B2B: Secrets To Big Customer Partnerships
Essentially, B2B customers want it all. What does this mean for B2B suppliers?
by Jeff Durr and David Leonard
Sluggish growth in the global economy continues to squeeze companies of all shapes and sizes, causing many of them to cut costs in business-to-business (B2B) supplier relationships.
Leaders seeking to slash their budgets often review large-dollar relationships first, hoping to use their buying power as leverage for lower prices or more favorable terms.
To help B2B leaders weather the scrutiny of companies that are cutting back on partnerships that don't add value, Gallup unearthed three key trends from successful major account management teams:
1. More than ever, B2B customers demand tailored knowledge, insights and perspectives.
Gallup finds that customers increasingly expect suppliers to possess the deepest and timeliest information on their most important business issues. These include the economics of customers' businesses, emerging challenges within customers' industries and trends within a supplier's customer portfolio.
The problem is, only 31% of B2B customers believe their supplier understands their needs, and only half of B2B customers (54%) strongly agree that their sales or account teams are trusted advisers. This means that B2B companies need to expand knowledge of their customers and marketplaces to enhance differentiation and value.
Gallup finds that when customers strongly agree that their supplier is a trusted adviser, they produce 1.5 times greater revenue and are 2.5 times more likely to say they are "extremely likely" to repurchase the company's products or services. They're also better brand advocates, being 3.6 times more likely to report that they are "extremely likely" to recommend the supplier's products or services.
The key to being seen as a trusted adviser is accumulating valuable, relevant and cutting-edge insights. One global packaging supplier tackled this challenge using two key tactics:
• Evolving market research into advanced analytics: By progressing from traditional research activities to big data and predictive analytics, the global supplier more effectively identifies, understands and forecasts end-consumer purchasing trends.
• Integrating analytics activities into end-to-end account management strategies:This tactic creates robust, relevant account support plans that account management personnel can readily implement.
2. Divide and conquer: Best-in-class companies segment account-relationship and support systems.
To support the heightened need for perspective and insights into their customers' businesses and industries, the best B2B companies are segmenting major account-relationship and support systems, building enterprise or national account groups. These groups provide cross-functional support and generate more value, insights and service for major customers -- across all business units and product categories -- than do product-specific account structures.
For example, a financial services company was battling stagnant customer growth and longstanding biases about customer engagement drivers, such as believing that product knowledge is a more important engagement driver than industry knowledge. To create the optimal account segmentation strategy, the bank turned to advanced analytics.
Historically, the company assigned B2B relationship managers based on geographic proximity to cut travel expenses in a low-margin business environment. While this strategy saved money, it left some B2B customers with uninformed relationship managers who just happened to be based in their region.
To help the bank jump-start growth while keeping costs down, Gallup conducted a complex analysis to assign account managers based on industry and other factors, such as geographic location. As a result, the bank now provides customers with relationship managers who better understand their unique needs.
Gallup's analysis involved combining historical sales and product and operations cost data with existing data on account management activities from the bank's CRM system. Gallup used machine learning -- with third-party data including customer geography, industry and performance trends -- to match account managers with customers and identify potential cross-sale opportunities.
Ultimately, this analysis resulted in a 10% increase in new business revenue, a 20% increase in customer satisfaction and a minimal increase in travel costs within the first year. This all happened because the bank provided customers with relationship managers who can better address the things its customers value.
More generally, Gallup finds that executive involvement -- with top-to-top relationships between high-ranking leaders and customers -- can powerfully support and supplement account-level relationships. Executive-level representatives are uniquely positioned to highlight their company's broader offerings and strategies. Top-level leaders can also facilitate tactical, forward-thinking business conversations -- garnering B2B customer loyalty and helping companies overcome pressing challenges.
3. Omnichannel relationships and digital commerce are increasingly prevalent.
Though omnichannel and digital commerce are more common with business-to-consumer (B2C) organizations, the shift to omnichannel relationships is a growing reality for major B2B relationships. According to one study, 83% of B2B sellers are either actively upgrading and implementing an e-commerce suite or planning to do so within six months.
Because B2B customers already enjoy high-quality omnichannel relationships in the B2C realm, they now expect the same from their B2B suppliers. Gallup research shows that B2B customers want seamless, intuitive online experiences that integrate flawlessly across all channels. In fact, channel satisfaction -- with five-star customer experiences -- drives customer outcomes more than access to multiple channels does.
Essentially, B2B customers want it all: affordable prices, diverse product offerings and excellent customer service across every channel. For B2B suppliers, the benefits of delivering rich omnichannel experiences and flawless digital service are sublime -- from driving profitability to increasing customers' loyalty and repurchase intent.
Many B2B organizations successfully meet customers' omnichannel demands by separating complex and simple customer interactions. These companies migrate simpler transactions to a digital platform to increase the ease of doing business and reduce the effort for both parties. By using consumer analytics to identify digital-ready customers and encouraging them to explore online and mobile options, leaders can satisfy customers' desires while reducing service costs.
To give customers the integrated, seamless channel experiences they seek, B2B leaders need to ensure there is companywide alignment on omnichannel and digital initiatives. High-performing B2B companies go beyond implementing an e-commerce platform; they fully embrace digital and omnichannel opportunities and make these initiatives top organizational priorities.
Bailey Nelson contributed to the writing of this article.