How to retain B2B customers while selling through the channel
In today’s fast-paced global marketplace, customer loyalty and retention are key; especially in the B2B market where companies will often talk about 85%+ of their business coming from existing customers – but this is under pressure and changing.
By: Melanie Parker, CLMP, Stream Loyalty
Customers have access to more information about the world in which they operate than ever before. They expect to be able to access online information about existing and potential supplier organizations. They feel, rightly or wrongly, that they can make independent buying decisions and don’t need the advice of a salesperson. The days of salespeople putting catalogs in front of customers are long gone; sales teams now cost far too much to function as “talking brochures”. Customers are happy to make purchasing decisions independently, which previously would have involved dealing with a salesperson; even multimillion-pound purchases, such as the purchase of a jet engine for an aircraft, are now made confidently online through sophisticated sourcing portals.
Increase competition with decreased customer loyalty
The global market, deregulation and supply chain sophistication have fundamentally changed the ability of suppliers to operate in markets and regions of the globe that were previously not accessible or economically viable. This, coupled with huge variations in manufacturing costs around the world, has led to global competition on a level few had accurately predicted.
Nimble and fast competitors are incredibly quick to provide replacement parts, consumables and alternative services to compete with original equipment manufacturers (OEMs); Me too products are everywhere. OEMs who could previously expect a level of retention and continued sales from hard-earned customers are finding that the aftermarket is eroding, both in terms of product and service sales.
B2B customer loyalty has become increasingly fragile as customers see alternatives to paying a premium to buy from the OEM. The importance of relationships and continuity has eroded in the mind of the customer, leading to greater price sensitivity and commoditization of products and services.
Dependence on distribution partners
Many suppliers have multiple routes to market. In addition to their own internal and external vendors, suppliers can work through a multitude of distribution partners and agents. These channel partners may have exclusivity agreements binding them to that particular vendor’s products or act as a channel partner for a number of potentially competing products. Channel partners may have little or no emotional loyalty to a particular vendor.
For the distribution partner, the key questions are:
- Which vendor products are the easiest to sell?
- Which products give me the best margin?
Suppliers selling through the single channel may have little or no contact with the end customer; their relationship, and potential loyalty, is with the channel.
How well do we really know our customers?
All of this brings us to a harsh reality: many suppliers have lost contact with their end customers.
What their end customers are actually saying and/or asking for is lost or distorted, albeit innocently in many cases, by the channel partner’s involvement.
The Voice of the Customer (VOC) may no longer be aligned with the Voice of the Supplier Business (VOB). Suppliers are investing in costly marketing initiatives and promotions where the sales potential is increasingly difficult to validate and the impact of promotions difficult to control, all because of the disconnect with the end customer. Expensive marketing campaigns may well encourage end customers to approach channel partners to purchase a supplier’s product BUT, of course, the channel partner may seek to replace that supplier’s product with a comparable product if it offers a better margin for the distribution partner.
So where does all of the above leave the provider?
Suppliers need to address a number of key issues:
Correctly calculate your cost of sale
Hiring salespeople is only viable (or necessary) if the cost of employing them is covered by the margins you make on their sales. Salespeople should be an integral part of the process of helping the end customer make a purchasing decision. Customers need to see value not just in what you sell, but more importantly in how you sell. If the customer feels they can make the purchase decision without needing a salesperson to facilitate the process, then that salesperson may be useless; and not only unnecessary, but an expensive operating cost affecting the sales organization’s margin and competitiveness. So, is the seller redundant? Not quite, there is still a role for sellers, but it has changed. Salespeople should help the customer facilitate the change; sell with – rather than to – customers. If the seller is not integral to facilitating the purchase decision, then for many vendors educating the customer through digital marketing – enabling and motivating them to buy online – is key to maximizing margins.
Communicate directly with your end customer and target market
Suppliers need to be able to communicate directly with their end customers to ensure loyalty is to the brand of the supplier and not that of the distribution partner. Channel partners will rightly remain an integral part of fulfilling these orders, but only by hearing the voice of the customer for themselves can suppliers be confident that their marketing initiatives and promotions are properly targeted. and communicated to the end customer and that these customers hear the voice. of the company. Marketing functions must have reliable and direct data on customer needs and buying behavior in order to make informed decisions about marketing spend; many marketing functions that operate through channel partners simply don’t have enough data to enable them to make these decisions and track their impact. A marketing manager described marketing spend in the absence of reliable data as “like throwing money into a black hole!”.
What are smart providers doing to address these issues?
What is the key to attracting, retaining and growing sales in an increasingly competitive marketplace where channel partners are a supplier’s primary route to market?
Communicate directly with your customers
The supplier must have a complete picture of which product and/or service is purchased by which end customer and, above all, why. When a customer places an order – even if it is fulfilled by a distribution partner and they are credited for the sale – the supplier must have access to this information in real time.
Loyalty programs for customers and B2B channels
Incentivize your customers and distribution partners
End customers and channel partners must be incentivized and motivated to be loyal to the supplier’s brand/products and/or services. In the case of premium products in particular, these incentives can often be non-monetary but of high perceived value to the end customer.
B2B employee loyalty programs
Incentivize your sellers and give them real-time customer data
Salespeople also need to be incentivized and motivated to focus on sales activities that contribute the most to the business. Often the key to this is access to customer feedback and sales data to enable them to use their time more productively, measure their success in real time, and achieve the recognition and reward that they are looking for.
So how do you build loyalty and retention in the digital age where customers have more choice than ever and suppliers are increasingly removed from direct contact with end users?
The simple answer is to make sure you have the data you need and the means to assess, segment and target your audience. Data is the holy grail for maintaining close and valuable relationships with your customers. Companies that invest in technology to collect, manage and use their customer data – and that use real-time personalization in their marketing – reap the benefits of increased response rates and clicks on marketing campaigns, and the resulting increase in conversions.
B2B loyalty is under threat. The B2B customer is sophisticated and the competition is intense. It is cheaper to retain your existing customers than to acquire new ones and therefore it is essential to use all available resources at your disposal to ensure that the VOC is aligned with your VOB. Learn to appreciate and understand buying behaviors and preferences, and learn how to work with your channel partners to deliver the best customer experience and ensure your customers don’t get lost.
Listen to this testimony one of our customers, Dentsply Sirona, who has succeeded in retaining its end customers in a very competitive distribution market.
Melanie Parker is a Certified Loyalty Marketing Professional and director at Broadcast fidelitya UK-based loyalty service provider with customers in England, New Zealand, Australia, France, Spain, Italy, Germany and Switzerland, Canada and United States. Melanie is a frequent contributor to The Wise Marketer.