Not too long ago, I ran across an article that posed a rather intriguing question. “Can customer service deliver a higher ROI than marketing?”
The author, Luke Brynley-Jones, points out that companies typically spend a lot of money on attracting new buyers, but perhaps not enough on fostering closer relationships with current customers.
Brynley-Jones writes: “Companies are spending the equivalent of 2% of their marketing budget on actively maintaining relationships with existing customers, while they blow a figure equivalent to the annual GDP of South Africa on banner ads and PPC.”
He makes a great point. It just makes sense that closer relationships can help you get even more value from already proven assets. But let’s take this idea one step further. Virtually every company operates as both a provider and a consumer. Wouldn’t companies be best served by actively managing the relationships they have with customers and those they share with the vendors that supply all the goods and services necessary to run a successful business?
Recently, I saw a perfect example of this mindset in action at a company called Sitel Operating Corporation.
Making the Customer Number One
In many respects, Sitel Operating Corporation’s whole business model is about maintaining healthy customer relationships.
Sitel is a global outsourcing provider of customer experience management that helps some of the largest brands in the world retain and grow their customer base. It provides many Fortune 500 and Fortune 1000 businesses with a complete portfolio of telephone call-center services.
The folks at Sitel pay plenty of attention to their existing customer base.
“We are very, very passionate about our customers . . . and that passion translates into the decisions we make,” says Sitel’s President and CEO, Bert Quintana, in a video interview with en-Contact Magazine. “When building our strategy, we have gone to our customers first to understand what’s important to them.”
This has resulted in some very valuable feedback.
“We got a lot of insight on how to behave and operate differently,” Quintana says, “and that’s created a transformation in our company.”
The Other Side of the Equation
Having this “customer is number one” attitude is half of the story.
Sitel also purposefully manages the business relationships it has with some 13,000 suppliers around the world. It does so through a centralized global procurement team supported by SAP Ariba solutions.
“This gives us a single picture of purchasing and helps us better understand spend,” says Ellen Gossett, Head of Global Procurement at Sitel. “This level of insight and authority enables us to take a more strategic approach to spending.”
This unified view and end-to-end control have proved invaluable to Sitel – a far-flung company that operates customer centers in 22 countries and 48 languages. Sitel has seen 50% faster approval cycles for new contracts and realized significant cost savings with sourcing events.
But perhaps even more important, Sitel has established a more equitable relationship with many of its vendors.
Gossett speaks frankly about the past. “Previously, suppliers held all the cards – they knew which products we had bought and which regions they were bought in,” she explains. “We had no way of knowing this ourselves.”
Now Sitel goes into negotiations with all the facts. This insight helps the procurement team take full advantage of Sitel’s size to negotiate the best possible deals and terms with vendors.
Business Relationships that Create Value
By staying close to Sitel’s customers, Bert Quintana can sum up what is most important to them in a few simple words: “Performance, relationship, and value creation.”
These same priorities obviously shape Sitel’s business approach as well.
“Since implementing our global procurement program, we have been able to drive much greater value from our suppliers,” Gossett says. “We’ve added almost US$20 million to the bottom line.”
And there’s one more thing worth noting about Sitel’s story. As part of setting up its global procurement organization, the company created a list of approved providers. This resulted in 22,000 fewer suppliers in the consolidated vendor pool.
Sometimes you can have too many relationships.
Please follow me on Twitter @JohnGWard3.
You might also like this:
- To hear more from Ellen Gossett in this SAP customer video
- To learn more about Sitel Operating Corporation’s success with global procurement in this SAP Ariba Business Transformation Study