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Loyalty in the B2B environment

In 1980 Jack Trout, together with Al Ries, wrote a book on positioning that has become an industry classic: ‘The Battle for Your Mind’. In their follow up 1985 bestseller ‘Marketing Warfare’, they joined the ranks of the top marketing gurus. And rightly so.   

You don’t have to be Einstein to work out that if a business doesn’t satisfy customers it won’t be around very long, unless they’re either operating as a monopoly or there’s no other choice because every other supplier is operating at full capacity. As Trout showed, achieving customer satisfaction doesn’t necessarily mean customer retention.

What do we mean by satisfaction anyway? That depends. For some people ‘it’s OK’ might be enough, but not for others. And the measure also moves – as we get more, we want more. Remember how happy you were the first time you found shampoo, conditioner and body lotion at a hotel? Now we simply take it for granted, and to achieve the same level of happiness today we need a bottle of bubbly, not just clean hair. We are so fickle!

Let’s have a look at the B2B (business-to-business) situation. Obviously the same sort of forces work in this scenario, where suppliers are getting better, deliveries arrive faster, prices are falling, products are becoming more reliable. And yet customer satisfaction scores are not 10 out of 10.

But there is good news. According to Trout, the lack of loyalty we see in consumer marketing, that is the degree of supplier switching, isn’t showing up in quite the same way in B2B markets. Yet.

Why? Well, firstly B2B buyers are generally a unit, not one person, and so the decision-making process involves more people. This means that a decision to change suppliers is more arduous; there is much less chance of an impulsive decision. We might not care if we change our brand of shampoo, but changing the type of lubricating oil in a high-cost machine is not a decision that will be made lightly. In B2B, switching a product or service supplier can be extreme and have far reaching ramifications. I have seen examples where companies have switched to a ‘cheaper’ product or service only to have it cost them more in the long run in terms of production issues, rework, quality/inspection problems and worst of all, unhappy and lost customers.

Secondly, the supplier-customer relationship is different. In the B2B market there’s often a lot of personal contact between the two, and customer satisfaction is driven to a large extent by people. Friendly, knowledgeable staff add a lot to the satisfaction score.

Finally, a lot of loyalty in B2B is the result of inertia: it’s too much trouble to change. The web that ties the relationship together is complicated, going through the approval processes before deliveries can be a hassle. There are terms of payment and other agreements, paperwork and admin… it’s all too hard.

So what does this mean for those B2B operators? There are two elements to loyalty: hardiness and endurance.

A hardy relationship is about the soft issues such as branding and positioning. This is not the kind of stuff business to business buyers would acknowledge in their selection of a supplier, but it is important in making sure that there’s a good, comfortable fit between the two. Over time, customers become more discerning; they’re seeing more marketing messages, and the need for identifiable uniqueness increases because the products, services and even the organisation becomes ‘commoditised’. And this is where there’s real danger, because the nature of a commodity is that it’s readily interchangeable with other similar commodities.

To avoid this, you must communicate values that resonate with your customers and develop a hardy, tough relationship. Customer satisfaction over time isn’t only about the deal, it’s about the relationship, and you can’t achieve that with a one-off burst of marketing tactics. It requires a dynamic, sophisticated approach that can be adjusted as customer requirements and the competitive environment changes.

Enduring loyalty is about moving in synchronisation with customers. A better product, or a cheaper service is not always the answer to changing needs, especially if they can be copied quickly. It’s not about being ‘built to last’ but about having the ability and insight to change while maintaining industry best practice and performance standards.

To figure out if your company offers its customers loyalty endurance, you must be able to answer two questions:

1. What is our value to the customer within the entire supply chain?

2. How do we retain and improve this better than our competition?

You need to take a tough look at how you analyse customer satisfaction, and work out a measurement method that’s more insightful, not simply asking the usual ‘would you buy from Company XYZ again’ questions that can only give a snapshot view which becomes outdated very quickly.

Satisfaction means nothing if it doesn’t lead to retention. In B2B environments in particular we need to achieve sustainable differentiation, and analyse customer satisfaction dynamically, not in an ad hoc manner. Product and service are simply not enough, it’s relationships that are the real shifter, the big differentiator, and if we want hardy, enduring customer loyalty, that’s where we have to go. 

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