Miguel Cossio, senior research director with Gartner, explains the concept of “customer of choice,” and how it relates to buyer-supplier relationships.

A customer of choice is one that receives priority treatment when accessing the services or products of a provider. The concept is commonly evoked in the transportation sector, especially when capacity grows tight and shippers find themselves scrambling for ways to move their goods.

More recently, “customer of choice” has emerged as an important topic in buyer-supplier relationships, with the balance of power beginning to shift toward the latter, Cossio says. Research shows that the notion of supplier collaboration has increased in importance for 88% of surveyed organizations, Cossio says.

The trend is at odds with the tendency of many buyers to stretch out payment terms to their suppliers. Reconciling that practice with the need to be a customer of choice is “definitely a problem,” Cossio says. But issues around money aren’t the whole story. “It’s a misunderstanding where people think you need to pay more to become a customer of choice. The conversation about savings still needs to happen, but you need a more collaborative approach.” 

Forty percent of organizations today don’t have a strategy for becoming a customer of choice, Cossio says. But even when they do, many concentrate on what’s in it for them as buyers. Instead, “the focus should be on what the supplier wants the most.”

The way to find that out is through supplier satisfaction surveys, similar to how many businesses today are polling their employees to gauge attitudes toward the workplace. But the effort doesn’t stop with the mere issuance of a questionnaire. Buyers must use the views gleaned from the surveys to identify specific areas where they can improve the lot of suppliers. The effort also needs to go beyond a handful of strategic suppliers, Cossio says.