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Does Your Strategic Vendor Consider You a Strategic Customer?

Whether you are using Info-Tech’s Commodity, Operational, Strategic, Tactical (C.O.S.T.) model to classify your vendors or you arbitrarily label high spend/critical vendors as strategic, it begs the question: “Does your vendor truly view you as a strategic customer?”

An Info-Tech client insisted that they were a strategic customer to a PC manufacturing company. They were spending a little over US$300,000 per year with this vendor, which was about 15% of their annual hardware budget. They were frustrated with the yearly account representative turnover, minimal service levels, and vendor performance. They were inquiring if we knew if this was standard service to expect of this vendor.

To assess, we asked these qualifying questions of typical behavior of vendors who view their customers as customers of choice or strategic customers:

  • Do you participate in “alpha” or “beta” product testing?
  • Are the personnel assigned to your account seasoned professionals?
  • Do the personnel assigned to your account have tenure with the vendor?
  • Is your vendor spend material to their total revenue?
  • Do the vendor’s senior executives proactively request meetings with your executives and team?

If you answered yes to most of these questions, which our client did not, chances are you are a customer of choice or strategic customer in the eyes of the vendor. If you answered no to most of these questions, then you are most likely either a commodity, operational, or tactical category of a customer to the vendor. Future notes will address how to identify your true classification as a customer in the eyes of your vendors.

Our Take

The old adage, “We never see ourselves as others see us” is extremely applicable when it comes to knowing how our “strategic” vendors view us. Situational awareness is critical when examining our strategic vendors’ categorization of us as a customer. The false assumption of our level of importance to the vendor can yield catastrophic consequences.Examples include over-commitment on the vendor’s behalf to your stakeholders, overpaying for goods and services, and high vendor turnover. Therefore, put yourself in your vendors’ shoes with a critical eye on how you would view the company to ultimately manage your stakeholder's expectations while obtaining the anticipated value from the vendor relationship.

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