Putting Clients First
"If you want loyalty - get a dog."
Is client loyalty still relevant in this day and age when clients can switch at the click of a mouse? Like electric windows, anti-lock brakes, and air bags, what is innovative and sets you apart from the competition one day may be commonplace the next. As competition becomes more intense, clients view your products and services as a commodity. When low-cost, low-frills competitors enter the market, buyers become unwilling to pay for an undifferentiated product or service - leading to price compression. Loyalty to the best value replaces any previous loyalty to a supplier.
In such an environment, client loyalty is even more important. Fred Reichheld, author of "The Loyalty Effect," argues that loyalty is still the fuel that drives financial success - even, and perhaps especially, in today's volatile, high speed economy. The cost of replacing a profitable client is extremely high. By contrast, client loyalty brings revenue growth, cross-selling opportunities, increased efficiencies, referrals, and price premiums.
Short-Cuts Don't Cut It
However, very few companies put their money where their mouth is. They don't invest in understanding and measuring client relationships and, most importantly, the emotions. Instead, they take comfort in some generic, mechanical, and impersonal client satisfaction survey results or anecdotal information. Both can be highly unreliable and misleading. They further compound the problem by having sales or business development people masquerading as account managers.
According to a Leadership IQ Inc. survey of over 1,000 board members, 28% of CEOs were fired because they ignored customers. For B2B suppliers, the implications of this finding are profound. The tell-tale signs of a deteriorating client relationship typically appear after the damage is already done. That's when the diving save, the search for the guilty, and vows of "never again" begin in earnest.
The Link between Emotional Attachment and Share of Wallet
There is increasing evidence that emotionally satisfied clients contribute far more to the bottom line than rationally satisfied clients, even though they appear to be equally satisfied. Neurological research by Gallup Organization ("Manage Your Human Sigma" - Harvard Business Review, July 2005) has shown that the brains of customers who had the strongest levels of emotional attachment to a specific company also had significantly more activity concentrated in parts of the brain related to emotion when thinking about that company. More striking was the strong correlation between emotional attachment and self-reported share of spending. In other words, there seems to be an underlying neurological mechanism that links emotional attachment and subsequent client behavior.
As Robert Half said, "When the customer comes first, the customer will last." To be able to put the customer first, however, you need to provide more than just lip service. Unfortunately, mass client satisfaction surveys can hardly tell the difference between merely satisfied versus truly engaged clients. So how does one stop worrying about a share of wallet and focus on getting a share of mind?
Stop Breathing Your Own Exhaust
Start by gaining a true, unbiased understanding of your clients. You'll find answers through objective, third-party, and holistic relationship assessments. If these reviews are personalized, in-depth, and conversational, they can collect a lot of rich information that is impossible to collect through mass surveys. While one size doesn't fit all, you can objectively test for emotional connections by asking open questions in four key areas:
The value of the information gathered in this way can be enormous. A deeper understanding of how much clients trust you in these critical areas of emotional connection can be a mirror to see yourself in - if you choose to look. By knowing how well you are meeting the clients' current needs, you can change your approach to account management, relationships, contracts, servicing, information technology, and reporting. It is also about looking forward and anticipating needs rather than just looking backward. By getting inside your clients' heads, you can chart out the future direction you want to take in offering new products and services. Depending on the strength of the emotional attachment, you can know the profile of your high-value clients and what you need to do to acquire and retain more of them.
Stay on Your Toes
A long-term B2B relationship can actually breed complacency. As in any relationship, it is easy to take your eye off the ball. And before you know it, the clients feel that they are being taken for granted. They don't see the same appetite for driving continuous improvement in service, quality, and performance. They perceive that they must not be as important anymore. Once this feeling sets in unbeknownst to you, the damage is already done. The loss of a single, profitable client can be devastating to your bottom line as well as to your reputation in the industry.
B2B clients are far more willing to participate in personalized relationship reviews - sometimes lasting several hours - than they are to take an impersonal satisfaction survey that takes fifteen minutes. Clients have also reported these third-party interviews as thought-provoking, worthwhile, and helpful in clarifying their own needs and expectations. Further, the investment made in understanding the nuances of the relationship in an unbiased manner created definite feelings of goodwill in the minds of the clients.
So whether you are a lone wolf or a global B2B product or services company, gaining an unbiased understanding of your customized value versus price equation as your clients see it - ideally through third-party relationship assessment - is critical. It will help you to prioritize the opportunities, find solutions, and take action.
But that means having to invest in continuously monitoring the emotional engagement of your clients. If you want loyalty, you can either get a dog or be proactive about providing superior value. After all, like beauty and contact lenses, value is in the eye of the beholder!
How healthy is your client franchise?
A management consultant, author, and speaker, Abhay Padgaonkar is the founder and president of Innovative Solutions Consulting, LLC (www.innovativesolutions.org), which provides strategic advice to major clients such as American Express.
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