Simply put: in today’s market, B2B companies are at risk of losing more than two-thirds of their customer base.
At least that’s what Gallup analysts surmise.
In a report released Wednesday on creating customer centricity, the performance-management consultancy’s chairman and CEO Jim Clifton said, “Companies are struggling to grow—so they’re giving up and acquiring their competitors.”
That’s the growth strategy for most of the world’s biggest public companies, and as a result, the number of publicly listed companies traded on U.S. exchanges has been nearly halved in the last 20 years, falling from 7,300 to 3,700.
“In a perfect world, the market would have doubled the number of big public companies instead of halving it,” Clifton said, adding that, “Gallup is not telling its clients to stop acquiring. But we are advising them to get better—fast—at real customer growth, especially in foreign markets.”
According to analysts, only 29 percent of B2B customers, from manufacturers to law firms, are emotionally and psychologically attached to the companies they do business with. The other 71 percent could take their business and go at the drop of a hat.
Seeing the world from their own vantage point won’t work for companies anymore, they have to see from the customer’s perspective.
“A customer-centric model is about more than focusing on the customer or having a defined customer experience; it is about putting the customer at the core of everything,” the report noted. “B2B companies are missing the vital link between data and action.”
The biggest barrier to customer centricity is a lack of customer awareness.
“Companies are playing defense because they do not know what their customers want,” Gallup said.
Surveys—favored by many as a way to gauge customer content—only assess surface-level satisfaction and won’t provide the level of customer understanding necessary now. And more often than not, survey data never makes it from spreadsheet to implementation because companies are either apathetic or not sure what to do with it.
“But their disregard has consequences,” according to Gallup. “When customers share their thoughts and opinions, they expect to see change. If they tell their vendor that on-time delivery is an ongoing issue, they rightfully assume that the vendor will take steps to fix its delivery process. If the vendor does nothing, its customers will become further disengaged and will not take the company of any of its future surveys seriously.”
Companies are actually going to have to talk to their customers.
One way to do that, Gallup says, is to conduct annual key account reviews or interviews with the most important customers to learn where the company stands.
“Key account reviews highlight what is happening within each account and can reveal different stakeholders’ motivations or concerns,” Gallup said. They also provide insight into strengths and opportunities across accounts and trends in the business’ behaviors.
Companies need to perfect what Gallup calls their “defensive plays,” too.
If a business doesn’t address issues immediately, like problems with on-time delivery, for example, it will likely cost it existing business with that account. This is the defensive side. If a company can find issues or gaps in customer relationships that may not pose a current threat but could limit future growth, that is the offensive side.
“If it has failed to meet the customer’s baseline expectations, the account team should not fixate on growth, but rather adopt a defensive mindset,” Gallup advises. “A company will not necessarily score any extra points, for instance, for on-time delivery when most competitors operate at about the same level. But success with the basics like on-time delivery provides the account team with time to think about its offense.”
The key to fixing issues and improving engagement is in the how. Companies want their problems resolved, yes, but most are more concerned with how the company handles that problem than with the ultimate resolution.
Creating opportunities for organic growth is another way to retain customers.
“Customers tend to have a strong status quo bias,” the report notes. “Even if a company delivers perfectly on its current contracts and takes measures to address or minimize problems, the customer is not necessarily going to give the company additional business.”
To get that added business, companies need a different kind of relationship with their customer.
They need to have innovative ideas and conversations that extend beyond their current transactions. Customers often don’t know quite they want, but if the company can figure that out, it could spell a big win for business.
Senior leaders should also be more involved with customers and communicating the breadth and scope of what the company can do for them rather than leaving this all to account managers.
B2B leaders should be thinking longer term when it comes to their customer relationships, and getting together for periodic business reviews could aid that. At these meetups, companies should come to understand the state of the customer’s business—not just the state of the account—and identify ways to help.
“The goal in all of this is for the B2B company to have more dynamic and forward-thinking conversations with customers and to channel those conversations into growth,” Gallup said.