Advantage Logo White
Advantage Logo White
Advantage Logo White

Select the Advantage platform that fits your needs

Help Desk
Published: May 7, 2021

How a focus on the right relationship drivers can foster unity in omnichannel strategy and execution

2020 marks an irreversible turning point in the CPG industry. Most notably, the pandemic propelled the growth of e-commerce and put the omnichannel environment on fast forward. In fact, 78% of shoppers will expect permanent changes to their shopping experience, and 44% are unlikely to return to the way they used to shop. This has left retailers and suppliers with a simple choice: embrace it or get left behind.

Embracing this dynamic shift represents a significant challenge for almost every company – supplier or retailer, irrespective of how well established they are. They find themselves in the tenuous situation of trying to maintain a leadership position and keep pace with consumer expectation, play catch-up, or struggling to know where to start. This uncertainty exists because the omnichannel environment is in the making; the pathway is untrodden, meaning there is no ‘secret to success’ yet within reach for all to follow. 

There is one certain tenet which does help retailers and suppliers navigate this journey: strong and unified business partnerships. Intentional focus on strengthening supplier and retailer engagement is a critical strategy for any business looking to forge ahead in this landscape of uncertainty.

But what does a strong partnership mean? At Advantage Group, we see that strong partnerships between retailers and suppliers are grounded in the knowledge that everything that they do together works in a synchronized manner to meet consumer needs. We have seen firsthand over our 30+ years and through our experience in over 40 countries, that the practices that best support supplier-retailer engagement are rooted in both business capabilities and behavioral competencies. In fact, there is a hierarchy at play, which shows that suppliers who demonstrate the behavioral competencies first, ultimately do better at the business capabilities.

With a global pandemic still raging, behavioral competencies are vital. Suppliers that focus only on the basic business capabilities are merely solving half of the equation. But the emerging omnichannel challenge requires focusing on both elements of the supplier-retailer relationship simultaneously.

People in serious discussion about business

Top Performing US Suppliers Provide the Pathway

Figure 1: Advantage ReportTM USA (Voice of the Retailer) Top 5 Supplier Overall Performance Scores vs All Supplier Average

The average performance or engagement score of all US suppliers as assessed by their retailer partners through the 2020 Advantage Report (Voice of the Retailer program) was just 23 net favorable points (on a scale of -100 to +100), declining 3 points from 2017. These statistics suggest that significant opportunity is left on the table for suppliers to beef up their customer engagement agendas.

The Top 5 performing US Suppliers however provide the pathway, outperforming and outpacing their peers, lifting their customer engagement scores from a net favorable score of just 32 in 2017 to 46 in 2020.

The strongest performing competencies for these leading suppliers in customer engagement are:

  • Leading digitally – Digital advertising, management of online content supported by dedicated e-commerce resources with the right skills and experience.
  • Insight – Providing objective insights to inform sound strategy.
  • Customer service experience – Maintaining a holistic customer service experience consistently.
  • Category growth – Fueling category growth for the future, looking beyond their own brands.

Advantage sees that top suppliers have transitioned their focus from more traditional brand and marketing methods to customer data analytics, digital skills, and content management in the new consumer age.

The fastest growing competencies for these same industry leaders and the critical omnichannel capabilities are:

  • Online product content
  • Dedicated e-commerce personnel
  • Digital leadership
woman engaging in digital marketing activities

So, what is holding CPG suppliers back from playing at the level of top performers?

Beyond the low satisfaction of supplier relationship performance is a weak assessment of supply chain practices, which contributes to the struggles many suppliers have in adapting to omnichannel demands. In fact, the five most under-performing competencies for US suppliers in 2020 illustrates this clearly:

  1. Delivering complete orders
  2. Aligning on supply chain metrics
  3. Driving supply chain efficiencies
  4. On-time delivery
  5. Packaging for e-commerce

The battles within the supply chain today represent a critical opportunity gap for suppliers to differentiate themselves from their competition by focusing on improving and advancing their retail partner’s omnichannel agenda. The opportunity exists within the gap between the expectations retailers have of their partnership and how suppliers presently perform. 

To see this demonstrated we magnify the top five suppliers in the US market. Collectively, the companies that perform best at customer engagement also perform better on the fundamentals of the supply chain. These companies provide a roadmap for improving customer engagement and making the omnichannel journey a smoother path to follow which will to be crucial as shopper habits continue to evolve at pace.

Figure 2: Advantage ReportTM USA (Voice of the Retailer) Top 5 Supplier Overall Performance Scores (supply chain practices) vs. Industry Average

Effective supply chain is the first step to unlocking relationship potential. Next, suppliers need to lead with behavioral competencies and follow through with solid business capabilities”

says Annaliese Jagusch, Chief Customer Officer, Advantage Group.

Having supply chain under control affords the top performers the ability to focus on other parts of the business and strategy for growth.  Additionally, while 2020 also made it harder for these suppliers to keep their supply chain at the same level, they were able to navigate the supply chain pain points more seamlessly with their customers due to their strength and simultaneous focus on the behavioral competencies.

These industry leaders have prioritized communication skills, responsiveness, proactiveness, and attention to building trust, improving supply chain engagement, and bringing more consideration, empathy, and flexibility to short-term obstacles.

Do not be fooled into thinking that these are practices everybody employs. Despite the importance of behavioral competencies, many suppliers overlook the basic tenets of relationship management. And as we see in Figure 2, while the top performers outpace and outperform the industry average, they too have a way to go to meet all expectations and truly delight their customers.

People working in factory packaging assembly line

Reaching the fast lane towards an omnichannel future

To keep up in today’s competitive landscape, suppliers must put themselves in the omnichannel environment and consider both retailer priorities and the capabilities of industry leaders. They need to prioritize their customer engagement strategy by focusing on both the business capabilities and behavioral competencies. The dramatic shift in shopper behavior will require retailers to engage with suppliers who can navigate uncertainty and help them lead in an uncharted omnichannel landscape. Retailers know there is no turning back now, so it is up to suppliers to help them move forward into the unknown with purpose. Who will they lean on to support them?  Those that they trust and who provide the right balance of business capability and behavioral competency.

Are your customer relationships ready to fuel your growth? Connect with Advantage Group today to place the strength of your relationships in an omnichannel context and create your customer engagement pathway.


Sources:

Annaliese Jagusch

- Chief Customer Officer