Your Customers Are at Riskin Key Account Management /
Everything might seem to be going on as normal, but do you have underlying problems that are threatening to create a bad situation for you company in the future? In B2B companies, customer indifference is a large and growing problem, especially in highly competitive industries.
B2B Customers Are Indifferent to Suppliers
On average, 60% of B2B customers are indifferent to their suppliers, with 11% being actively disengaged (Gallup). This means that in most B2B companies, around 71% of customers are not loyal in any way and would most likely to willing to switch if a better offer came along. In industries with low switching costs, that 11% of disengaged customers has high risk of churning.
Indifference means that customers are using your services based on convenience rather than preference. In most cases, there’s no compelling reason to switch at that moment, leading the customer to stick with what you’re offering because they are already using it. When a better offer comes along, they won’t have a strong enough attachment to your product or company to give much thought to switching for something else.
Additionally, indifferent or disengaged customers are unlikely to provide any additional revenues to your company. They are not likely to recommend you to others, nor are they likely to expand their existing accounts with you. Customer indifference leads to reduced organic revenue growth.
B2B Companies Are at a High Risk of Losing Customers
Most B2B companies do not place enough value on customer retention, leading to high rates of indifference in their customer base. Only around 29% of B2B customers are fully engaged with their suppliers (Gallup). This means that less than one-third of your customers may be bringing a high level of value to your company. In this case, engaged customers are those who are either emotionally or psychologically attached to a supplier.
This rings true for every type of B2B industry, not only those with low switching costs or high customer churn rates. The truth is that B2B companies are not focusing enough on the customer’s needs or trying to understand their point of view, leading to high customer dissatisfaction or disengagement.
Lack of focus on the customer can lead to higher churn rates. Products and services offered by your company have little to do with churn. In most B2B industries, churn is created by a lack of customer-centric business practices and support. Slow growth has similar causes, because customers are unwilling to grow their accounts with your company if they’re not actively satisfied. Being customer-centric helps B2B companies to lower their customer churn and increase engagement.
Buyer Needs Are Not Understood
The main issue with most B2B companies is that they are not aware of the problems faced by their customers, so they are no addressing them or are failing to address to them properly. Across B2B industries, only 31% of customers believe that their supplier actually understands their needs (Gallup). This is a shockingly low number, considering the importance of understanding customer needs!
Most customers today expect suppliers to understand more about them, including having timely and useful data that will help the customer to grow and use the supplier’s products more effectively. Those companies that do understand customer needs are usually referred to as a trusted advisor by the customers themselves.
To improve your status with customers, you need to understand more about their needs and their business. You can do this with better market research, analytics, and end-to-end account management for your top customers. These practices should be integrated in your Key Account Management strategy to ensure that you’ve got all the information you need for each customer.
Buyer Needs are Not Being Fulfilled Properly
If you don’t understand your customers’ needs, you’ll have trouble fulfilling them in a way that’s satisfactory to the customer. When buyers don’t feel like you’re doing a good job solving their actual needs, they may not stay engaged in your business. You need to first understand the needs that a buyer is trying to solve, then act on that knowledge to solve the problems.
Customers understand their business. They know what they need and when it’s needed. If you don’t operate within their understanding of their needs, it will be difficult for you to gain any traction with customers, especially larger customers that have more demands and more complex needs.
Helping customers to expand their own business is one of the most effective ways for a B2B company to grow sales to that account (Gallup). As the customer expands, they will usually require more from you to handle their larger client base. When you position your company as a trusted advisor to your customers, you’ll have a great opportunity to grow your own sales as well through upselling, cross-selling, and meeting further demands for your expanding customers.
Customer Growth is a Pre-Requisite to B2B Company Growth
As your customers get larger and start supplying to more customers of their own, their need for your products and services should also increase. Seeking growth in your sales by helping customers to grow allows you to maximize your accounts and meet sales quotas without hunting new leads.
New sales are great to help you maintain a consistent level of accounts. However, if you rely too heavily on new sales then you may be missing opportunities to get the most out of each individual customer. By taking care of individual customers you not only create an atmosphere of engagement and customer loyalty, you also become an essential part of their success. Working with your customers to help them reach their goals and grow in their industry makes your company a valuable partner, not just a vendor.
You won’t be able to reach your full potential as a B2B company unless you’re willing to work with your customers and help them to attain growth. Their company growth will lead to growth in their account with you, helping you both to achieve success together. Working with your customers should be a win-win situation where you are helping them to succeed.
Working with Customer Data
Data and how you manage it are the keys to working well with your customers. It will be difficult for you to succeed and help them reach their goals if you’re not aware of what’s going on with your customers, their industries, and their customers. You can do this by upgrading your data analytics and intelligence practices.
The first step is structuring your data collection to make sure you’re getting the most useful data from your customers. Ask the right questions, make frequent updates to your customer profiles, and observe their unique situation. Build a system for collecting and storing this information in a way that’s going to be useful for you later. If you’re implementing a data-based system for the first time, start out by collecting up-to-date and detailed information on your customers (Gallup).
There are often problems hidden under a mountain of data. To get to the bottom of the issue, you need to take in and understand the data that’s available from your own interactions and your customer’s data that they make available to you. Take a structured approach to data management and analytics, or else you may not get the right insights at the right time to help your customers grow.
Becoming a Trusted Advisor
If you want to do something about your customer churn problem and actively work to build your customer accounts, becoming a trusted advisor will help in both of those areas. When your customers consider you the same as all their other vendors, there’s nothing stopping them from moving on to another company if you aren’t meeting their needs well enough. As a trusted advisor, you’ll understand what they’re trying to accomplish and will be working with them to reach goals.
According to Gallup, companies also stand to benefit a lot from being seen as a trusted advisor. Their customers are likely to give 1.5x more revenues than other customers, they are more likely to purchase the products or services again, and they are much more likely to recommend the company to others. All of these benefits will increase as the number of customers who call you a trusted advisor also increases.
At-risk customers are not something you want to mess around with. If your customers are indifferent or actively disengaged with you as a company, they are at a high risk of churning when they have the opportunity or incentive to make a switch. Work towards thoroughly understanding your customer’s needs, solving them in a satisfactory manner, and becoming a trusted advisor to your more important customers.
Alex Raymond is the CEO of Kapta.