Supplier Rank: The Most Revealing Customer Experience Measure For Your Company

We’ve tested every known measure to assess customer experience, and it’s time your organization considers a new, more revealing measure: Supplier Rank.

Like many companies, we’ve long advocated for the use of the Net Promoter Score (NPS), for its reliability as a predictive indicator, but in recent years we’ve found supplier rank to be an even more revealing measure. Here’s why.

What Is Supplier Rank

The concept of supplier rank is simple. It involves measuring the customer’s preference for your business vs other options they can purchase from. 

The question to get there is equally simple. The supplier rank question asks, “Presuming you source from more than one supplier, how would you rank supplier X vs. the other suppliers in this category, all things considered?”

By asking this question, the customer is forced to choose who they prefer. With their response you clearly understand how you stack up compared to the competition. If your business is ranked #1, you’re positioned to win more business. If you’re tied for first, you’re in the hunt, but it’s not a sure thing you’ll win the next deal. If someone else is preferred, you’re playing catch up. Unless you make course corrections to better your game, the other provider is likely to win the next opportunity when it arises.

The supplier rank question works for several reasons. It’s simple to understand. Moreover, it's predictive. Experience has shown the answer provides a strong indication where the customer is leaning as they consider where they will award the next piece of business. Rank has little to do with current wallet share. It has much more to do with the future awarding of business. 

Rank has little to do with current wallet share. It has much more to do with the future awarding of business. 

So why is supplier rank a more reliable measure than NPS? Two reasons:

1. NPS scores can give false positives. 

Let’s assume your customer rates you favorably with a high NPS score. Success! You must be performing well. Not so fast. Just because the customer will recommend you doesn’t automatically translate to you being his preferred supplier. That’s the true test. Too often, the customer also likes another supplier for different reasons. So it comes down to how you both compare and who he values more. This is the more enlightening question. That fact doesn’t come out when measuring NPS.

Just because the customer will recommend you doesn’t automatically translate to you being his preferred supplier. That’s the true test.

2. NPS doesn’t account for cultural differences in scoring. 

This consideration is for businesses that operate globally. One of the common complaints with NPS is that the scores are not comparable across regions. Due to cultural differences with scoring (ex. the common belief that Germans rarely give 9’s or 10’s.), NPS’ scores are difficult to compare region to region. But with supplier ranking, cultural differences are eliminated. Someone will be ranked first regardless of where the survey is conducted. Measuring ranking results allows for comparisons across geographies and differing markets. 

Putting Supplier Rank to Use

The next time your organization runs a customer survey, include the supplier ranking question, “Presuming you source from more than one supplier, how would you rank supplier X vs. the other suppliers in this category, all things considered?”. 

Then measure the percentage of customers that rank you first. If you’re favored by over 50% of your customers, you’re in a strong position. If the percentage is only 25-30% or worse, that’s a red flag. You’re likely losing opportunities at a number of customers. 

Knowing how to improve your position comes from the follow up question: “What is your reasoning for this ranking?”.

If you’re the preferred supplier, why? What’s the key reason for your success? This is your key differentiator. Never lose sight of this reason.

But if another supplier is preferred, what’s their secret sauce? The answer they provide will be the number one issue you’ll need to address if you want to win more business at the account. 

Regardless of your baseline score, your goal is to improve the percentage of customers that rank you first. 

A caveat for those of you that are the sole supplier to your customers. In this case, supplier rank doesn’t apply since they have no one else to compare too. NPS still tends to be a predictive measure. A high score gives you assurances your position is secure. A low score could be an early warning, business might be at risk unless issues are addressed. 

At T4, we’ve incorporated supplier rank into our customer interviews and seen great results. We encourage your organization to see how impactful it can be for you and your customers as well. If you need help with this, or organizing customer studies in general, schedule a quick call with us to learn more about the power of listening to your customers.