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Business Journal
People Who Mean Business
Business Journal

People Who Mean Business

Building business-to-business relationships

by William J. McEwen

As we've discussed in previous brand loyalty management articles, marketing today is increasingly about "relationships." Repeat business is now recognized as the avenue to enhanced profit performance, and the prerequisite for a sustainable future. Thus, there is considerable interest in marketing activities that promise to enhance the strength of those relationships, from loyalty and "customer value" recognition programs to programs to reward frequent flyers, frequent visitors, frequent shoppers and frequent buyers.

The goal: building an enduring and leverageable bond between the company and its customers. The need: creating this bond efficiently, as well as effectively.

People relationships versus business relationships
The impact of this emphasis on building relationships can be felt not only in shopping malls, grocery aisles and auto dealerships, but also in the world of business-to-business marketing. This, too, is understandable, as a world once dominated by the heirs to Willy Loman is now apparently under siege by e-marketers selling business customers with promises of "cheaper," "simpler" and "faster."

What do today's purchasing agents seek? What creates a real bond between company buyers and the product or service providers who want to serve them? A consistent and reliable source of the desired product is needed. Price is important. Speed is important. But what about people? In business-to-business marketing, have personal relationships been rendered obsolete, replaced by cyber-relationships?

In studies of customer loyalty in fields as diverse as automobiles and airline travel, Gallup has consistently noted that employees who "touch" customers --regardless of the medium through which this contact is achieved -- have enormous influence on the extent to which these customers express loyalty to the brand.

But perhaps "business-to-business" is a different breed of "relationship", with decisions that are far less emotional, and much more clearly focused on the bottom line. Thus, it would seem that the real need in business-to-business marketing is to create the most efficient means to assure that these "rational" customer needs are met. As Mario Puzo put it, "It's just business, Michael." The handshake may be a great addition to an evening social, but there's simply no time for the personal touch, and thus it has no place in the cold, hard world of today's business-to-business marketing.

True?

Digging deeper for the gold
In a recent study for a business services client, The Gallup Organization found that "people" attributes might well be more important than the more obvious -- and "rational" -- loyalty-drivers of promotion, product and even price. Surprisingly, this continues to be true today, just as it was when the Wright Brothers were operating their bicycle shop.

We also found that, when you seek to find out what's really important to business customers, it makes a great deal of difference how you ask the question.

How should you ask about what's important? What's the best way to discover which factors are most important to a business customer? Should we just ask them? Actually, we shouldn't. Why not? Because the simplest and most direct approach may not be the best one. Not when you're looking for the true decision-drivers, for what's really important. Not when you're digging deeper for the insights that your competitors might overlook.

When 430 current customers of this particular business services provider were asked to rate the importance of various features and service attributes, they answered, as might be expected, quite "rationally."

What did we find to be the most important factors leading to an enduring business-to-business relationship (i.e., loyalty) for this company? It all depends on how you ask the question.

According to their own ratings of what's "important," the most important consideration for business customers is "price", which received an average importance rating of more than 85%. What was rated as least important? "Communication with the service provider team." Only 63% of this business' customers said communication was important, a rating only slightly lower than their ratings of the caliber (responsiveness and knowledge) of the team itself.

These seem like straightforward results. It's a price war in this category, and the provider's service reps don't appear to make much difference when it comes to cementing the bond of customer loyalty. A shame, perhaps, but that's the way it is.

Or is it?

What you say versus what you do
Instead of taking the obvious approach -- using a direct assessment of customers' "importance" ratings -- Gallup followed a different approach. Gallup's approach doesn't require customers to introspectively self-evaluate the reasons for their actions, and thus it doesn't force them to rationalize their decisions.

What's wrong with the direct approach to measuring "importance"? If rated importance were the same as actual importance, no one would have ever purchased a product based on its advertising. After all, "Advertising doesn't affect me." No one would purchase a computer based on the games available, and no one would subscribe to a men's magazine for anything other than the articles and interviews. Some attributes that are important may not be readily recognized, or admitted. As a result, key insights may be overlooked entirely.

Instead of looking to "importance" ratings as the key indicator of the loyalty-enhancing power of an attribute, Gallup prefers to assess the importance of these various loyalty drivers analytically. Deriving the importance of attributes by using techniques such as logistic regression allows us to express the importance of the attribute in terms of its ability to predict important outcomes such as customer behavior. In other words, regardless of how "important" an attribute might be stated to be, the real question is how powerful that attribute rating is when it comes to actually predicting the customer's brand loyalty. It's entirely possible, for example, that a reportedly "important" attribute may in fact not contribute at all to the prediction of loyalty.

Using this "derived importance" approach to the business services data in this case yields a markedly different loyalty "photograph". Is "price" No. 1? Actually, it's not. In fact, it's the least powerful predictor of loyalty among nine possible predictors. What is No. 1? "Partnership." The most powerful predictor of loyalty to this brand isn't price. Rather, it's the belief that the company understands the customer's business and is committed to spend the time required to meet the customer's needs. Customers who feel this business services provider offers outstanding "partnership" credentials are about six times more likely to be loyal to the brand.

The power of partnership
What about "communication" -- which customers had rated as the least important determinant of their bond with the company? The loyalty-driver analysis tells a different story from the self-perceived importance ratings. Customers who rated the business services company's people as excellent in their customer communication skills were about five times more likely to be loyal to the company.

Is price irrelevant? No. Customers who feel the service provides highly competitive pricing are twice as likely to be loyal. Hardly insignificant, but about three times less important than the people/partnership attributes.

Is the product mix irrelevant? No. Customers who prize the quality and assortment of the products provided are also twice as likely to express real loyalty to the brand.

"Products" and "price" do make a difference. As other Gallup studies have shown, however, much of the time this difference is made manifest only when problems arise. These aspects of the marketing mix are often judged to be at parity -- and impact loyalty strongly, but only when failures occur. Products that break down, missed deliveries, incorrect orders, and sudden and unwarranted price increases -- these are often the drivers of dissatisfaction and customer defection.

If the business-to-business marketer seeks to build enduring and resilient customer relationships, Gallup's evidence would underscore an important fact. People relationships and "human" attributes continue to make a difference -- even to today's hard-nosed, no-nonsense purchasing agent.

On the road again
Does this mean we put Willy Loman back on the road, suitcase in hand? No. But it means that there is a continuing need for human contact, for emotional reassurance, for personal communication from the business-to-business marketer. Brand relationships are built through a culmination of consistent contact -- and people are a powerful part of this mix, however that contact is made. That's true for business customers, just as it is for people who are dining out, choosing an airline or buying a new suit.

What the business customer needs is not merely the reassurance of the right product, at the right place, at the right time and at the right price. What the business customer also needs, and what builds an enduring bond of brand loyalty, is to know that the provider offers a reservoir of relevant expertise, easy approachability, a warm welcome and demonstrable commitment to the customer. "Whatever it takes."

Can an e-marketer provide this reassurance through a web site? Perhaps. But only through a web site that evidences "people" skills and a clearly "human" touch. Not all people have the talent to deliver a truly loyalty-enhancing message. Not all web sites do, either.

William J. McEwen, Ph.D., is the author of Married to the Brand.
Gallup

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