Contrary to what some suppliers and service providers may believe, it is important not to get caught up in the number of clients you work with. Rather, your focus should be on the quality of your clients, as well as whether or not both parties see the value in working together.
Typically, our main concern or selling point when considering suppliers is cost: How much would we be able to save, compared to other options out there? What often gets overlooked, though, is how the suppliers or customers can be of value. In such cases, no time or effort is dedicated toward uncovering your client’s needs beyond the surface level of the requirements or tasks that they present at briefing meetings — a crucial and necessary step in building a strategic relationship.A strategic relationship is one that focuses on delivering value to your customer’s customer. Joint Business Planning or Quarterly/ Annual Business Review sessions align these mutual objectives and goals to set the strategic partnership framework. Without these mutual goals and objectives, it is likely that the focus will be on discounts and cost advantage rather than added value.
To gain a better understanding of this, let us first define what a transactional relationship is.
What is a transactional relationship?
Focusing on the price and margins is seen as a traditional relationship that is known to be a transactional relationship. This tends to follow these three steps:
- Annual negotiations
- Agreement on price, margins, and trade terms
- Implementation of activity plans
In a transactional relationship, typically one side’s benefit is the other’s loss, and does not promote mutual growth. On the other hand, Joint Business Planning or Quarterly/ Annual Business Reviews are meetings that aim to change this type of transactional relationship, because real value exists on both sides.
Forming a strategic partnership with your Clients
The following are a few points to discuss and determine in your planning sessions with your customers.
- Establish mutual objectives - be open with each other and share your strategic objectives to determine what these mutual objectives are.
- Investigation and research -don’t focus on just your customer, but your customer’s customer.
- Identify mutual opportunities - work with each other to assess business opportunities.
- Negotiate and agree on a framework - create a strategic partnership framework that is acceptable on both sides.
- Joint business development of the business growth plan - create a mutual plan that can also be defined and measured to track progress.
- Measure and review - assess the results against the mutually agreed objectives.
By setting a strategic partner relationship through Joint Business Planning, customers and suppliers are able to choose which partners they are willing to work with in the long run. On the customer end, they need a supplier who can actively support what their customer wants in order to add value to their relationship.
The time, cost, and effort involved in setting a strategic customer and supplier relationship may be seen as tedious at first. However, in the long run, these are steps you can take to reduce costs and drive efficiency. You may not see it at first, if only costs are compared but the what should be taken into consideration is just how much ROI you are able to gain from working together.
Ready to find out if StraightArrow can be your new Strategic Partner? Feel free to schedule a consultation with us, and one of our Business Development Managers will be in touch with you before you could even say “partners.”
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