Home >Opinion >You need to find love in B2B markets also

Passionate customers who love doing business with you: They only matter to consumer-focused companies, right?

Think again. Even in business-to-business (B2B) markets, customer loyalty can accelerate growth and create competitive advantage. With an economic upturn expected, B2B businesses need to focus on loyalty if they want to capture increased growth in the next few years.

Most B2B companies still lag on customer-focused metrics. In a recent survey of top executives across business-to-consumer (B2C) and B2B businesses of a large Indian conglomerate, B2B executives unequivocally said that they lagged on key customer metrics when compared with their B2C peers.

B2B marketers need to focus on loyalty to retain their most important customers, to grow their share of business with them, and win new business through their referrals—unsolicited or otherwise. In our studies of loyalty metrics for B2B companies, we found:

—Customers who are promoters of a company (they would recommend it to a colleague or friend) have an average lifetime value between three and 12 times that of detractors, depending on the industry and customer segment.

—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.

In a recent Bain and Co. survey of 290 executives in B2B industries across 11 countries, two-thirds of respondents said customers are less loyal than they used to be. The challenge of building loyal B2B customers is compounded by the complicated channel structures of B2B industries, with their concentrated buyer communities, large accounts and with many people influencing the relationship. For example, each of the 40 accounts of Dürr AG, the German supplier of paint and assembly shops, is a huge automotive manufacturer with hundreds of decision makers. So mapping Dürr employees with customer contacts—a prerequisite to marketing effectively to them—is complex.

Despite the challenges, some B2B companies have managed to earn strong loyalty. In our experience, what B2B loyalty leaders have in common is their ability to deliver on customer centricity and ensure continuous improvements: many of them using the Net Promoter System (NPS), a closed-loop feedback mechanism designed to help companies increase promoters and reduce the number of detractors among customers.

Short, frequent NPS surveys after key interactions, such as a new contract negotiation, can identify aspects that delight or annoy customers. When companies market to distributors or other intermediaries, NPS gives feedback from retailers and end users, as well as from distributors and direct customers.

When a leading Indian textile player used NPS to get high-quality market feedback, the CEO discovered latent discontent with his company’s salesforce among his key customers (spinners and weavers) that the company’s sales metrics did not yet reflect. Given new capacities and increased competition, this feedback proved a timely warning to improve customer engagement and resolve irritants. It also provided an opportunity to grow business with new-to-sector customers by identifying the actual reasons for not adopting this company’s fibre (perceived complexity in usage), which it could address.

Another company, a major Indian industrial player’s wire division, which had long marketed steel wires to distributors in India, tended to view its end users as a homogeneous group: It didn’t know how different types of customers used its wires or what features they valued most. To find out, it worked closely with its distributors and spoke with 1,100 end users and more than 200 retailers, contractors and other influencers.

The company discovered that some customers were willing to pay more for premium products—they prized durability that prevented the wire from breaking—while others valued ease of installation to enable easy re-use. These customer insights led the company to design a new wire product with an advanced protective coating for durability. To improve ease of installation, it is working on a do-it-yourself sub-brand. This sort of customer insight helps B2B companies decide where to place their strategic bets.

Bringing the voice of the customer into B2B marketing decisions results in closer collaboration between functions, as well as with external partners. E.ON SE, a multinational power and gas company based in Germany, learned this lesson in one of its country operations, which relies on third-party agencies to acquire new small- and medium-size business customers. Feedback from new customers showed significant gaps between the rebates, tariffs and features that customers expected and what E.ON actually provided. This disconnect prompted a stream of calls from confused business owners.

In response, E.ON invested in support tools and training events for its agencies to convey more accurate information. It established quality targets as part of the agencies’ compensation, to motivate and reward desired behaviours. Early results show that E.ON has brought on board new small-business customers with greater clarity and fewer complaints.

Business buyers often demonstrate the same intense advocacy for a trusted supplier that consumers show for their favourite brand of shoes or smartphones. The payoff for B2B companies who invest in customer loyalty with the same passion as their B2C counterparts: longer lifetime value customers, higher market share, growth above their market average, and satisfied customers who cost less to serve.

This is the final part in a five-part series on customer loyalty and advocacy.

Nikhil Prasad Ojha is a New Delhi-based partner and heads Bain and Co.’s India strategy practice. David Michels is a Zurich-based partner in Bain and Co.’’s customer strategy and marketing practice. Murad Nathani is a senior principal in the India office, and a member of the Asia-Pacific customer strategy and marketing practice.

Net Promoter® and NPS® are registered trademarks of Bain and Co. Inc., Fred Reichheld and Satmetrix Systems Inc.

Net Promoter SystemSM and Net Promoter ScoreSM are trademarks of Bain and Co. Inc., Fred Reichheld and Satmetrix Systems Inc.

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