Shanghai Daily

Business customer loyalty a "tough nut to crack"

Do your B2B customers love doing business with you?

Par David Michels and Ellon Xu

First published on mai 05, 2014
min


This article originally appeared on Shanghai Daily. Passionate customers who love doing business with you — that’s an aspiration that matters only to consumer-market companies, right? Manufacturing and industrial companies, whose buyers base decisions on a cold assessment of product features and price, don’t put much stock in loyalty, right? Think again. It turns out that even in business-to-business markets, customer loyalty can accelerate growth and create a competitive advantage. In our studies of loyalty metrics for B2B companies, we found: Customers who are “promoters” of a company 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. But loyalty has become an even tougher nut to crack: In a recent survey by Bain & Co 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. Take, for example, Dürr, the German supplier of paint and assembly shops. Each of its 40 accounts is a huge automotive manufacturer with hundreds of decision-makers and influencers. So mapping Dürr employees with customer contacts — a prerequisite to marketing to them — is complex. Read the full article at Shanghai Daily

This article originally appeared on Shanghai Daily.

Passionate customers who love doing business with you — that’s an aspiration that matters only to consumer-market companies, right? Manufacturing and industrial companies, whose buyers base decisions on a cold assessment of product features and price, don’t put much stock in loyalty, right?

Think again.

It turns out that even in business-to-business markets, customer loyalty can accelerate growth and create a competitive advantage. In our studies of loyalty metrics for B2B companies, we found:

Customers who are “promoters” of a company 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.

But loyalty has become an even tougher nut to crack: In a recent survey by Bain & Co 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. Take, for example, Dürr, the German supplier of paint and assembly shops. Each of its 40 accounts is a huge automotive manufacturer with hundreds of decision-makers and influencers. So mapping Dürr employees with customer contacts — a prerequisite to marketing to them — is complex.

Read the full article at Shanghai Daily