Cleanzine: your weekly cleaning and hygiene industry newsletter 25th July 2024 Issue no. 1124
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Revenue at risk as poor QBRs cause increasing number of contract terminations
Some 88% of buyer organisations state that suppliers aren't demonstrating enough evidence of value and innovation in Quarterly Business Reviews, and more than three quarters (76%) report that it often feels as though QBRs are merely a tick-box exercise for their suppliers. With 93% of buyers reporting that they are looking at their supplier relationships with much more scrutiny than two years ago, suppliers need to up their game to maintain a competitive edge.
This is according to research published yesterday by global business review platform Clientshare. Buyers of B2B services - including facilities management, logistics, IT services and business process outsourcing - in the UK and US, are becoming increasingly disillusioned with suppliers who deliver poor-quality QBRs.
This has a hugely damaging impact on suppliers. More than three quarters (82%) of buyers report they have cancelled a contract because they felt their supplier didn't deliver enough value and innovation.
As well as customer churn, low-quality QBR processes also result in suppliers missing out on growth within their accounts. Almost three-quarters, (74%) of buyers report that suppliers are missing out on key opportunities with their organisations by not making the most of QBRs.
'The QBR Delusion' whitepaper reveals the critical importance of QBRs for business relationships, as the number of face-to-face meetings between suppliers and their clients has dramatically declined post pandemic. Just over a third (68%) of buyers point to QBRs (or regular review meetings) as the most important moment for suppliers to evidence their value, share insights and expertise and create demand for additional services.
In addition, the majority (59%) of buyers state that QBRs frequently become overly operational and lack a true strategic focus. Other frustrations include sub-standard content, suppliers failing to explain how they plan to address ongoing challenges, and meetings not taking place at the agreed cadence.
"The QBR is the best time for suppliers to have meaningful business conversations with their clients," notes James Ward, managing director, Clientshare. "But most are wasting this opportunity and are often damaging their client relationships in these meetings.
"Customers can see that suppliers are simply going through the motions. They're turning up with irrelevant and inaccurate content, and they're overly focused on operational data, looking backwards instead of focusing on the future and helping their clients to address their big strategic challenges."
As frustrations around QBRs escalate, relationships between buyers and suppliers are deteriorating. Some 60% of buyers now believe that their suppliers are getting by on delivering the bare minimum, while 79% say the bare minimum is no longer acceptable - they know they have choices and hold the power in their supplier relationships. Moreover, 56% say they don't trust that suppliers will live up to the promises they made when they first signed the contract.
"Huge numbers of suppliers are losing clients and revenue because they're not using QBRs as an effective way to demonstrate value and innovation, strengthen relationships, or address client concerns in a timely way," adds James. "Suppliers need to wake up and recognise that expectations around QBRs have evolved over recent years. It's no longer enough to be presenting low-level operational data, they need to be providing actionable insights and ideas. Today, outsourcing is about so much more than cutting costs.
"Suppliers need to be showing how they can help clients tackle big challenges in areas such as innovation and ESG."
Claire Fields, director of strategic partnerships, OCS Group UK, states:
"Buyers are now really investing in supplier relationships as they recognise the need to drive as much value as possible from their investments. And that means their expectations are now far higher. Buyers want suppliers to be far more aligned to their business objectives, values and culture and to demonstrate this in review meetings by offering insights, best practice advice and innovation."
Clientshare's research highlights the content buyers regard as essential for suppliers to share during QBRs. This includes operational performance data, summaries of how suppliers are addressing client feedback and challenges, strategic initiatives, and opportunities for additional value and innovation. Crucially, buyers also want suppliers to provide clear plans on how to deliver agreed outcomes and key action points following these review meetings.
Significantly, the research reveals that there are major upsides for suppliers that optimise their review processes to meet evolving client needs. Buyers become much more engaged with suppliers that have clear and strong processes around QBRs. For instance, they're more likely to leave feedback, NPS, and CSAT scores when they feel they are clearly tracked and actioned by a supplier. And, crucially, 74% of buyers state they would definitely be more likely to buy from a supplier that consistently listens to and acts on the feedback they've provided.
As James Ward concludes:
"By implementing a consistent and structured approach to QBRs, suppliers will reduce churn and margin erosion, improve NPS and drive revenue growth. Suppliers need to approach QBRs as the most critical moment in their client engagement strategies and, if they can get it right, a way to drive a serious competitive advantage. The key is establishing QBRs as a gateway to meaningful business conversations."
Used by more than one in three of the FTSE 100, Clientshare helps suppliers in Logistics, BPO, FM, Contract Catering and IT to improve retention and grow accounts. The platform gives businesses the tools to create high quality and consistent business reviews, deliver them to the right stakeholders, measure their effectiveness and NPS and act on customer feedback. Customers, including CEVA, Compass Group, SEKO, OCS, CBRE and ISS, use Clientshare to manage client reviews, uncover accounts at risk and identify growth opportunities.
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