Suppliers should acknowledge that SLA’s are not the infinite method for managing customer satisfaction. Many articles are written on how to measure and manage customer satisfaction. Many suppliers go into price war to deliver the services at lower cost. Price is not the main reason for customers changing suppliers.
Some reasons why customers change suppliers for Information Technology:
1. To solve aproblem
The problem customers experience is normally a service related problem. The supplier is happy that they delivered on the SLA’s but, the customer have a business problem that was either excluded from the original SLA agreement or that surfaced during the contract period and the supplier did not address the customer problem. A problem where the impact of the non-deliverables on a SLA was more severe to the business than the financial penalty value of the SLA.
2. Need business improvements
Not all customers are unhappy with their current suppliers. Some customers feel that the supplier deliver on the requirements but do not add any value in improving their business. Customers’ needs to build their business and if the supplier is not adding value as strategic and advisory partner they will look for alternative suppliers to fill this requirement.
3. Off-shore business decisions
Customers that have a footprint in various countries are often limited to supplier selection. Global supplier’s selection are done at Head Office. The relationship between local customers and suppliers are often damaged and limited by global supplier selection.
4. Compliance and Regulations
It is very unusual that a customer will change suppliers due to legislation changes. The reason for "compliance change" is due company take-over and/or perception. If a supplier and customer have a contract for example 7 years, the perception is that something is illegal and the supplier must change. During a company take-over the company with the majority shareholding define the supplier list.
5. To get the lowestprice
For a customer to change supplier is most of the time painful. Changing suppliers means potential interruption during transition phase, on-site training of health and safety, policy reviews and many other hidden tasks. If all services and values are equal between suppliers, price selection is normallythe last reason why customers will change suppliers.
Conclusion
Suppliers that wants to keep their customers should not just focus on SLA’s. It is critical that your people onsite become pre-sales advisors. Form partnerships and become a local footprint for a global supplier. Innovation and digitalization that will grow your customers business will always give you a competitive advantage at current and potential customers.
