Loyalty in Business to Business Relationships

While brand loyalty may be a dying breed, there is no question that there are many marketing tools at your disposal that will increase customer loyalty and aid with client retention. In consumer marketing, loyalty is often related more to the brand than the retail relationship, whereas in BtoB business transactions, relationships and loyalty are more skewed towards the supplier than the brands they carry or services they offer.

This can be explained in part by the fact that in business to business commerce, transactions are built on relationships, trust (over time) and ultimately loyalty as a reward of superior customer service. Many BtoB relationships involve direct selling in which regular face to face visits and ongoing communications solidify a relationship that goes far beyond the actual products or services being rendered.

Regular, ongoing contact is the key to developing these relationships. After all, out of site, out of mind. Too often sales and marketing efforts are placed on new prospects and a flurry of communication is conducted before the initial sale but quickly diminishes after the first sales transaction. Sales people are stretched with ever increasing targets and the goal of landing new business often supersedes the need for ongoing care of existing clients and the fostering of relationships.

In order to combat this tendency, many organizations put in place incentives and other inducements to create loyalty (often false loyalty) to keep customers coming back with reduced efforts by the sales force. These incentives can take the form of cash discounts for ongoing orders or stocking order plans, incentive trips and other rewards but ultimately without the care and direct contact with the sales people these incentives often fail to achieve their intended purpose. As an example, I once was buying media for a client and after making a fairly large and long-term commitment to a particular supplier found out that I had qualified to receive an iPod as an “incentive”. The problem was that I knew nothing of the incentive before I made the purchase decision (probably a good idea for me and my client) and then was simply rewarded for the purchase after the fact. While there is nothing strategically wrong with rewards programs, I’m quite sure this was not the thinking behind the iPod incentive program.

The point is, there is no substitute for building a strong supplier/client relationship through regular communications. Hoping that clients will simply call when they have a need is a dangerous strategy. The choice of communications vehicles and strategies can be as varied and innovative as your imagination allows.

While I’m not a huge fan of newsletters (both hard copy and electronic) for some industries they can be very effective. My accounting firm as an example puts out regular updates and provides analysis immediately following provincial and federal budgets. For them it is a simple way of staying in touch with clients, some who they never see until year-end. Instead of newsletters I often send appropriate and interesting articles that I find to clients who might benefit from them. It’s one way of staying in touch and letting the client know you are thinking of them and looking out for their interests.

Another way of engaging clients is to bring them into decision-making process. If you are considering a new product or service offering, why not ask a few of your best ongoing clients to participate in a small focus group? As regular, ongoing purchases of your products and services, who better to analyze a new product or service offering and provide honest feedback as to its value and market potential. Not only will you garner much needed feedback, but you will also demonstrate to these select clients that their opinions and guidance are very valuable to your relationship.

Print advertising in trade publications is usually thought of as a means to attract new business. There can also be an additional benefit to this form of marketing communications. That being, solidifying and strengthening your existing customers. One of the key reasons car manufacturers place very expensive lifestyle car ads on TV is reinforce a good buying decision in the minds of those who have already purchased that car model. With a good sense of their purchase, they are far more likely to tell their friends about what a great purchase it was resulting in referral sales.

There is always the tried and true method of holding client appreciate events, mid-week rounds of golf and of course taking clients to hockey games. For those with somewhat larger budgets a three-day fishing expedition to the Queen Charlotte’s can go a very long way… (I’m open to offers), but there is nothing quite like simple, regular contact. If face-to-face appointments are not possible, regular phone and email contact is essential in building and maintaining good client relationships.

While this may seem obvious, there are still those organizations who place so much emphasis on the development of new business leads (filling the pipeline) that they tend to ignore their largest growth potential in their existing client base. Think for a moment about your own clients. Probably, less than 20% of them are accounting for the vast majority of your business, while the other 80% represent the balance. If you could move even 30% of your infrequent accounts up to the status of your “major” clients, just think what that would do to your bottom line. The cost of sale of moving an existing client to a higher sales volume is significantly less than acquiring a brand new account and the stronger the bond between supplier and client means the more difficult it will be for a competitor take that client from you.

Loyalty does exist. But you have to earn it. No amount of incentives, trips and free-bees can take the place of building strong client-focused relationships based on simply providing outstanding service.