B2B Customer Experience Scores Are Low And Excuses Ring Hollow

The customer experience for companies doing business with other companies stinks. Three independent studies that Forrester Research has conducted over the past year indicate that the business-to-business (B2B) experience is perceived as worse than that in the bottom-of-the-barrel consumer industries such as TV service providers and health insurance plans in Forrester’s 2011 Customer Experience Index. This is not surprising for several reasons. Many B2B firms believe that customer experience is something that only consumer-focused firms like Disney, Zappos, and Ritz Carlton need to consider. Moreover, many B2B companies argue that purchasing decisions are made for a complex set of reasons other than customer experience. Finally, they often say that because of the relatively low number of accounts, they already provide a personalized experience through account management teams.

Firms making these rationalizations miss several important points. First, if word of mouth is important to sales, then so is customer experience. Forrester’s consumer research shows that only 23% of individuals trust radio and TV ads — and only 19% trust direct mail — while 73% trust recommendations of friends and family. There is little reason to believe that the numbers are much different for B2B. And while Facebook may not amplify opinions, social media tools used for professional networking in online communities certainly do. Second, firms that have poor experiences with other firms buy less. The experience design company, Walker Information, finds that firms whose customers are trapped spend significantly less, grow more slowly, and have lower gross margins than those that are truly loyal. Forrester’s research suggests similar outcomes, with strong correlations between customer experience ratings and likelihood to purchase again, recommend, and switch. Third, customer experience is not limited to the customer-facing employees, such as account managers and call center representatives, or the contract holders at the client’s company. Rather, the end-to-end experience often includes interactions driven by back-office employees that make life difficult and frustrating for important stakeholders who could drive future business at the client firm.

Improving the B2B customer experience from its dismal state is more than a marketing effort. After all, marketing only owns a small portion of all of the interactions with customers. Companies such as John Deere, Maersk Lines, Fidelity, Philips Electronics, and Intuit understand this and as a result have significant B2B customer experience efforts under way. While in some respects the B2B experience is more complex than the business-to-consumer (B2C) environment (e.g., diverse stakeholders within a client), other issues with partners, resellers, agents, and other intermediaries that impact or even deliver the experience are very similar. In fact, the best practices that the best B2C firms use apply to B2B firms. Best practices include:

  • Defining the intended experience for the target customer. As experience design firm Beyond Philosophy puts it: “To improve customer experience implies you are somewhere today and you are heading somewhere else. The strategic question is ‘where?'” To get started, firms need to define who exactly they mean by the customer . . . something all the more important for B2B companies, which have many stakeholders inside of a client. One manufacturer found that it had 26 personas across departments just to describe those maintaining purchased equipment within client firms. Some were upward of 10 years old, and all were at varying stages of development. By rationalizing these down to just a handful of well-developed personas based on behavior rather than departmental role, those redesigning the experience — a cross-functional team that included employees as diverse as engineers, contact center staff, and account managers — created a common vocabulary and target to work on. Another B2B firm, in trying to decide for which stakeholder within its client base it should prioritize, realized that concentrating on improving the experience for lower-level logistics clerks would swing much more business its way than improving the customer experience for higher-level contract managers.
     
  • Understanding the customer perspective. The most challenging aspect to improving the customer experience is for firms to shift to outside-in thinking in which employees put themselves in customers’ shoes, rather than today’s inside-out mindset that focuses primarily on narrowly defined internal metrics. Common experience design practices, such as behavioral personas, customer journey maps, and voice of the customer (VoC) programs, can help turn this around. Export Development Canada’s customer journey map for its insurance group found more than 35 internal handoffs between departments across 14 customer touchpoints with little consistency in total time to completion. The group used journey (value stream) maps to focus project teams and Lean methodologies for aligning internal business, processes, people, and systems. The result was a 60% reduction in processing time with improved predictability, a 24% increase in Net Promoter Score (NPS), and reduced waste.
     
  • Aiming to change the culture. Firms serious about improving the experience realize that a cultural transformation needs to take place. Key practices such as recruitment and hiring, onboarding and training, internal communications and storytelling, performance metrics, and rewards and recognition systems aimed at changing the beliefs and behavioral norms of internal employees can similarly be applied to partners, resellers, agents, and other third parties that affect the B2B customer experience.

The widely divergent range of customer experience scores that B2B firms achieve in Forrester’s studies today suggest there is a lot of room to differentiate based on customer experience. And that could translate into big dollars. In the B2C space, Forrester estimates that a 10-point increase in its Customer Experience Index score can amount to up to $1.5 billion. But changing culture isn’t easy. Those that get the jump will create something that takes time and is hard to replicate.

Comments

Paul Hogan makes a great

Paul Hogan makes a great point: "[I]f word-of-mouth is important to sales, then so is customer experience." Customer service in business to business relationships is not given the same attention as customer service in business to consumer relationships. It is easy to dismiss the importance of the customer experience when you are not engaged in an industry that puts you face to face with the consumer. If B2B firms implement customer service policies and metrics similar to those used by B2C firms, long-term profits are sure to increase.
I work as a client account manager for a B2B firm and quickly realized the importance of the customer experience. Many of my new accounts are a direct result of preexisting accounts and business relationships. Just like I refer my makeup artist to my family and friends, my clients refer their peers and associates to my firm. There are certain business aspects that transcend all industries and customer service is one of them. The good news is that many businesses do not excel in this area, so if you find a way to make your customer experience memorable, you will stand out above the rest!

I think some companies feel

I think some companies feel they are too big, or too important to fail. They envision themselves immune to any negative feedback and find it easy to dismiss one customer is another comes along, or if the scores of others appear to have no problem. What they fail to realize is most people continue dealing with companies because either they do not know what other options are available or they are apprehensive about switching.

As highlighted here, word of mouth still dominates advertising. If I have a problem and I make it known to my friends and colleagues, their level of trust in me determines how they respond to the company. A lot of firms are more concerned with the dollar than with the person paying the dollar. They fail to realize it is not the dollar that supports them, it is the consumer carrying the dollar.

Ray Kroc once said "If you work just for money, you'll never make it, but if you love what you're doing and you always put the customer first, success will be yours." A company need to understand that taking care of the customers takes care of the company. No matter how small or insignificant the customer, if you do right by the least of them, you have a client for life.

Great post - and great

Great post - and great comments!
We're in the B2B business, and your comments re: personas seems spot on. For more complex B2B products, services and solutions, it's often critical not just to make 1 set of customers happy - but to appeal across different functional areas and lines-of-business - to understand the decision-makers, the key influencers and the possible detractors. It's complicated - but it makes a world of difference. And with businesses operating at bare bones in today's economy, knowing that service will be strong is more essential than ever.

Spot On

Extremely well written article Paul. You have summarized the issues plaguing the Customer Experience in B2B space. We at Lead On Consultants, work on Customer Experience for B2B firms and this is what we face all the time. Another things which makes it difficult to convince B2B organizations on the need of CE is the absence of market leaders in this segment. Customers are left to choose the best from the lot of average or worse depending on the industry you look at. There is no name like Apple, Amazon or Zappos that comes to my mind in B2B.

There is also a reluctance to invest time and resources on such projects in these organizations. Since each customer brings in considerable value, they are not able/ready to divert account managers working on these accounts to take part in CEM process. They fail to realize that once they streamline the process to manage touch-points better, these account managers will have more time to work on customer relations rather than fire fighting with issues on daily basis.

It is just a matter of time. We need few examples and that would wake B2B firms to the need of Customer Experience.

Logic vs Emotional

Another point which just struck me -

In a B2B setup, Customers buy for organizations, not for themselves. So they have to convince somewhere up the ladder of their decisions. And this makes the whole buying process more rational. Hence, this is what vendors focus on as well. They believe that if they would fulfill their customer's need and design a solution which is robust, works well and is competitively priced - they would be able to close the sale. So the whole transaction lacks emotion and experience.

Emotional connections in B2B

Hey Arti, thanks for the comments. This is another place where I just don't buy the rationale that i hear from many B2B companies. Sometimes B2B customers buy for organizatoins (e.g. software, supplies), but that doesn't mean non-rational things like emotions (i.e. trust, cultural alignment) don't influence purchasing decisions. In looking at some verbatims for a B2B Customer Experience Index study we did, customers commented on the arrogance of one firm's staff. The well-worn adage about buying IBM is case-in-point. Sometimes B2B customers act like consumers...Maesk Lines (shipping company) found that the front line logistics people could swing a significant amount of business their way because on a daily basis they were hitting 2-4 websites comparing companies that could get done what they needed. Dan Arieli has some great research on the irrationality of people...which he aludes to when he talks about sales forces that take buyers out to the golf course or for drinks...which lowers their resistance, etc. The question is whether you are tapping into this emotional aspect of customers as a gimmick to make a short-term sale....or as a long-term part of the overall customer relationship to drive future business.

B2B Customer Experience - link to revenue?

Great article Paul, and it confirms the opinion I had already about the importance of CE in a B2B environment.
I myself am working in a B2B environment for a logistics service provider and am currently engaged in a project to boost our overall customer experience and I find myself struggling now with the well known issue of convicing my management to invest significantly in certain quality improvement projects I have proposed. Obviously they like to see a ROI.
Now my question is: is the same postive correlation between Customer Experience and revenue visible in a B2B environment as identified by Forrester for the B2C environment?
Clearly I'm currently using the valuable B2C metrics from Forrester (Bruce Temkin's research among others) to approximate the expected financial gains, but like to understand better whether it would be realistic to apply them completely to my B2B environment, or would I be 'fooling' my management perhaps?
Can you or anybody of the readers here give me some pointers here? Would it be safe to apply the same rationale or should some downgrades (or perhaps even upgrades) be made compared to the B2C metrics?

One additional challenge I have is that in our Logistics industry, business decision makers are not always in the same country (e.g. they can be either on import side or on the export side) - as such I also have to make some adjustments when determining the "true" effect of improved Customer Experience in one country only...

Appreciate any advise anyone can give me here. Thanks,

Link to revenue

Peter, tying customer experience to financial results is something that both B2B and B2C companies struggle with as they are trying to get the attention and buy-in from executives to put money into these longer term improvements. Take your time with it and understand that, depending on the culture of the organization, it could take some time to find the right customer experience metrics and get enough projects under your belt to convince reluctant execs (it's not uncommon to see teams sepnd a year or two laying this foundation). Customer Experience consultant Jeanne Bliss talks about "dancing with your company's power core" -- understanding who calls the shots in the organization and finding projects and metrics that appeal to them. I think it's some good thinking. That all said, here is some anecdotal stories that we've heard from copmanies doing this:
- Adobe found that within the retail segment, customers in the highest loyalty quadrant had 43% greater lifetime value than those in the lowest loyalty quadrant. The difference jumped to 66% among volume licensing customers and a whopping 288% among key accounts. (See Andrew McInnes' report "Lessons Learned From The 2011 Voice Of The Customer Award Winners").
- CDW drove over $200 million in increased sales by implementing a closed loop VOC program for promoters (typically firms just do this with detractors). The firm uses Walker Information's loyalty index (they do a lot of work in the B2B space....it's worth looking at their numbers) and found that "Truly Loyal" accounts bring in more than twice the revenue, margin, and order volume that High Risk accounts do. It also showed that moving an account to a more positive loyalty level had significant financial benefits. (See Andrew McInnes' report "Lessons Learned From Three Award-Winning Voice Of The Customer Programs 2010").
- Avnet ties its customer experience efforts to three metrics: 1) operational costs as percentage of gross profit, which have decreased from 80% of gross profits to 64.5% in two years through its efforts; 2) operational income margin, which increased from 2.6% to 4.6%; and 3) return on capital employed, which increased from 6.4% to 12.5%.

Hope this helps.