Adopting a customer-centric mind-set is just as critical in B2B dealings as it is when serving retail customers, but players face special challenges that can trip them up.
Many discussions of customer-experience strategies begin with a flawed assumption. When executives delve into the competitive advantages of building a more customer-centric organization, they very often focus on interactions with retail buyers—the end consumers. But in our experience, a customer-centric mind-set is just as critical in the B2B space, and more and more executives are developing B2B customer-experience strategies with striking results.
B2B customer-experience index ratings significantly lag behind those of retail customers. B2C companies typically score in the 65 to 85 percent range, while B2B companies average less than 50 percent. This gap will become even more apparent as B2B customer expectations rise. Digitization and the rising use of smartphones are establishing new standards for fast, seamless customer service in all settings. Real-time responsiveness and easy-to-use apps for daily banking chores or ordering groceries are setting a high bar for speed and ease of doing business in B2C industries, and these expectations are migrating to B2B. One sign of changes to come: a logistics start-up called Shipster has translated retail tracking and tracing apps to B2B international shipping by putting live tracking of international shipments on apps for web and mobile phones for all its customers.
Such developments are making improved customer experience at least as critical for B2B companies as for B2C players. In our experience, customer-experience leaders in B2B settings have on average higher margins than their competitors. In cases where companies have undertaken broad transformations of their customer-experience processes, the impact among B2B and B2C players has been similar, with higher client-satisfaction scores, reductions of 10 to 20 percent in cost to serve, revenue growth of 10 to 15 percent, and an increase in employee satisfaction.
Consider one IT-services provider that found itself battling emerging low-cost players in a maturing industry. Executives realized that customer satisfaction was increasingly becoming a way to stand out from its lower-cost rivals, but its net promoter scores were much lower than those of its peers. To respond, the company launched a customer-experience transformation in 2012. The company redesigned a set of 20 customer journeys end to end, addressing all dimensions of customer experience—process, customer tools, performance management, and employee mind-sets. After 12 months, its negative net promoter score had turned positive, and a year after that, the company was outperforming the industry average.
As with B2C customer-satisfaction improvements, benefits to the bottom line can include “stickier” customer loyalty, which can also accrue more quickly than is typically seen in B2C settings. For example, another IT-services provider served 30,000 employees at a large global client. Each employee reported multiple small incidents each year. Minor though the incidents were, the overall volume caused so much dissatisfaction that the client threatened to switch providers. The company responded by making drastic improvements to its incident management, broadening the focus from only severe incidents to also include minor, high-frequency incidents that annoyed every-day users. A 45 percent reduction in incidents followed, leading one of the company’s clients to cite the incident-reduction program as the reason for renewing and expanding the scope of its contract with the company.
Make no mistake, however. In fundamental ways, a B2B company’s customers and their buying patterns are more complex than those of a business focused on retail customers. Indeed, a B2B company requires specific strategies to differentiate itself via customer experience.
First, in B2B there is not one single customer; ensuring a great and consistent experience for all isn’t always possible. For example, one European corporate bank wanted to optimize its corporate-lending process. This process entails providing multimillion-euro loans to client organizations to meet strategic objectives, such as the purchase of new machinery or growth through acquisitions.
Taking up the customer journey it sought to improve, the bank faced multiple stakeholders in many of the individual client organizations it served. Many had differing needs. Others would only participate in different parts of the lending journey. The CEO and CFO of a client organization might participate in initial strategic discussions to explore different financial solutions but then leave it to the company’s treasury department to negotiate the loan terms. Legal teams worked out the details of the contract, and payments officers arranged interest payments. To understand the perspectives of these different stakeholders and their needs, the bank typically had to undertake a complex mapping exercise.
Such a plurality of stakeholders also creates complex buying behaviors. Even though B2B purchases are commonly assumed to stem from rational decisions, in our experience they hardly ever do. Overall total cost of ownership is never the only decision factor. Other factors also influence decisions, such as long-standing relationships with procurement teams and the general reputation of suppliers.