Supplier Relationships Believed Central to B2B Customer Engagement

Customer engagement is hotly pursued in the consumer marketplace. Companies know that they need to meaningfully connect with their customers to drive brand loyalty—and they’re going to great lengths to remain competitive, constantly working to make it easier for people to enjoy a personalized omnichannel consumer “experience.” But what about customer engagement in the B2B marketplace? Don’t companies serving other companies need to keep their customers satisfied and coming back for more?

A recent Gallup report, Guide to Customer Centricity: Analytics and Advice for B2B Leaders, revealed that companies are engaging only 29% of their B2B customers. Researchers suggest that the remaining 71% are either indifferent toward the business partner in question or actively disengaged with it. Corporate leaders are asking what they need to do to differentiate and become a truly first-rate partner with loyal and engaged customer base.

Rising to the Top

The analysts at Gallop recommend committing to a customer growth strategy that’s dedicated to making the most of existing client relationships—and suppliers can be a way to competitive advantage. In fact, along with the company and its clients, suppliers are one-third of their customer-centric model. They suggest companies can become a “customer of choice” with their suppliers by means of:

• Engaging suppliers via two-way feedback
• Clearly communicating with suppliers, sharing information relevant to goals
• Being easy to do business with, demonstrating clarity, simplicity, and consistency

The Importance of Optimizing Supplier Payments

Supplier payments is one area that can be optimized to ensure winning B2B customer relations across industries. According to David Hill of American Express Global Business Consulting in his article Procurement’s Role in Maximizing Value via Supplier Payments, a company’s payment process can make a significant impact on supplier relationships and the value each partner realizes on the back-end. He states, “Beyond negotiating a payment term, payments were often viewed as a cost of doing business.” He goes on to describe procurement’s changing role as “guardians of supplier relationships and responsible for total cost of ownership.”

Hill argues that adopting a strategic B2B supplier payments strategy creates a win-win for both parties, noting that suppliers can benefit from cash acceleration, reduced DSO, enhanced visibility and cash forecasting, process efficiencies from automation and even contract extensions by participating in the payment program.

He outlines these five steps for procurement to create a B2B payments strategy:

1. Create a current state assessment of the organization’s procure to pay function, benchmarking against best-in-class organizations and highlighting opportunities for improvement

2. Perform a comprehensive spend analysis to define the opportunity and segment your company’s suppliers by product/B2B strategy

3. Measure potential savings opportunity from associated rebates, process efficiencies and working capital benefits

4. Secure buy-in from senior leaders and key business stakeholders. Ensure that the importance of new initiatives is widely understood and use leadership mandates to ensure that the importance of preferred payments methods is understood.

5. Define and own the supplier communication strategy, endorsing the B2B payments program as a strategic initiative

Always Looking Ahead

Gallup points out that the buying center is often a blind spot, and suppliers should know who all of the players are, what roles they play in purchase decisions, and how they evaluate the strength and quality of their relationship. It’s important for companies to collaborate—engage—with suppliers with respect to payments to ensure expectations are met now and in the future. Knowing how suppliers plan to invest in technology/process optimization helps align payment terms and method preferences—and keeps the procure-to-pay process in a forward trajectory. And hopefully, that points to a future of ongoing customer engagement and loyalty.

For more on procurement and payments, read The 3 Components of a Successful Tech-Fueled Procurement Transformation and Exploring AP Technologies, Part 1: Supplier Portals.