The Customer-Supplier Relationship – Where Excellence Happens

The terms customer and supplier are used throughout this ptograsm to describe the roles of the ‘Supplier’- the one providing the product, service, benefit etc. and the ‘Customer’, the one buying or receiving the product or service. Healthcare provider and patient, mechanic and car owner, government employee and citizen tax payer, software designer and computer user, Restaurant and customer – you get the idea.

The relationship between these roles is a dynamic one, but it is worth examining to see how the Values of Excellence are integrated to enhance this relationship to create success and satisfaction,

Or

Where they are lacking- precipitating a relationship breakdown.

The customer-supplier relationship contains an assumed contract between the parties.

The customer wants or needs to get something from the supplier, and the supplier wants or needs to give something to the customer. The degree to which the supplier demonstrates The Ten Values of Excellence will determine the level of satisfaction in the customer experience and whether or not the relationship will continue and repeat over time, and whether the customer will recommend the supplier to other potential customers. The Ten Values of Excellence are the framework for customer-supplier relationship excellence.

Customers want to have a relationship.

Few suppliers start out with an understanding of this basic assumption. Customers expect the supplier to welcome their business and to be prepared and geared-up for serving their needs. They expect the supplier to want to discuss their needs and to take an interest in their situation.

The supplier needs to understand that this relationship starts out with a positive expectation from the customer. The supplier is always in the position to demonstrate their willingness to participate in a win-win relationship, but without appropriate attention, may drop the ball before the relationship can ever begin.

To be effective, supplier's need to be proactive about establishing and maintaining a relationship with their customers-- over as long a period of time as possible.

The Excellence Value of ‘Connection’ (being open and available, convenient and easy to connect with), Environment (having a clean and safe warm and welcoming place of business), and Self-Management (courteous and attentive pleasant front line customer service) will help communicate openness and receptivity from the first positive interaction with a new customer that immediately starts the relationship off on the right foot. Even when customers are doing digital business with an automated website, the design of the experience can still effectively communicate excellence so even a positive digital relationship is created and supported.

The first interaction is of critical importance to the establishment of the kind of relationship the customer wants to have.

The importance of the win-win relationship.

In a win-win relationship, both parties benefit. This should be the actual target and goal of the supplier. Rather than just maximizing profit with a customer once, the supplier is potentially setting up the basis for ongoing sales - or in the case of a customer only buying once- a reputation for a quality experience that this customer will share with others.

In a Win-Win relationship the customer gets their needs met with a high level of quality, value, efficiency, courtesy etc. and the supplier gets compensated with a contract, wages, votes or other reward. Win-win relationships tend to repeat themselves, and are the only type of relationships that are sustainable over time. Fundamentally, the supplier should be continually evaluating the way they are relating to their customers- would this feel like Win-Win to me? Consciously or unconsciously your customer will conclude their transaction with a good feeling, confidence in the Supplier, an impression of excellence or regretfully, something else. As a supplier do you start out with the idea of a win-win relationship?

Every advertisement, retail sign, TV commercial, internet banner ad, or political campaign speech is an invitation to "Come and have a relationship-- we will provide what you want or need". The premise is always that this will be a win-win relationship. If you vote for me I will do this for you, if you buy this car, you will get quality, value, dependability, etc. In an ideal world, every transaction would result in suppliers totally fulfilling their promises and meeting or exceeding customer expectations. If this really happened, we would only need one supplier in every industry. Membership in the club of suppliers that create real excellence in the eyes of customers is in reality, quite rare.

Win-win relationships are reflected in the 'Zone of Satisfaction' on the Customer Satisfaction Behavior Curve (7.9 or higher) and are characterized by customers who return to buy again, and provide referrals and unsolicited testimonials with increasing intensity as their satisfaction increases. A World Class Excellent Supplier (9.24 or higher) enjoys close to a 1600% return and recommend rate because their satisfied customers are telling everyone, and those folks are telling others, who are telling others because the product, service, management, leadership, talent, work etc. is excellent! These are also known as unsolicited testimonials.

People talk about the really great things that they experience in their lives from the new movie to a great restaurant. Customers who rate the supplier as World Class really feel like they are winning in the relationship. When levels of satisfaction are not achieved, return and recommend slips, and the relationship begins to deteriorate from preference or a feeling of win-win to indifference, and eventually dissatisfaction (Win -lose).

The deteriorating relationship.

The customer satisfaction behavior curve clearly illustrates the rapid fall off of customer loyalty that happens as customers become less satisfied and when suppliers are perceived as less than excellent. It is interesting to note that as satisfaction drops below 7.9 (the zone of satisfaction) the customer drops into a wider zone called the zone of customer indifference.

The Zone of Customer Indifference does not mean that things are all bad; it just means that fewer things are really good. Customers may patronize a particular business because of one or two strong features- lowest prices despite an inconvenient location and messy store, a gas station close to home despite having higher prices, or an expensive clothing store with really warm and friendly staff.

In an especially busy area with lots of potential customers, or an area where there is no competition, these suppliers might be able to sustain themselves over time- in fact many retail chains are designed to leverage a single feature such as a convenient location or everything under one roof at a shopping mall. The incumbent may be re-elected simply because there are no better choices available. The boyfriend will keep his girlfriend until a better one comes along. But none of this has anything to do with excellence.

Customer indifference however, means vulnerability for the supplier.

When they aren’t satisfied, voters look for alternate candidates, local restaurant patrons consider trying a different eatery, long time GM loyalists start looking at Volkswagens, or employers paying closer attention to the new resumes that come across their desk.

As satisfaction levels get lower and lower customer supplier relationships become more tenuous, and customers looking for higher levels of satisfaction naturally migrate to other suppliers. The supplier becomes vulnerable to more and more competitors and as satisfaction levels drop still further, customer relationships can sink into the Zone of Customer Dissatisfaction.

The negative relationship.

When customers find themselves very dissatisfied with a supplier, losing business is not the only negative effect. As satisfaction levels drop below 4.0 customers go from disappointed to irritated to mad to actually becoming a dedicated enemy of the supplier. None of these things are good when negative word of mouth, public announcements of dissatisfaction, industry association complaints, lawsuits or even worse can result. All of these will hurt business and create a bad reputation that no supplier wants.

The Win-lose relationship

It's hard to call this a relationship, because the customer will run from this supplier after a single transaction. It is continually amazing how many suppliers operate routinely with a win-lose relationship model. Bait and switch, car repair rip offs, unjustified cell phone bills, irrational medical insurance rate increases, politicians who do the opposite of what they promised once they're in- there are too many examples.

The supplier who can't compete with a commitment to excellence might decide to get what they can from a single transaction, with no hope or plan for a future relationship of any kind. Although the win-lose relationship is unsustainable over time, short term gains by the supplier at the expense of the customer create animosity, and adversarial relationships between customers and suppliers develop for entire industries because of lack of trust that happens when customers repeatedly 'get the shaft'.

Stuck with your supplier.

Win-lose relationships are especially frustrating when the customer has to deal with a single supplier that abuses the customer-supplier relationship by delivering poorly across the range of the Values of Excellence. Cell phone companies that surprise you with extra charges and penalize you for canceling your contract, local cable or internet where you only have one choice of company in your neighborhood, or a health plan that doesn't let you schedule more than one appointment a month--these are all examples of suppliers who leverage these sole option/sole source positions.

Suppliers like these, who can avoid competing head-to-head with another supplier to keep a customer's business, are strategically in the position to consistently take advantage of the customer. Corrupt monopolistic practices force win-lose or no choice options on the customer. It’s no surprise that customers don’t like this because the chances of obtaining the excellence they want is a long shot.

Customers have little recourse besides a painfully inadequate legal system when it comes to consumer protections. Reporting a bad supplier to the better business bureau has little effect these days.

Free markets and competition create higher levels of excellence.

One of the healthiest things the American economy can do to help itself is to empower competition. When markets are truly fair and open, levels of excellence will increase because of competition, resulting in better choices for the customer. Suppliers have to continually evaluate their offerings to maintain customer satisfaction and loyalty and have their excellence shortfalls more evident when there is competition.

Relationships take work.

As any marriage counselor will tell you, all relationships have their idiosyncrasies. Tolerating mistakes is easier if there are other admirable qualities there and the other in the relationship is doing their best to make an effort. Things seem to work out better when there is a sincere effort to maintain the customer-supplier relationship, and to do some things right that exceed expectations. Everyone appreciates this. Customers can become partners in helping the supplier learn what they need to do to raise their level of excellence.

All relationships are customer supplier relationships

In every human interaction, one is the customer; one is the supplier-- your spouse, your friends, your kids. Of course these personal relationships switch roles back and forth often, but the Ten Values of Excellence can easily be extrapolated and applied to relationships outside of business and work. If things have not been going well in one of your personal relationships you might want to review the Ten Values of Excellence list again - with your personal relationship in mind.