Friday, March 20, 2015

Can Companies Find Love In B2B Markets?

Passionate customers who love doing business with you: that’s an aspiration that only matters to consumer-market companies, right? Some social media or dot.com era company that sends free promotional items out constantly? 
Image result for find loveAfter all, clear-eyed purchasing buyers at Health care, Business and industrial customers don’t put much stock in loyalty. They base their decisions on a cold assessment of product features and price. Right?

Think again. What we all know in the small business world has been validated yet again. It turns out that even in business-to-business markets, customer loyalty can accelerate growth and create a competitive advantage. 
In studies of loyalty metrics for B2B companies the following key elements were found:

  • Customers who are “promoters” of a company have an average lifetime value between three and 12 times that of “detractors,”
  • Promoters stay longer with the company, buy more products, usually cost less to serve and are more likely to refer the supplier to colleagues.
  • Greater loyalty correlates closely with higher market share, a higher share of the customer’s spending and higher profitability.

As a result, B2B loyalty leaders tend to grow four to eight percentage points above their market’s annual growth.

Image result for loyaltyBut loyalty has become an even tougher nut to crack: In a recent survey by Bain & Company of 290 executives in B2B industries throughout 11 countries, two-thirds of respondents said customers are less loyal than they used to be. The challenge of building loyal customers is compounded by the structure of B2B industries, with their complicated channel structures, concentrated buyer communities and large accounts with many people influencing the relationship. 

Despite the challenges, some B2B companies have managed to earn strong loyalty. What do they have in common?

First, they identify the things that truly delight or annoy customers through short, frequent surveys after key episodes such as a new contract negotiation. When they market to distributors or other intermediaries, they also seek out feedback from retailers and end users.

Tata Steel’s Wire Division (TSWD), for instance, has long marketed steel wires to distributors in India, but the company tended to view its end users as a homogeneous group. It didn’t know how different types of farmers and growers used the wire and what features were most valuable to them. As the market grew more competitive, TSWD realized it needed a better understanding of its end users. Working closely with its distributors, TSWD spoke with 1,100 end users and more than 200 retailers, contractors and other influencers.

These conversations revealed that some customers were willing to pay more for premium products. Some farmers prized durability because if the wire broke, entire rows of grapes would fall and rot. Others valued ease of installation, so that they could install a fence in one section of the farm for a crop’s growing season, then dismantle it and reinstall it elsewhere for a new  crop.


This sort of customer feedback helps B2B companies decide where to place their bets. At TSWD, feedback from farmers and retailers led the company to design a new wire product with an advanced protective coating for durability. Sub-branded as “Farming Gold,” the wire comes with a 15-year warranty, approval by an external testing lab and a price 25% higher than the existing product. Now that early results show Farming Gold to be one of the most profitable wire products in TSWD’s portfolio, the company is working on sub-brands for security-conscious and do-it-yourself customer segments.

Bringing the voice of the customer into B2B marketing decisions also requires other departments to collaborate more closely with one another and with external partners. 

Your technology provider is a key partner in this mix providing both the tools and the analytics to process this information and make informed decisions to help your build your product mix and satisfy the Voice of the Customer. 

Business buyers often demonstrate the same intense advocacy for a trusted supplier that consumers show for their favored brand of shoes or smartphone. The payoff: Many leaders in industries ranging from manufacturing to financial services to health care are relying on loyalty to grow their business.


How can you build the same kind of loyalty that drives people to that yet another iPhone? or stick to a particular super market chain or store? 
Do you have the tools and the capability today? And are your using them effectively? 

For more information on TSH or MDS call The Systems House, Inc. at 1-800- MDS-5556. Or send a message to sales@tshinc.com
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