B2B companies are failing to engage 70% of their customer base according to a recent Gallup report.
This significant study, conducted over five years and based on responses from over one hundred thousand people, completely chimes with research by Bsquared which shows that only 8% of B2B companies have reached full “maturity” in their customer engagement.
The report concludes that the reasons for this lack of engagement are due to incumbency – the difficulty and inconvenience in switching suppliers – and also because supplier organisations depend too much on their name and brand reputation.
The result is that organisational growth strategies rely more on acquisition of competitors and not engaging and nurturing customers. This latter strategy is the one which creates strong customer loyalty and organic growth.
Some people would question if this matters because revenue and profitability can be increased through acquisition. Well, in my opinion, it does because this strategy does not automatically increase shareholder value, especially when the customers (revenue generators) leave.
Bsquared research shows that while senior management is willing to devote resource to customer engagement initiatives within organisations and employees are likely to understand the importance of customer focus, the major weaknesses lie in the organisational infrastructure and culture.
These weaknesses are:
- Lack of harmonised processes to capture customer feedback and intelligence
- Little consistent analysis of information gathered to support decision making
- Not enough communication of feedback throughout the organisation and to departments and employees who could make use of it
- Inability to act on the information provided to drive changes throughout the organisation
- Little or no management of outcomes
- Poor integration with corporate governance or management dashboard
Our clients who have successfully improved their customer engagement see that moving from an operational focus to a relationship focus will identify issues early before they become major problems and help with the resolution of these issues. Having a partnership approach to customers gives greater direction on both sides – the supplier understands the customer’s strategy better, will spot opportunities quicker and can demonstrate an alignment with the customer objectives; the customer will be aware of the supplier working quickly to resolve issues and the value they add to the customer’s business.
The Gallup report is able to quantify the return on investment for customer engagement with the data showing that B2B customers with high customer engagement achieve:
- 50% higher revenue/sales
- 34% higher profitability
- 55% higher share of wallet
The report also concludes that:
“B2B companies across all industries are at risk of being replaced – not because of their products or prices, but because they are failing their customers”
If you are interested in finding the level of your own organisation’s customer engagement, try this short assessment for a simple and immediate benchmark.