Empowering retention strategies in the age of the customerRead more
What really matters in B2B relationships?
Customer needs are becoming more diverse and often change from day to day, putting enormous strain on the resources and capabilities of sales organizations. This often results in B2B companies over investing or under delivering for customers as changing needs outpace their capabilities. B2B companies often feel and experience that their customers “want it all” – cheaper, faster and better and find it hard to prioritize what really matters. The following case gives some insight on priorities across the value chain in a market that is highly mature, and where the remaining players know how to deliver on time with the right quality at a competitive price.
Prioritizing business drivers – what to improve?
A large industrial supplier of highly specialized products asked us to help identify the factors that would allow them to differentiate themselves from the competition. In a market where a range of suppliers are able to deliver quality on time, true game-changers are hard to come by without cutting the price to non-profitable levels. Therefore, we conducted quantitative interviews with current and potential customers, inferring importance of a range of business drivers from the customers’ own perception on one side – and statistical analysis on the other.
Figure 1: Importance of business drivers
*Calculated importance is found through statistical analysis. Partial Least Squares is used to discover the connection between each business driver and loyalty.
**Asked importance is found by simply asking customers how important they find each business driver.
Surprisingly, we see a rather large gap between what customers say is important, and what actually drives further satisfaction and loyalty. When asked, customers value the brand low in importance in order to put a high emphasis on delivery. At the same time, almost every customer was pleased with the delivery leaving only little room for improvement. Our analysis showed that the real differentiator when moving forward, apart from the actual product, was the brand. This does not mean that timely delivery is not important, only that the need here is fulfilled and that further improvement should be focused elsewhere. This is not an uncommon pattern in mature B2B markets, where basic needs already have been totally fulfilled. All suppliers are able to deliver quality on time, so differentiation has to come from somewhere else.
Instead of initiating an endless pursuit of improving the already close-to-perfect delivery, the supplier started looking more in-depth at what could be done to improve brand perception while providing unique custom-made products. Going down this road allows the supplier to differentiate itself from the competition, without cutting price and quality.
Customers do not necessarily know what they want
If asked, the first things that come to mind are often the most obvious ones. But when choosing among a variety of suppliers who all provide a great baseline of services, other factors might be the real game-changers. As a result, businesses have to prioritize efforts instead of pursuing an endless fight for improvement in already well-performing factors. This is accomplished by taking advantage of the data and revealing the true differentiators.