CX Strategy (2) – What makes B2B different?
Welcome to the second article in my series on how to develop and implement a customer experience strategy.
This series is about customer experience in business-to-business (B2B) situations. Most of what you read elsewhere about customer experience is in the context of business-to-consumer and is not directly relevant. The reasons are the following:
- In B2B, a single person is never responsible for all the client organization’s interactions with your company.
- The difference in the relative financial importance of your largest and smallest customers is much greater than for B2C.
- The people who use your products or services are usually not the ones who make the purchase decisions.
- Your relationship with your customer requires more constant attention because multiple sales and support engagements are likely to be happening at the same time.
- Relationships with individual people in the customer organization matter as much as relationships with positions on organization charts.
- It takes time to know whether you are improving things.
- Your customers want and need you to be successful.
- Angry customers stay with you.
There are businesses that look like B2C but are actually B2B. Kentucky Fried Chicken (KFC) is an example, and so is General Motors. Most of their income comes from franchisees, not directly from consumers. Keeping franchise operators happy is more important to KFC than the views of the end customers. It is largely up to the franchise operators to keep the end customers happy.
No single person responsible for everything
When I shop at my local supermarket, I start by scanning my loyalty card and picking up my barcode scanner. I then scan each article as I put it into the caddy. I check out on my own and speak to nobody. The same happens when I buy something from Amazon. More commonly, my retail interactions involve a single person. If I buy a pair of shoes, it is possible that I won’t go back to that store for a year or two, no matter how happy I am with the shoes and the shopping experience. OK, if you want to be picky, a second person might have welcomed me to the store.
When a business buys from another business, things can be far more complex. Yes, a business can still buy Amazon Web Services and never interact with a human being. At the other extreme, a decision to no longer handle invoicing internally in a large company but to outsource it to another company can take two years. It can involve many different people, from the CFO to Procurement to labor unions at the customer end, from a sales person to an implementation project manager at the supplier end. And that is just to get to a decision. Implementation can be complex and involve a lot of different people. Management and organization changes can call the whole project into question and delay things significantly.
Differences in customer size matter
In most B2B situations, you have customers who matter more to you than others. There are two main reasons some may be special. The obvious one is revenue. A typical Pareto curve means that 20% of your customers may bring 80% of your revenue. The 20% need to be treated differently from the 80%. While you might like to think this is in the case in B2C, it has a different scale in B2B. There are very few B2C situations where a consumer is spending millions with one company. The second reason a customer may be special is that they are the pilot customer for a new product or service. You need them to be particularly happy with you, so they are willing to recommend the new product or service to others. (Of course, you should not expect a B2B customer to recommend your product to one of their competitors.) The Pareto chart below illustrates a typical B2B customer profile.
Users are not purchasers
Perhaps most importantly, the user of a product or service is rarely the one who signs the purchase order. If you are a catering company, you may bid to supply canteen / restaurant services to a large client. The people who eat the food are unlikely to be consulted in any way in the purchase decision. Unless your food is awful, they are also unlikely to be consulted at all about renewing the contract. Of course there are exceptions and end users can be decision-makers. A noteworthy example is software. Before the emergence of cloud computing, most decisions to purchase software required you to buy hardware. This meant that the central IT department could control everything. That has changed. An individual user can download a free trial version of some application and use it. It can spread to a department, if the department has a credit card, and then throughout a company, no matter what the CIO wants. That creates a specific customer experience dynamic which we will cover.
Constant attention required
The nature of large transactions and large projects means that some B2B customers require constant attention from your teams. The attention may be from different teams at different points in the implementation of a large project. Multiple sales, project and support engagements may be happening simultaneously.
Relationships with both positions and individuals matter
Large customer organizations are dynamic. Their structures can change, and people move from one position to another as they develop their careers. People you know at one customer can suddenly pop up at another. This has profound implications for research and improvement methods. For relationship surveys, it usually means that an overall score for a customer has no value. What matters is the state of each individual relationship, particularly with decision makers, decision influencers, and to an extent with the end users of your product or service. The same applies in the other direction. Customers need to be carefully prepared for a change in ‘their’ account manager, for example. This will be covered in detail in the section on relationship surveys. If your customer project takes a long time to implement, you can be reasonably certain they will change their organization and that this will have an impact on what you have to deliver. Plan on it.
It takes time to know whether you are improving things
If you run a supermarket and want to improve sales of something, you move the product to the head of an aisle. You learn about your success or failure right away. When selling to businesses, it takes much more time to know whether customer experience improvements are helping or hurting. For most types of B2B businesses, it will take 12 to 18 months before you know whether a change is giving you a competitive advantage. The reason is the typical purchase cycle. Customers will use a product or service for some time before needing to buy more. If you are working in a company that considers thinking two fiscal quarters ahead to be long-term planning, you may have difficulty retaining the funding for your efforts. A later article will cover methods for ensuring ongoing sponsorship for your work.
Your success matters to your customers
Most of your customers want you to be successful. Think about the procurement people, for example. In their ideal world, they want as many companies as possible – including yours – to compete to offer products and services at the lowest possible price. Others want to see as many different innovations as possible, believing that your innovation will be to their competitive advantage. If you have already sold them something, your continued financial survival is important to their belief you will be able to support and improve your product or service. While the same may be the case in consumer businesses, consumers are more likely to have short-term relationships with companies, not caring much if one goes out of business. The consumer’s livelihood is unlikely to depend on the survival of a company that does not employ them.
Angry customers may stay with you
Customer satisfaction is easy to understand in consumer businesses, less so when selling to companies. If the waiter in a restaurant treats you badly, most people (in the USA at least) still leave a tip and never go to the restaurant again. That is life in consumer land, apart from banks and cable TV companies that make it difficult for you to leave. Let’s suppose your company supplies restaurant services to corporations. Six months into a contract, a customer’s employee finds a worm in one of your salads. The customer gets angry. You devote large amounts of resources to fixing the issue so it never happens again.
One final thought – Sales differences are quite similar
Will Cannon has written an interesting article about the differences between B2B and B2C for sales teams in April 2020. He makes some points that are quite similar to those made here, and some new ones. As regular readers know, I consider the relationship with sales to be the most critical internal one a CX leader can have. Please have a look at Will’s article here.
The next article will be about why you need a strategy. Seems like a reasonable question.
As is often the case, the above is an edited version of a chapter in one of our books; in this case Customer Experience Strategy – Design and Implementation.All of our books are available in paperback and Kindle formats from Amazon stores worldwide, and from your better book retailers.