A few weeks ago I was having lunch with a friend, a successful executive who has run large sales organizations for three different companies. She is a forceful executive with clear ideas of how “things should be done.” On this particular day, she appeared a bit frazzled and distracted.
I asked her what was the matter and she said, “For the last 12 years, I have had all my key financial accounts with Bank XYZ – a fund for my daughter’s college education and my mortgage, plus my personal savings and checking accounts. Now, I am in the process of closing each account and transferring them to Bank ABC. Do you realize how time-consuming that is?”
“Why would you go through such trouble?” I asked. “Why don’t you just keep your accounts at Bank XYZ?”
“I simply can’t do that,” she replied. “My account manager, the person I have dealt with for the last 10 years, just left Bank XYZ and took a position at Bank ABC.”
This conversation illustrates a critical point in the creation and management of customer loyalty. In the B2B world, your sales force is actually your loyalty program.
In our research across a broad spectrum of business-to-business companies, including medical devices, chemicals, pulp and paper, pharmaceuticals, heavy earth-moving equipment and banking, we consistently find the most important factor that builds a strong, loyalty-based relationship between a customer and a company is superb account management by their sales representative.
Loyalty, at the end of the day, is not created by offering discounts or exceeding customer expectations. Rather, loyalty is simply a trust-based relationship that is established by meeting the needs of the customer on a consistent basis over time.
Consider the following example: You and I both sell sand to the same glass manufacturer. In addition, we dig the sand from the same pit. There is absolutely no difference between the product you sell and the product I sell.
When our mutual customer orders a ton of sand from you, he receives a ton. When he orders a ton from me, sometimes he receives a ton, sometimes half a ton and sometimes a ton and a half. When this customer requests a delivery for Friday you get the sand to him on Friday. When I promise Friday delivery, half the time it shows up the following Monday. When this customer needs an emergency shipment of sand you can deliver it, but I am unable to do so. When a problem arises, you respond to it right away and call the customer back the next day to make sure your solution is working for them. I rarely ever do that. Your technical support group can show this customer how to make better quality glass. My technical support group is not familiar with the latest techniques.
Whose company is this customer going to trust? To whom will they give their loyalty?
In my career, I have identified seven different ways that account managers create trust-based relationships and high levels of loyalty among the customers they serve:
- They contact the customer on a frequent basis (i.e., two to three times a month). Frequent contact makes it difficult for things such as incorrect shipments and product problems (the kinds of things that can destroy relationships) to fall through the cracks.
- They respond to the special needs of the customer (e.g., arranging an emergency product shipment) quickly and accurately.
- They train the customer on how to use the product (both initially and ongoing), which enhances perceptions of overall product quality and performance.
- They are a valuable source of industry information, such as key trends and best practices.
- They conduct quarterly business reviews, which allow them to remain up-to-date on the key issues and challenges facing the customer.
- They solicit the customer’s ideas on product enhancements and features, which can be a very helpful input into your new product development activities.
- They develop a broad network of trust-based relationships across the customer’s organization.
A loyalty program is much more than offering a card that gives discounts to your customers. For companies serving B2B markets, a properly run sales force that executes the seven activities outlined above is the most effective (and cheapest) loyalty program you can find. Developing strong, long-term relationships between the members of your sales force and the customers they serve will translate, over time, into greater levels of sales and profit growth.
When American Airlines started its Advantage Program in the early 1980s, it had one clear objective in mind – to learn more about their customers and their key needs so they could serve them better. The ultimate goal of the program was to develop stronger relationships with their customers so American could benefit from their loyalty.
Over the years, many retailers and restaurant companies have adopted loyalty programs. While they come in various flavors and sizes, they typically work in the same way – purchase our product enough times and we will give you some form of a discount. We may even give you something for free (e.g. a trip to the destination of your choice).
At this point, you might be forgiven for raising a simple question: “That may be great for an airline or a restaurant, but I’m in the manufacturing business. I make widgets with a high degree of consistency from one production run to the next. What am I supposed to do – give you a free widget after you purchase 100 of them?”
You’re right. Most loyalty programs have lost their way, and they certainly do not apply to many B2B companies. Rather than serving as a way for a company to know more about its customers so they can serve them better, these initiatives have devolved into simple giveaway programs. However, that does not mean you have to fall into that trap. You must recognize that you have the key to customer loyalty right in the palm of your hand. You just need to recognize one simple fact: Your sales force is your loyalty program. Stated somewhat differently, your sales force is the key to understanding the needs of your customers and meeting them in a better way than your competitors. This is the key to customer loyalty – not giving discounts.
John Larson is the senior partner at John Larson & Company, a pioneer in the field of customer loyalty, and the co-author along with Bennett McClellan “Capturing Loyalty”