Silence, Trust Issues Key in Detecting B2B Defection

Posted on by Richard H. Levey

In a relationship, "fine" can mean anything from "things are wonderful" to "I don't really want to talk now, but my bags are packed and I'm on the next bus out of here."

In the case of business-to-business relationships, "fine" often means the latter. "When people start using the word fine, it's not fine," says Tom Cates, president of The Brookeside Group.

The onus is on the marketer to recognize problems before the relationship becomes "fine," says Cates. A relationship becomes fine when a client isn’t getting what it needs from a vendor and doesn’t feel the relationship is important enough to talk about the difficulties. Instead, the client is likely to start looking for other vendors.

What makes gauging the client's behavior difficult is the fact its behavior might not change while looking for a new supplier. At the point when defection is inevitable, the client usually tells the vendor it is because of pricing concerns—which is a lot easier to say than talking about difficulties with the sales team. When this information is passed along to management, they don't have a chance to determine the other factors contributing to defection.

The elements used to picking up subtle drops in motivation are different than those used to measure satisfaction, Cates says, citing six keys to recognizing if a client is prone to defect:

1. Integrity:The client must believe the vendor is going to be reliable and dependable, and will deliver on what it promises.

2. Competency:The client has to trust the vendor has the skills, people, knowledge, tools and experience to accomplish what it offers.

3. Recognition:Vendors have to make clients believe their businesses are important to them and not just numbers on a spreadsheet.

4. Proactivity:A client must believe the vendor is looking out for its best interests, and that there won't be any surprises, such as price hikes, delays on installation or products being phased out down the line. Vendors should be quick to note when new opportunities may be coming up in the future.

5. Savvy:Clients should think a vendor is familiar with their world—whether it be their vertical market, their customer base, or how they fit into the competitive landscape.

6. Chemistry:"This tends to be the final cherry on top," Cates says. "Does [a client] like working with you? Is the communication friendly?

Brookeside uses a surveying system to measure client and vendor perceptions, and ranks clients based on their likelihood to defect. It can't just ask whether a vendor has integrity—that would have nebulous meaning to both the client and the vendor. Instead, a series of statements are presented—such as whether or not a vendor takes notes at meetings, or whether a client feels it is getting what it needs—and evaluates both the clients' reactions and the vendors' reactions.

Clients, as one might imagine, don't exactly jump to engage in potentially uncomfortable conversations, even when the questions are being asked by third parties. Cates estimates that initial responses range in the 20%-30% range.

"A lot of people are skeptical about providing their vendors with feedback," he says. The common sentiment is "why give feedback if nothing changes?" But as companies make the client surveying process a regular part of their communications, response rates rise, he adds.

"The cool thing is, even if [a vendor] gets a response from one in three, it can change its behavior toward all of its clients," Cates says. "[A vendor] says we always do this, but a client says [the vendor] never does, and light bulbs go off."

Of course, not all customers are worth attempting to save. "There are some for whom you don't have a good fit," he says. "There's no way you can make them economical. Having said that, I believe most markers give up too soon. Many marketers say 'This guy is only worth $100,000, and our average is $1 million, so let's move on.'"

The question Cates would ask is whether that client considers the marketer a backup vendor. If it turns out the client is spending $1.5 million with another vendor, the calculus regarding whether or not it is worth saving changes.

Business firms may think auto renew contracts represent a way of circumventing these concerns, but Cates warns they could represent false security. "If you end up creating through them hostages and ill will, people find themselves trapped," he says. "Marketers can often do more damage by keeping someone who has a weak relationship but who feels trapped into it. [Clients] become antagonistic quickly, spread negative word of mouth, and yet if you have them locked in they stay with you.

"That's a whole new breed of antagonistic client," Cates continues. "The worst thing you can do is leave them no choice."

Consider a client who is in such a relationship, but who develops a need for a high-margin good… which can be found with another supplier. "He quits complaining to the vendor, but he whittles them down" in terms of their importance. "His business [with the vendor] remains stagnant, but guess what he is telling others in the industry?"

Ultimately, Cates says, "If you don't have don't have a portfolio of people who say you are fabulous, it makes your life a lot harder."

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