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Business Journal

B2B Barriers to Organic Growth (Part Two)

Business Journal

B2B Barriers to Organic Growth (Part Two)

by Craig Kamins

Story Highlights

  • Only 29% of B2B customers are engaged
  • Success with basics such as on-time delivery gives a solid foundation
  • Better communications and streamlined processes mitigate problems​

This article is the second in a three-part series about the barriers business-to-business companies confront in maximizing their customer relationships.

Business-to-business (B2B) companies could be getting a lot more out of their customer relationships.

According to a recent Gallup report, only 29% of B2B customers are engaged, with 60% indifferent and 11% actively disengaged. This situation represents a significant loss of growth opportunities for B2Bs.

B2B Customers Who Are Indifferent

Over the past few years, Gallup has conducted a series of in-depth reviews with leading B2B companies across various industries. By analyzing these interviews, Gallup has identified the most common barriers these companies face when changing or maximizing their business approach.

The barriers fall into three categories:

These barriers reinforce why it's crucial for B2B companies to talk with their customers: to understand where the company stands with its accounts. Key account reviews can be an effective way to begin that discussion. Before starting these conversations, though, companies should recognize that there is a difference between playing defense with customers and playing offense:

  • Playing defense: Companies need to listen for specific kinds of problems, including any related to quality, on-time delivery and problem resolution. If a company doesn't immediately and decisively address them, they will likely cost the company existing business with the account, either now or when the next RFP comes. These types of problems reflect the defensive side of the equation.
  • Playing offense: Companies should also listen carefully to identify problems or gaps in customer relationships. These gaps might not pose a current threat to the account, but they could limit future growth opportunities. These types of problems represent the offensive side of the equation.

Both kinds of problems are equally important, and both demand the account team's attention. The team decides where to expend its energies based on the concerns the customer raised in the key account discussions. If the team has failed to meet the customer's baseline expectations, it shouldn't fixate on growth, but rather adopt a defensive mindset.

Perfecting the Defensive Plays

Now, any defensive actions an account team takes to correct problems might not contribute directly to account growth. For instance, a company won't score extra points with its customers for on-time delivery, because that's a baseline expectation in any customer relationship. But success with the basics, such as on-time delivery, gives the account team a solid foundation on which to build its offense. Defensive barriers include:

Customers tend to focus on the frequency and severity of problems. Customers understand that companies make mistakes and that problems with quality and delivery can occur. Companies should resolve these problems quickly and efficiently because customers become frustrated when they recur. If a company applies a short-term fix without identifying or addressing what's causing the problem, it might reoccur a few months later. Companies often implement short-term fixes when they don't have a structured process in place to monitor and correct quality problems.

Customers scrutinize "ease of doing business" when evaluating company performance. Though most B2B customer surveys and similar tools don't attempt to measure or quantify it, "ease of doing business" strongly affects how customers think about and evaluate their relationship with a B2B company. From a customer's perspective, ease of doing business includes:

  • the simplicity and transparency of a company's processes
  • how quickly a company responds to questions, requests and problems
  • the tone of conversations with the company -- for example, whether the sales or account representative and other company contacts are enthusiastic about helping the customer
  • how accommodating the company is when a customer needs changes

Ease of doing business reflects the company's internal communication and processes -- for example, how well plants, corporate offices, business units or functions communicate among themselves. When customers consider a company difficult to work with, it becomes harder for the company to build or maintain trust with those customers.

Company bureaucracy can slow down customer service. Salespeople and account leaders don't always have the authority or flexibility to act on their customers' behalf; someone at the corporate level often needs to review account team requests, which delays changes or problem-solving. As a result, solutions can take time.

Customers want the companies they do business with to work faster and with more flexibility. They want their sales or account representatives to have the authority to make decisions that benefit their business.

Past problems can affect customer relationships. Even if a company is performing well, its customer relationships might not be secure. Past problems with quality or ease of doing business can linger in stakeholders' memories, even though the company thinks they were resolved or forgotten.

For instance, customers frequently remember past problems with contract negotiations, especially if these discussions were contentious. The company might assume that the customer has forgotten the intense negotiations after the contract is signed, but this isn't always the case. Customers remember the company's tone and attitude.

In one example Gallup came across, a customer complained that an account representative initiated contract renewal negotiations when he was sick -- and then proposed a rate increase over the phone rather than waiting to meet with the customer in person. The customer signed the renewal, but his memories of the rep's behavior continued to affect his relationship with the company almost a year later.

Actions Companies Can Take

B2B companies don't have to stay on the defensive with their customers, though. They can mitigate these problems by taking action:

Communicate effectively with customers. Quality and delivery problems often occur at the company's plant, and solutions never reach key stakeholders at the customer organization. Account leaders need to document and share the actions they took to correct problems so customers can assess the company's progress over time. This documentation can also serve as a template if the same problem occurs at other plants. Another best practice is for the company to conduct monthly calls about quality with its customers.

Streamline administrative processes. Companies should monitor and streamline processes and procedures that can hinder customer service. Customers often become frustrated when they don't understand the time it takes for companies to execute processes or procedures. As a first step, companies should document existing processes and then ensure that customers understand how long each step will take. Account representatives should also introduce customers to members of the corporate customer service organization. Meeting corporate team members ensures that customers know who is acting on their behalf for approvals, contracts and other administrative functions.

Discuss quality when wrapping up negotiations or transactions. Companies can't overcommunicate about quality with their customers. In addition to conducting key account reviews and monthly quality discussions, companies should check in with customers at the end of a contract negotiation or a sales or service transaction. The goal of these conversations should be to determine whether the customer is satisfied with the outcome and address any customer concerns before the problems become deeply rooted.

The first article on barriers B2Bs face focused on those that limit a company's understanding of its customer relationships. The third article will focus on those that prevent B2Bs from growing organically.

Craig Kamins is a Senior Practice Consultant at Gallup.
Gallup

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