Customer Satisfaction Does Not Create Loyalty
News Did you ever wonder why such a high proportion of satisfied B2B customers end up leaving and moving to a competitors’ product or service?
BusinessWeek cited that 60 percent of defecting customers describe themselves as satisfied just before defecting. Case in point: A $1.6 billion B2B company was experiencing an 85 percent customer satisfaction rate but still suffering from an abysmal 68 percent retention rate. When the CFO asked how this could be, the VP of marketing had to find an answer— and he did.
As it turns out, the marketing team was not aligned with the sales process or the economic buyer. The rigorous Voice of the Customer survey program that gained insight from 250 customers per quarter had a flaw that was easily uncovered. The company was not getting survey results from the decision makers in the accounts surveyed. Rather, the users of the equipment and the procurement administrators were the typical individuals responding to the surveys.
The company had neglected to build relationships with the decision makers. The lack of relationships meant that the decision makers were too busy to complete a satisfaction survey, let alone give candid performance feedback. When the time came for the decision maker to renew a contract or determine which vendor to choose for a new project, the company was not positioned to win. Building relationships with decision makers is the linchpin to customer loyalty in the B2B World.
"A simple start is to identify your most important customers, begin the journey to engage and build relationships with the decision makers that matter most, and concentrate on a few programs and make them great."
Listed below are seven fundamental best practices to successfully engage with decision makers and build loyalty with your B2B customers.
1. Focus on the few
Use Pareto’s Principle and focus on the few. In the B2B world, the majority of revenue comes from just a few accounts. HCL is a $3 billion dollar company growing 26 percent annually. Amazingly, 75 percent of HCL’s revenue is concentrated in their top 80 accounts. If they were to lose just one of those top accounts, it would require countless new accounts to make up for the revenue loss. But HCL focuses intently on these top 80 accounts building relationships and consequently leading the industry with a 95 percent retention rate. Shami Khorana, president, HCL Americas states, “Our Customer Advisory Council initiatives have significantly driven our retention and growth rates within our top accounts.” By segmenting your B2B customers by revenue, it becomes pretty easy to figure out who the really important customers are to retain.
2. Listen, listen, listen
In the B2B world, engaging with customers almost always involves a conversation. Rarely do you see a situation where a sale is made, or a complaint is resolved, without a conversation. The Dell Large Enterprise leadership team gets it. Andy Lark, chief marketing officer, Large Enterprise, is adamant about setting the tone when engaging with customers to build relationships that last. Andy comments, “When we open our ears, seek first to understand and listen to our customers, we are able to position our solutions to solve customer’s problems. This positions Dell ahead of product organizations that attempt to point a solution at a problem and increases the value of our portfolio with our customers.”
3. Engage similar customers together
Have you ever taken your kids on vacation together and witnessed the magical moments when they get along so well together? That’s exactly what happens when you bring customers together that face similar industry or functional challenges and dynamics. When you create an environment that allows the decision makers in your accounts to share experiences, network and debate best practices with you, you create a bond that extends beyond the time spent together. George Scotti of Springer Science+Business Media has created an amazing Customer Advisory Board program where Springer hosts their top customers in discussions that address common challenges and market dynamics.“Our top customers love our Customer Advisory Board program because we create a dialogue driven environment to help them address their challenges.”
4. Leverage your team
Leverage your executive team for relationships. Face it. In most B2B companies, it’s not easy for your sales team to build an executive level relationship with the decision makers in their top accounts. Most sales reps don’t share similar experiences with decision makers and they often find it difficult to engage in a conversation at the same executive or strategic level. But, you can leverage your own leadership team to foster and up-lift the conversations thatkeep your organization connected to the decision makers in your top accounts. Xerox has done a marvelous job of leveraging their executive team to engage with their key customers and foster business conversations. These discussions uncover the unmet needs in these accounts, and lead to increased share of wallet and increased customer loyalty.
5. Enable decision makers to talk to others
Now here is a beautiful way to have a customer engage with other customers. Springer Science+Business Media has leveraged a third party to help establish a series of “summits” across the country, where 3-4 Springer customer and industry experts sit on a panel. The summit’s target audiences are prospects and accounts that have not yet adopted new solutions. The expert panel answers questions about addressing industry challenges and the role Springer plays in solving such problems. These forums help prospects become familiar with a new product or create awareness in a new market, accelerating the sales cycle.
6. Turn insight in to actions in to results
This is where the marketing department can bring the elusive strategic value to the organization. Get the marketing and product departments engaged with your decision maker’s ideas. Synthesize all your direct market insight into key priorities that are actionable. I’m not talking about the laundry list of 56 features that need to be built in to the next release—I’m talking about the big nuggets that will propel the organization forward. Jeff Tinker from Wells Fargo has been engaging customers for strategic insight and product development for years, and says with one key project in particular that, “We were literally at a point in the product’s development that we were incorporating feedback overnight.” The controlled engagement between customers and internal teams align actions and results to insight from the customers. Forget about the latest ad campaign—get the organization aligned on the priorities of the decision making customers.
How often we forget that the biggest cause of divorce is communication—lack of it that is. Decision makers want to hear directly from the people they have connected with—and not read broad based messaging distributed to the bcc all list. Who has responsibility in your organization to communicate one-to-one with your top customers and your key decision makers? The customer loyalty life cycle requires the marketing organization to step up and play a leadership role managing the entire communication experience. One-to-one. Own it.
8. The ROI
While most B2B companies see substantial increases in customer loyalty and retention similar to HCL’s industry leading numbers, an added benefit is increasing revenue in those top accounts. Tom Webster at Intesource implemented his decision maker programs and refined them over several years. And, while retention rates with this group (80 percent of Intesource’s revenue) have grown, account growth has leaped 100 percent. The art of developing customer loyalty in the B2B world is not really as complicated as people may make it sound. A simple start is to identify your most important customers, begin the journey to engage and build relationships with the decision makers that matter most, and concentrate on a few programs and make them great. By starting now, you can be well on your way to achieving the success that Springer, HCL, Wells Fargo, Xerox, Intesource and Dell are able to deliver.