Customer loyalty is something every company wants and needs, and every manager understands just how essential it is to growth and success. But often, the concept of “loyalty” it is often cloaked in fuzzy imperatives with no defined outcome or strategy, and driven by personal relationships that may be tenuous. Most importantly, companies – especially in the midmarket – are failing to recognize the difference between customer loyalty to a relationship, which is often temporary; and customer loyalty to the brand, which has more permanence. As a result, companies are unintentionally giving away customer loyalty without realizing it.
The problem exists when companies proudly proclaim, “We’re a sales-driven organization!” believing that is what makes them successful. Sales are, of course, an essential part of the business – no company can exist without it – but there may be folly in letting Sales call the shots. Sales organizations live on short-term results, and lack the long-term focus more typical of the Marketing function. Relationships are a positive thing, but loyalty based on individual relationships with sales agents are by nature, limited in scope and temporary in duration. And more importantly, they depend less on the brand and more on individual personalities which may come and go. Having a sales staff that makes meaningful connections with clients is always desirable, but that’s only half the equation of driving loyalty. Unfortunately, many companies only go half-way.
“In most types of businesses, they are not taking actions to develop customer loyalty,” said Bob Domenz, founder and CEO of Avenue. “They are primarily sales driven organizations, and behaviors taken to drive customer loyalty happen only through the sales force.” Loyalty in that context is driven by the relationships that exist, by sales reps that go above and beyond the call of duty, who are responsive to their customers and helps them solve problems that may come up. “Many aspects of loyalty get attributed to the heroics of a specific sales rep. It’s rare that this type of business has set up an intentional account team that creates multiple points of contact, which is a way to diffuse that single-source relationship driven customer loyalty.”
Changing where branding exists in the business lifecycle
It’s not uncommon for businesses from new, entrepreneurial ventures on up to the midmarket to remain sales-driven. Especially in early-phase companies trying to move from zero to sixty before they spend all of their VC’s money, driving sales is a matter of survival, and they remain focused on the short term. It’s often not until companies are more established and financially stable that they begin to recognize the importance of marketing. “Branding in these types of organizations often falls into a second-level priority,” said Domenz. “Once a business has reached a certain point, they are able to start doing things they consider brand building, and ultimately for those that do take that step, brand building becomes a strategic lever for the company to create loyalty.”
But by de-emphasizing marketing and loyalty to the brand at the earliest stages, companies are missing an opportunity to build long-term results. There exists a great imbalance between focus on sales, where the relationships are; and marketing, where brand building exists. “If you hold up a mirror to these organizations, you’ll see strong investment in the structure around sales,” said Domenz. “And in this sales-driven mindset, Sales probably has a direct line to the C-suite. Marketing might only have a marketing manager, and usually, marketing is little more than sales support. It’s a tertiary function of the business.”
Rather than operating strictly as a sales-driven organization, it is important to get an early focus on marketing as an executive function that exists alongside sales, rather than simply operating as a sales support function. Marketing and sales should be seen as equals, working together to develop revenue and growth strategies. “That lack of focus on marketing is very common, especially among midmarket sized businesses,” said Domenz.
Death of a salesman
There are far-reaching changes occurring in the demographics involved, and the newest influx of Millennials are gradually shifting the balance of power in the buyer-provider relationship. Domenz observes, “If you’re working with a client that has a direct sales force, or even if they are selling through distribution, you are seeing the sales force aging. And on the buyer side, it is increasingly becoming younger. It scares the hell out of these veteran sales reps. What works for them, showing up with donuts, golfing, and all these other types of in-person, time-intensive selling activities don’t work with Millennials.” The Millennial demographic is changing the nature of those relationships, and this demographic acts and responds differently than any other generation – and organizations must engage those Millennials on their own terms to build brand recognition.
Millennials involved in a buying decision instead set out to become more knowledgeable about a product offering, as well as competitive product offerings, before making first contact – and in some cases, may even be more knowledgeable than the sales rep about the industry, or even about their own product line. The balance of power is shifting in the hundreds of thousands of sales conversations that are going on in any given moment. For the sales rep to be successful in the future, he or she has to become even more expert and knowledgeable in a certain product category, the competitive setting and landscape, than they have ever been in the past.
A customer experience focus that is team-based, and lacks that extreme dependence on a single personality that everybody knows and loves, is important earlier in the life cycle of the business to accommodate this shift. “In my opinion, 90 percent of companies rely too heavily on the sales reps to generate sales,” said Domenz. “The right mix is unique to each company, but the universal truth is that you have to have both.”
Millennials pay attention to what happens before meeting the sales rep, and this is where the importance of early-stage marketing and brand building comes in. Millennials are online-intensive, and it is essential to invest in the right kind of online content and social media activities. “It’s like the Wild West,” said Domenz. “It hasn’t had very many settlers just yet, and people are still figuring it out.” The Millennial buyers will care less about the fact that you showed up to a presentation with donuts for the staff, and more about what thought leadership a company has published, the type of strong and informative content that exists, and the types of materials that have been put out before the sales rep even touches the relationship at all. Bring the donuts anyway, but your first impression has already happened long before your ever made first contact.
Domenz cites an example of a company that has done it right – Clarke, an international environmental products and services company, “has a very strong customer relationship management practice in the sense that everyone from their reps to their scientists and field techs and on up to the CEO of the organization, has regular and intentional contact in support of their customer. As a result, many of these relationships span decades, and they have endured changes in sales reps. But a great by-product of a company which puts in place the steps necessary to mitigate this loyalty giveaway, is to retain your top sales performers. They have the backing of a very proactive, strong team, and that makes them succeed. So what you see in a case like Clarke is that you keep high performing sales stars for decades, and this becomes a one-plus-one equals three equation. If you can create loyalty with your sales rep and loyalty to the company and brand, then those two pieces together have an exponential value equation to them. That customer is essentially locked for life. They have no motivation or reason to try for another alternative.”
A company that recognizes the importance of customer loyalty to both relationships and to the brand itself, and starts taking steps early, can achieve higher levels of success in the near future, as well as better prospects for the long haul. “It’s an insurance policy that most businesses should have,” said Domenz. “Unfortunately, there aren’t that many who have taken this policy on customer loyalty, and they are at great risk because they are letting all that loyalty lie at the sales relationship, as opposed to the company and brand.”