Business Administration & Strategy Consulting

Earning customers' loyalty: Isn't that for companies in consumer markets?

Many business-to-business (B2B) executives figure that their customers act rationally and base decisions mostly on price—loyalty doesn't enter into the equation.

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Increasingly, however, B2B executives in industries ranging from industrial goods to financial services to healthcare find loyalty to be a powerful lever for them. It can both accelerate growth and create sustainable competitive advantage. But earning loyalty in B2B markets poses unique challenges, often involving complicated channel structures, concentrated buyer communities or large accounts with many people influencing the relationship. Defining who the customers really are and how to best engage them requires tailored solutions and a higher level of sophistication.

For example, when Tata Steel Wire Division (TSWD) in India needs to understand how farmers are using its barbed-wire fences so that it can develop targeted new products, it has to work through its distributors and retail network. For any supplier to a large corporation, simply mapping who in the organization decides on, influences and uses the product can be a Herculean task.

In B2B markets, even those long regarded as commodities, deriving strategic advantage from loyal customer relationships requires true differentiation. Often that means not just great products at competitive prices, but also dependable delivery, tailored services and a high level of responsiveness and collaboration. The value in most B2B markets has shifted. Among manufacturers, for instance, profit pools have moved downstream to ancillary services, lifetime contracts or provision by the hour—all of which depend on addressing customer needs such as reliability or reduced risk. B2B companies thus need to go beyond mere satisfaction to earn customers' enthusiasm and loyalty so that they can improve the business's economics.

As Lanham Napier, CEO of cloud hosting firm Rackspace put it, "Greatness is achieved when customers say we're great."

Can a B2B customer really promote or advocate for your business? Yes, but not just by saying favorable things or recommending the firm to others. Loyalty and advocacy also can be expressed as the customer's willingness to discuss how you can better serve his or her needs and add more value—critical to boosting revenues and profitability.

To that end, many B2B companies have adopted a comprehensive approach called the Net Promoter SystemSM. This system gives companies the foundation for determining which investments will yield the highest return. At the same time, it shapes behaviors, mindsets and decision making at all levels in order to form a more responsive, customer-centered organization.

Net Promoter® companies use regular customer feedback to understand what they are doing right and wrong. They loop the feedback quickly to frontline employees, their managers and senior executives. That allows employees to discover the root causes of both problems and areas of distinction, which then enables them to take targeted actions. Over time, the accumulation of improvements serves to build a powerful competitive differentiation. Access our page dedicated to the report, and discover discharge systems that audit and consulting firm created for you on the web site:

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