By Jo Causon, CEO, The Institute of Customer Service
Nearly every business works with a range of suppliers on whom they depend for materials, products or services and the recent months have brought this into even sharper relief! Effective procurement is vital for good business outcomes.
It is also a key component in the customer experience. Customer facing services are frequently outsourced to third parties – whether that’s running a contact centre, managing deliveries or logistics, or other customer interactions. Organisations are effectively entrusting the third party with their brand. The way in which their suppliers interact with customers and the quality of the service provided will reflect directly back on their own business and reputation.
Customer experience disconnect
That’s why it’s essential for customer service professionals to be fully involved in the procurement process. New research that we have carried out at The Institute suggests that, while progress has been made in building customer-related metrics into procurement decisions, there is still further to go. In many cases, there remains something of a disconnect between the procurement team and those with customer experience responsibilities.
We found that, overall, 69% of managers believe procurement affecting their organisation’s customer experience is successful. However, scratching beneath the surface, some interesting disparities begin to emerge. Whereas nearly three quarters of procurement managers believe the organisation manages its supplier relationships effectively, this drops to only 58% of customer experience managers. The same is true when asked whether the organisation’s suppliers help improve business performance: 74% of procurement managers agree, but only 55% of customer experience managers.
Meanwhile, there is recognition on both sides that there is room for improvement in ensuring the procurement team has the appropriate level of interest in procurement affecting the customer experience.
Not just about cost
Organisations evaluate a broad range of factors when making procurement decisions but, when asked to prioritise just three things that are critical, they are still much more likely to give a high weighting to cost.
Of course, it is normal and right that the cost of an outsourced service should be a key consideration. But cost must not be allowed to completely overshadow other priorities, such as the customer service dimension.
I have a concern that, given the challenging times ahead due to Covid-19, more businesses may be seduced into prioritising cost over everything else. This will prove to be a false economy if it results in poor customer experiences, reputational damage, and time and cost in putting service failures right.
This makes it increasingly important that customer service directors and professionals take steps to be actively involved in procurement processes. This needs to be more than having a place on the selection panel on ‘beauty parade’ day. They need to be involved right from the beginning – working with the procurement team and other parts of the business to devise the brief, driving the selection criteria from strategy through to execution and being clear about the key measures including cultural fit and the long term approach.
Building true partnerships
The aim must be to work with organisations who can become genuine partners – that share similar values to your own organisation and recognise the key importance of customer service. There must be a good cultural fit between your two organisations. This isn’t only a case of the senior team getting on well – the relationship needs to be right at all levels. This needs to be tested and explored. Go on site, get a direct feel for their culture and values. Talk to their customers. Explore their mission and values, look at their employee engagement activities, their commitment to diversity and inclusion. Environmental, social and governance issues (ESG) are really coming to the fore too – does the business have a clear and defined agenda? Does their track record indicate that this is taken seriously?
The greater the influence of a supplier on an organisation’s customer experience, the greater the need for effective relationships that cannot be completely expressed in contractual terms. Where procurement is most successful it operates as a genuine partnership in which all parties are committed not just to fulfil contractual obligations but to proactively seek opportunities that create mutual value. Both sides have a stake in the outcome.
Preparing for Brexit
There is another looming issue that should also be a spur to get this right: Brexit. Businesses are of course highly focused on the challenges of Covid-19, but our final separation from the EU is fast approaching and cannot be overlooked. What impact will our departure have on supply chains and delivery of goods or services, especially if there were to be No Deal? Customer service professionals must be asking the question within the business and working closely with colleagues to create solutions and contingencies.
The importance of procurement is clear. Our research uncovered some instances of significant partnership successes. But this momentum must not be allowed to drop. Now more than ever, integrated approaches are needed to ensure that procurement doesn’t default to pounds and pence, and customer experience remains a core and guiding principle.