: Service characteristics

Trust

Honesty

Reliability

Competence

Understanding customers

Responsiveness

Accessibility

Communication

Approachability

Courtesy

0 2 6 124 8 10


4.7 Technology

Most organisations are able to cite good and bad examples of using technology to support business-to-business customer service. There is a general assumption that technology should make life easier while saving time, travel and resources. The extent to which this is true is an important question as technologies are not universally used, optimised or even fully understood.

For some, the adoption of new technologies requires a leap of faith that some suppliers are not prepared to take or can afford. The same, of course, is also true of customers.

• At the simplest level, data sharing is viewed as integral to a good business-to-business relationship with regular service bulletins reducing the need for ad hoc enquiries. The generation of exception reports is used to facilitate increased awareness of stock levels at a variety of locations and to help support negotiations on new contracts. The evidence from the research suggests that this is an increasingly good practice. Technology is also cited as allowing easier identification of opportunities for productivity improvement and for reducing the amount of project downtime. When projects increase in size and scope, technology is considered essential in maintaining the momentum of the project. This is in part associated with the benefits associated with combining a variety of data sets to assist in the modelling processes and the timely measurement of KPIs

System compatibility is essential

Technology allows for efficient data information and

knowledge exchange

Key words

• Productivity• Performance• Savings• Information• Exchange• Improvement


• With very few exceptions, those we interviewed were aiming to reduce paperwork from both environmental and volume perspectives. Scanning technologies are increasingly adopted to save space when archiving invoices and for document transfers between locations. While it is an accepted norm that financial data is exchanged electronically, there is still plenty of scope to reduce the amount of paperwork incorporated within the procurement process

• Suppliers need to recognise that technology applications cannot be developed without understanding fully the challenges that the customer faces. When suppliers use technology well and the customer can see the clear benefits for them, they are more likely to work harder at developing the

relationship. The negotiation of IT consultancy, supplier terms and support contracts, aligned with technology systems, is viewed by customers as one of the most challenging aspects to get right first time

• The increase in an organisation’s size is deemed to be a key determinant in raising the expectation that technology should be more widely adopted. Most customers consider that due to the size of their own organisation, they are more aware of technological trends than that of their suppliers. Customers can, for example, recognise when suppliers’ technology is becoming dated and approaching the end of its useful shelf life. If possible customers will move suppliers if they do not keep up-to-date with technology. Often smaller suppliers welcome customers’ advice on purchasing more affordable IT solutions that cover the basics but this was not always forthcoming

• Some customers will freely admit that they need to improve when using technology. There is a realisation that the pragmatics of choosing the best technology for the job are sometimes ignored due to budget holders wanting a higher profile, more visible or even a ‘sexy’ product. Certain technologies, e.g. phone menu systems, are not seen as appropriate for the business-to-business environment 2

• Figure 7 provides an overview of the realistic expectations and advantages of using technology in the business-to-business environment. There are three key expectations: the routine savings made, the improvements to systems and the improvements in accuracy from the reduction of risks to business processes.

Budget constraints v technical specification = compromise

2 Note: For an overview of customer service technologies in the B2C sector see ICS Breakthrough Research report service technologies: developing strategies


Self-help questions

• When did we last assess our technology needs?

• How can technology help us to move our business forward?

• Will the adoption of new technologies help our customers and the end user?

• How can we integrate our systems with our business partners?

• Who can help us to inform our technology decision-making process?

Save paperwork

(and paper)

Save travel

(and fatigue)

Save time (spent

on routine tasks)

Improve data

quality and

information sharing

Improve

productivity and

performance

management

Reduces mis-

understandings

between business-

to-business

partners

Reduces project

down time

Reduce risk

through more

accurate modelling

and forecasts

Figure 7: Technology expectations: saving, improving and reducing

ROUTINES

SYSTEMS

ACCURACY

Expectations of business-to-business technologies


4.8 Business evolution

Although much of this report focuses on existing custom and practice, there is an increasing implicit expectation that customers need more innovative suppliers to help them move their businesses on. Many supplier markets are becoming more global, saturated and competitive. The ‘added value’ supplier dimension is seen by many as a key differentiator.

A number of points emerged from our research relating to the evolution of business.

• The ability to think longer-term is highly desirable and as relationships between customers and their suppliers become extended, customers expect to be rewarded with more favourable terms and conditions. If suppliers cannot guarantee capacity to service large-scale contracts it is unlikely that contracts would be awarded

• In some situations customers recognise that they need to break away from long-standing suppliers as this can inhibit the evolution of an organisation. Occasionally there may be conflicts of interests as suppliers diversify their activities. To this end, previously unused ‘wild card’ suppliers are increasingly considered as they can potentially offer new perspectives, fresh ideas and add another dimension to the tendering process. When initially bidding for contracts, suppliers should demonstrate their ability to innovate but not over promise on their ability to deliver. Customers become suspicious when suppliers offer services too cheaply although it is understood that when entering new markets there may be an element of ‘loss leading’ to establish a presence. New suppliers are expected to make a clearly visible attempt to understand the nature of the customers’ business and not just to sell them products and services

Innovative suppliers can move their customers’ business on

New supplier = New tricks (can)

Key words

• Innovation• Creativity• Partnerships• Perspectives• Performance


• When business relationships start to develop, customers welcome the opportunity to trial products and services in new markets especially if they are low risk or where the risk is shared. Increasingly, customers look for suppliers to buy them time to focus on developing other parts of their business. In the re-negotiation of contracts there is an expectation that more favourable customer terms should surface. This should include a fuller understanding of the indirect costs associated with contract management. Customers expect suppliers to work harder on larger contracts. Poor working relationships increase the chances of contracts not being renewed

• In well-established relationships customers expect to learn from their suppliers and it is felt that if performance is superior, costs became less significant. Ultimately, more creative partnerships are sought, with suppliers and customers evolving in tandem. Future strategies need to be reviewed at regular intervals as some relationships do have a finite shelf life.

The key stages in business evolution through supplier value are brought together in Figure 8. The model can be used to track key considerations that need to be made at the beginning of a relationship and, ideally, as it develops over time. Key to success is the initial inclusion of, and ongoing consideration for, the end users’ needs (for the customers’ customer). As the duration of the relationship becomes longer there is a paradigm shift from a contractual/profit emphasis to a more creative/developmental emphasis.

Self-help questions

• Do our suppliers help or hinder our business?

• Where do our suppliers add value?

• Can our organisations evolve together?

• Who drives the innovation process?

• What other organisations should we be monitoring or trying to work with?

Customers want to learn from suppliers


Figure 8: Adding customer value through the supplier’s role

END USER FOCUS

Reduce interest conflicts

More favoured

terms

Evolve together

New suppliers

Innovation when bidding

New ideas/trials

Contract context details

Higher profits and

marginsMore

creative partners

Performance over profit

END USER FOCUS

Focus on indirect

costsStrategy:

forward or dissolve?

Learn from supplier

Duration of business relationship


5 Best and worst practice

Best practice

suppliers also helps customers develop new products and services. If suppliers are perceived as leaders in their field or have a niche market, customers expect to be steered away from potential pitfalls

• Good suppliers use financial modelling to reduce potential problems, share financial systems and accurately process invoices. Informal discussions of potential issues and solutions are welcomed (and commonly practised). These focused dialogues help to sustain business relationships

Building a sound relationship is essential to successful business-to-business customer service. This section examines how:

• suppliers can begin to best meet their customers’ needs

• how both suppliers and customers can work together effectively.

Consideration is also given to how customers can assess potential and existing partners.

• Many customers highlighted ideal attributes that they wanted from suppliers. First and foremost is mutual trust and transparency leading to respect. Customers consistently told us how they seek openness, honesty and directness in supplier dealings.

There is also an expectation that suppliers should accept responsibility for their mistakes and deal with poor performance rather than adopting a ‘blame culture’. The supplier that always says ‘yes’ rather than thinking through the consequences has limitations. Mutual support is seen as key and customers need to feel good about the organisations they are working with. Often this is cemented by a ‘key supplier contact’ being agreed for the duration of a contract

• Customers look to suppliers to reduce risks to their business even if this involves working with new methods and processes. More creative thinking by

Customers’ views

• They take ownership and deal with things.

• These guys tend to be in tune with the way our business is going and tend to have a reasonable handle of what we expect from them.

• We want consistency in what we are getting, consistency in approach, consistency in price, consistency in the people.

• I think it is by meeting what they said they would meet and by providing us with what we have agreed they will provide.

• They were bringing added value. They weren’t just doing the job.

Key words

• Responsive• Consistent• Loyal• Trusting• Integrity• Transparent


• Other synergies are apparent though the adoption of shared strategic aims. At a basic level this could be through using the same technology or just by adhering to ‘old fashioned’ business values and ethics. Good partnerships were cited as working best when expectations were made clear and fully understood. It was considered useful that customers explained the rationale for their business plans to suppliers as this allowed them to contribute to ideas. Where customers have ‘preferred’ suppliers, expectations are higher

• Good suppliers invest in customer projects, recognise increasing global markets and work hard to over-deliver. They know when to ‘talk sales’ and when to ‘talk customer service’ always focusing in detail on the project in hand

• Suppliers need to demonstrate their competence by providing evidence of how they have performed in the past. This is important for first time suppliers. ‘On time and on budget’ is the key message. Consistency of delivery, across a wide geographical area, to high service standards is seen to be indicative of a good performer. Local contracts are perceived to be relatively easier to service. Suppliers are expected to be capable of liaising with a network of other suppliers to guarantee the delivery of seamless customer service, regardless of location

• Suppliers that ‘add value’ go a long way in engaging customers and developing longer-term relationships. This is seen as a trade-off against potentially higher profit margins. It is expected that suppliers should understand key principles of economics and market dynamics and be able to demonstrate financial acumen. In certain sectors, good health and safety records are critical in reassuring customers. Suppliers accredited by nationally recognised organisations are also an influencing factor

• Customers and suppliers should share strategic objectives and be positive rather than negative in their outlook. This allows more focus on business goals rather than getting bogged down in processes. Information should be shared and jointly analysed

• Suppliers are also expected to ask questions about ways of working differently within the boundaries of any agreed contracts. Customers prefer suppliers to adopt a longer-term approach whether in the anticipation of customer needs or just taking the day-to-day initiative. Product and service life cycles are increasingly considered as well as the needs of the end user.

Self-help questions

• Does this supplier share our values and can we trust them?

• How capable are suppliers of long-term and strategic thinking?

• What historical evidence is there of this supplier’s best practices?

• What are the supplier’s most desirable attributes and how can they be further developed?

• How can suppliers help us to minimise our risks?

• How can we help the supplier deliver added value?

From a customer perspective there were a number of suggested activities that could enhance supplier performance and therefore the business-to-business relationship. Ongoing, in depth customer enquiries beyond the initial projected image will establish whether suppliers can deliver over and above the expected basics and how synergies can be gained. The onus rests with the supplier to demonstrate empirical evidence of what they have done in the past. Figure 9 draws these points together.


Worst practice

In writing the preceding elements of this report we have attempted to outline our findings from a more positive perspective. However, it is useful to highlight some of the negative observations that interviewees expressed. The main consideration for many remains the issue of human resources.

• There were many examples of practices that were either time consuming or financially costly. These worst practices are often linked to named individuals. Failure to deliver was more consistently attributed to employees rather than systems in place. However, in reality, the causal factors should be more attributed to the way that supplier human resources are managed

• It is evident that individuals can (and sometimes do) ruin an organisation’s otherwise excellent reputation. Examples were given of inarticulate directors with attitude problems that permeated a supplier’s organisation. Customers know when suppliers move poorly performing employees in an attempt to rectify a problem

• Without regular supplier reviews, mistakes are often repeated. Employees on both sides of the relationship need to be educated about the preferred way of working. They do not always see the bigger picture. Suppliers are not always transparent with regards to duties and responsibilities

• Simple courtesies go a long way but are not always present. Many individuals do not respect the significance of who they were dealing with. It is clear that customers dislike cold calling and time-wasting by suppliers’ employees

• Business customers do not like suppliers that ‘hide’ behind legislation instead of solving the problem

• Some organisations have a ‘unique’ organisational culture that does not comply with ‘normal’ business practices. Sometimes these organisations can be difficult to work with

• When suppliers are slow to respond and adapt to change, customers feel let down. Unfortunately some suppliers do not have flexible long-term development plans.

Self-help questions

• Can you reflect on the above observations?

• Do you allow these activities to carry on unchallenged?

Key words

• Management• Perspectives• Courtesy• Review


Figure 9: Supplier assessment – what’s behind the image of the supplier?

Focus of customer enquiry

Projected image of supplier

Looks

behind

Looks behind

Looks at

Longer term aims

Evidence of track record

Working culture and practices

Potential to add value

Professional integrity


From the diversity of factors identified it is apparent that not all the scenarios outlined in this report will apply equally to all businesses. However, the frameworks that are included can be selectively used for benchmarking purposes and to highlight areas of deficiency when organisations work together. Although at times there is inevitably cross-over between some of the elements discussed, the authors feel that the way the content has been sub-divided makes the interviewees’ shared experiences more accessible. Key sections can be used for individual workshops, training and development purposes.

6 Conclusion

Our findings have identified the diverse considerations that have to be made when analysing the business-to-business environment. Although the initial aim was to consider only the customers’ perspective looking down the supply chain, it soon became apparent that in reality many of the themes discussed applied equally to suppliers looking up the supply chain to the customer and beyond. The reading audience could therefore potentially be any business that interacts with another organisation or group of individuals.

Our final point is this: that no business-to-business relationship will ever be static. The processes are dynamic requiring an ongoing critical perspective. In today’s more global and competitive markets success will only be achieved by organisations that embrace change, focus on customer service and who have a pragmatic yet innovative outlook.


7 Business-to-business customer service: actions for consideration by suppliers

Based on the findings of our research, the following is offered as an action list for suppliers (or alternatively, a customers’ wish list).

1 Commit yourself to better ways of working

Customers want to have their lives made easier by suppliers and believe that most suppliers have scope to improve their performance. Many customers are frustrated that some suppliers they want to work with just “can’t get their acts together’’, for example because of too much focus on mundane systems and paperwork. Suppliers need to get better at putting things right when they go wrong. Suppliers that put resources into business relationships are the winners (and very much in demand).

2 Behave more professionally

Too many suppliers fail to behave in what customers consider is a professional manner. With increases in the number of global suppliers, customers frequently ask themselves “why work with those that have a propensity to be antagonistic?” Suppliers often fail to fully consider issues of trust or the consequences of betraying customers’ trust from an ethical perspective.

3 Realign policies, values and culture

Too often suppliers “say one thing and do another”. Customers frequently interpret this as suppliers not adhering to what they say are their core values. This creates problems if customers are looking to work with organisations whose culture and values match their own. Although it is recognised that relative values change over time these need to be updated and publicised with positive cultural shifts enhanced. Policies and agreements can benefit from being more formalised and therefore transparent.

4 Appreciate customers more

Suppliers should give customers more recognition and show their appreciation of how much of the suppliers’ business they represent. Suppliers should also focus more on how customers are trying to enhance the experience of the end user.


5 Reflect on partnerships and how they change over time

Suppliers sometimes fail to recognise how close business-to-business partners need to be to make the relationship work. Not only should suppliers need to reflect more on past experiences, they should also inform customers of future plans and innovations.

6 Reduce staff turnover

It is universally recognised that turnover of key employees adversely affects the productivity of the business relationship. Customers may be happy to pay more for contracts if they know that more quality contacts will be in place.

7 Be more open, honest and trusting

Suppliers need to think more about issues of trust and it is critical that they acknowledge their weaknesses in this area. If the supplier fails, the customer will often fail as well; responsibility is not always equally shared.

8 Facilitate better discussion forums

Although suppliers talk with customers, in many cases the quality of this dialogue is poor. Plain speaking and clear communications generally are required so that suppliers understand their customers’ issues. This also helps customers to better understand their suppliers.

9 Review organisational structures and key people

Suppliers need to consider how an increase in size through business growth is reflected in the ongoing development of their management structure. Often structures and responsibilities are not clearly defined. Customers feel more attention should be given to ensure that the key business-to-business contacts can work together through good organisational frameworks.

10 Question and negotiate more, be more flexible

Suppliers are sometimes too passive in their negotiations and need to think more laterally rather than accepting all sources of information, including proposed contracts, at face value. There is more scope for flexibility within contractual parameters.


8 Business-to-business customer service: actions for consideration by customers

Based on the findings of our research, the following is offered as an action list for customers.

1 Review the role of contracts

Consideration needs to be given to whether the supplier contract is viewed solely as a legal document or whether it has more potential as a development tool.

2 Share expertise

Many suppliers do not have the same level of expertise as their customers. In this situation time invested in training suppliers’ employees will pay dividends. On the other hand there are some issues when sometimes suppliers know more than the customer. In this situation suppliers should be enlisted to support the development of the customer.

3 Discuss your long-term strategy

It is often suggested that many suppliers only think in the short-term. When customers explain their intended future direction, it may be easier for suppliers to more fully support the customers’ longer-term aims.

4 Make workspace available for suppliers

Having suppliers working in the customers’ environment facilitates both cultural understanding and cements relationships between key individuals.

5 Share information

Some suppliers are experts in their field but do not always have access to privileged market data. By giving new information to suppliers they may offer the customer a different perspective on new trends and markets.

6 Encourage calculated risk taking and innovation

Customers need to provide suppliers with the opportunity to work differently and develop ideas outside established practices.

7 Be a critical friend

Relationships are at best difficult to define but they have to ‘feel’ right. There needs to be a balance between the personal and the business. Customers need to get to know the supplier’s employees they work with.

8 Communicate concerns directly

Customers need to identify immediately any foreseen problems and express their feelings and expectations clearly.

9 Don’t abuse your power

Power should be used by customers responsibly and for mutual benefit. Manifest abuse of power will harm reputation.

10 Train your people well

Customers’ employees need to see both the supplier and the customer perspectives so that they fully understand all elements of the business-to-business customer relationship.


Appendices

Appendix 1 Interviewee questions

Organisation questions

For your organisation:• Gross annual UK turnover?• Number of employees?• In what sector/s do you operate?• Who in your organisation is

‘the person who has the power to initiate, continue, enhance or terminate the contract/relationship’ with a supplier?

• Who are your five best suppliers and why?

• Who are your five worst suppliers and why?

Can you describe your ideal business-to-business relationship?

Organisation specific: good

Thinking about your best supplier:• What products or services do

they supply you with?• What are their business-to-

business best practices (in your opinion)?

• What are the key features of your relationship with this supplier?

• How would you describe your working relationship with this organisation?

• How dependent are you on this organisation?

• What share of their business do you represent (approx percentage)?

• What share of your business do they represent (approx percentage)?

• How long have they been supplying you?

• How do they structure the management of their customers?

• Why do you like working with this organisation?

• What value do you place on the relationship that you have with this organisation?

• How is information exchanged between your two organisations?

• How do you judge the relative success of the relationship between your organisations?

• How would you describe the balance of power in the relationship that you have with this organisation?

• What is the job title of the contact that you deal with? How would you describe their role?

• How do they earn your loyalty?• What factors create satisfaction

within a business-to-business relationship?

Organisation specific: bad

Think about your worst supplier:• What products or services do

they supply you with?• What are their business-to-

business worst practices (in your opinion)?

• What are the key features of your relationship with this supplier?

• How would you describe your working relationship with this organisation?

• How dependent are you on this organisation?

• What share of their business do you represent (approx percentage)?

• What share of your business do they represent (approx percentage)?

• How long have they been supplying you?

• How do they structure the management of their customers?

• Why don’t you like working with this organisation?

• What value do you place on the relationship that you have with this organisation?

• How is information exchanged between your two organisations?

• How do you judge the relative success of the relationship between your organisations?

• How would you describe the balance of power in the relationship that you have with this organisation?

• Who is the contact that you deal with? How would you describe their role?

• What would make you a more loyal customer?

• What factors create dissatisfaction within a business-to-business relationship?


Appendix 2 Job titles of interviewees

• Purchasing Manager• Customer Services Director• Head of B2B Customer Service• Business Development Director• Core Utilities Director• Senior Manager Group Procurement• Chairman• Customer Director• Group Purchasing Director• Group Supply Chain Manager• Procurement Team Leader• Procurement Manager• Director

The person who has the power to initiate, continue, enhance or terminate the contract/relationship.


Appendix 3 About the authors

Harvey EllsSenior LecturerUniversity of Brighton School of Service Management

Harvey is the Course Leader for the Retail Marketing, Retail Management and Marketing Food and Drink programmes at the University of Brighton. He is actively involved in the work of the Consortium of Retail Universities and a number of local food based social and voluntary enterprises. Prior to joining the University, he spent 15 years working in a variety of operational roles within the retail sector including two years as a Human Resources specialist. Harvey has an MA in Academic Practice and is currently working on his PhD focusing on children’s food cultures. Other research interests include Retail Branding, Food Sociology, Service Quality in Higher Education and Retail SMEs. He is a co-founder of Brighton University’s Centre for Retail and Consumer Studies (CENTRECS) where he has completed a number of research and consultancy projects.

Chris DuttonPostgraduate Programme LeaderUniversity of Brighton School of Service Management

Chris has been with the School of Service Management since 1995 when he was charged with establishing the School’s Retail degree programme. Prior to this,

he spent 12 years gaining retail management experience with J Sainsbury which included a number of years as a Store Manager. Chris, who is a Principal Lecturer, has held a number of roles within the School and is currently the Assistant Head of School as well as the Postgraduate Programme Leader. With expertise in course and module design Chris has been an influential addition to the School’s development team. Since 1998 he has been an Associate Lecturer at Surrey University and was recently appointed as External Examiner at the University of Westminster. His research interests include customer service, service quality and business ethics. Chris has gained an MBA and is currently studying for a PhD. Chris also is involved in a number of key consultancy contracts for the University.

Dr Paul FrostHead of School of Service ManagementUniversity of Brighton

Dr Paul Frost BA (Hons), MSc, PhD gained insights into the operation of a large organisation in the UK national scene during his early experiences in industrial relations. Early in his career he obtained international experience in the human resource management function within a small manufacturing organisation in the US. Later Paul worked in a multi national and multi cultural

setting as Chief Executive Officer for an international education and development charity. He has been engaged in education, development and training for over 20 years and has worked with the employees of many well-known large organisations and with those from the SME sector.

As a result of his professional experiences to date, Paul is an expert in the principles of learning and in the development of individuals and organisations. He has designed, written, produced and operated numerous development programmes for university delivered qualifications, organisationally focused training and development provision, and offered one-to-one support for many senior managers trying to bring about change in their organisation.

Since founding the Historic Vehicle Research Institute in 2000, Paul has undertaken pilot research to investigate the ownership of historic vehicles. Most recently he has mapped out a multinational study to understand the historic vehicle community as a community of consumers, the impact of heritage on contemporary vehicle purchase and the meaning of historic vehicle ownership in 21st century life.


Institute of Customer Service2 Castle Court, St Peter’s Street, Colchester CO1 1EW T: 01206 571716 F: 01206 546688

Prin

ted

on a

100

% re

cycl

ed T

CF p

aper

Des

igne

d by

Wav

e (

0173

3) 5

5871

8 w

ave.

uk.c

om

[email protected]

£125ISBN: 0-9539028-9-7

excellence in managing the business-to-business customer ...€¦ · excellence in managing the...

Documents