Business To Business Core Customer Metrics
The Corporate Executive Board recently studied Customer Loyalty from a business to business perspective. One of the major conclusions is that, in many cases, switching business to business suppliers is so hard to do, the fact that a customer is buying from you (behavioral loyalty) doesn’t mean they are emotionally invested in that behavior. Also, purchase decisions are generally shared among multiple people, and still more people are internal influences.
While not shocking or surprising, it is true that much less to do is made about building loyalty among business to business customers than among business to consumer customers.
Thinking through some of the core measures that are prevalent today, most seem to be not especially well-suited for B2B applications. For instance, the much discussed Net Promoter Score relies upon the the predisposition of loyal customers to want to recommend the companies they like. While it makes sense for cars, audio equipment, movies etc., I’m not sure that physicists go to cocktail parties and talk about what brand of test equipment they’re using. Or maybe they do, and that’s why I’ve never seen a physicist at a cocktail party.
The article raises some interesting nuances worth thinking about. For instance, B2B surveys that focus on the end-user in the company are more predictive of loyalty than are those that focus on decision-makers. While this may seem simplistic, most B2C surveys focus on the household decision maker’s attitudes (e.g., Dad buys the soap) rather than the users (e.g., everyone in the house uses the soap).
Apparently there is no magic bullet available for B2B companies, just as there isn’t one for B2C. The most important distinguishing characteristic between successful and less successful companies will be the PROCESS they went through to arrive at their core customer metric — not the metric itself.
What B2B loyalty metrics do you think are most effective for a particular company or industry and why?
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5 Responses to “Business To Business Core Customer Metrics”
April 28th, 2008 at 12:02 pm
For any of your readers interested in more info on Net Promoter, we invite them to visit the official site: http://www.netpromoter.com.
There are a number of B2B instances of companies using NPS to good effect. Here are some links to success stories, some of which are write-ups from the presentations delivered at Net Promoter conferences:
http://www.netpromoter.com/success-stories/stories-sorted.php
May 2nd, 2008 at 12:22 pm
Interesting links. So, Amy are you suggesting that NPS is the best B2B Core Customer Metric? If so, what do you think makes it superior?
May 5th, 2008 at 9:48 am
We work with the NPS, and have found it pretty useful. Somehow whether or not you would recommend a company to a colleague does seem to be a useful discriminator. You do need good data, but it seems like the most important thing is to have a good process for making use of the data to drive improvements. It is far better to have a company striving to do better for its’ customers than not trying to do better.
The premise of the article above seems to be that it is not worthwhile for a B-to-B company to worry about customer loyalty. That sounds like a questionable assumption.
And yes, even recommendations from one physicist to another physicist at a party regarding new and effective lab equipment might be very useful to the maker of that lab equipment.
May 9th, 2008 at 11:04 am
Sorry for the confusion David — but saying loyalty is not worthwhile is the OPPOSITE of what I meant. For a loyalty metric to be worth the effort (and time and money) to collect it, it must 1) be an accurate representation of the attitudes of the customers you care about; and 2) be predictive of loyal behavior (typically, purchasing, purchasing more, purchasing again, etc.).
I didn’t see which industry you represent, but I’d be interested in hearing about the process you went through to establish that recommendations from customers is the most predictive metric for customer loyalty.
Rather than advocating for a particular metric, this blog is focusing on arriving at the best metric, essentially, knowing what is best to measure. Would greatly enjoy hearing more about your journey!
October 21st, 2008 at 9:52 am
These are some very interesting comments. I believe that suctomer satisfaction is very important. One of the biggest mistakes companies make in regards to customer experience however, is focusing on only one metric such as customer satisfaction.
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