Companies must talk to customers in disciplined, systematic ways

Editor’s note: Doug Grisaffe is vice president, chief research methodologist, at Walker Information, Indianapolis.

Loyalty. It has received lots of press in recent years. Definitions and prescriptions for measurement vary substantially depending on which expert one asks. I’ll argue here for a particular conceptualization of loyalty and explain why it is so fitting for business-to-business contexts. I’ll also integrate those thoughts into a logical checklist of design considerations for creating new loyalty research programs, or revisiting the quality of existing programs. My hope is that “producers” and “consumers” of B2B loyalty research find food for thought and natural applications in their own respective practices.

Business-to-business contexts

Business-to-business contexts have broad similarities with business-to-consumer settings (e.g., the buyer’s desire to solve a problem or satisfy a want or need, an exchange of resources, “value” produced for buyer and seller, etc.). But the detailed specifics of B2B often differ in marked ways. Unique characteristics exist for buyers, sellers, and the interactions between them. Important implications for loyalty research emerge from consideration of these characteristics.

For B2B buyers, purchases may be for their own organizational use, for reselling, or for reprocessing and then reselling. This usually creates a more complex set of decision considerations than in a basic B2C purchase. Dollar amounts are often bigger in B2B than in B2C. Purchase decisions may be more technical in nature. More detailed considerations of specifications may be required. These factors substantially raise the purchaser’s level of involvement. Often there is a competitive bid process, involving comparison of several potential suppliers. Multiple decision makers may be involved, requiring consensus and approval through multiple levels of organizational hierarchies. Finally, B2B buyers require highest-quality service elements, as their ability to succeed depends on the seller’s delivery times, technical assistance, after-sale service, and so on.

For B2B sellers, there also are unique characteristics. For example, demand is sometimes “derived,” not depending directly on the buyer, but on third parties who purchase from the buyer. Often the potential pool of B2B customers is smaller than in B2C situations. Multiple seller representatives may be required, bringing into play special interpersonal cross-functional dynamics and complexities. The buyer’s competitive bid process and multiple levels of hierarchy and approval influence the seller’s processes too. Finally, sales and marketing may be more technical, requiring special seller expertise in knowing and explaining the value proposition.

Then, beyond isolated buyer and seller elements, different interactive dynamics may exist in B2B exchanges (e.g., mutual dependencies). Buyers cannot succeed unless suppliers are able to deliver the right product/service at the right time for the right price to meet schedules and production. Sellers often come to depend heavily on a small proportion of largest/best customers who sustain the supplier’s prosperity. Thus both parties are motivated to become partner-oriented, to engage in longer and more complex negotiations, to include reciprocal purchase agreements, to execute deals, and to act cooperatively and collaboratively.

These dynamics become even more unique in B2B services where exchanges are particularly social, personal, and “intangible.” Key customer-facing employees shape the total offering and customer experience. Familiarity, personal recognition, friendship, individualized service, and special treatment are common. Some service exchanges are so relational that interpersonal terminologies are even borrowed to discuss the dynamics - e.g., “forgiveness” in response to service failures.

My sketch of B2B contexts is partial, and there are many varied types of B2B situations. However, one thing is clear: we are not dealing with routinized customer behavior toward low-cost, low-involvement, fast-moving packaged goods. Rather we are dealing with bigger, more interpersonal and relational exchanges. Thus, a higher vocabulary applies to B2B, including words like “relationship,” “partnership,” “dependence,” “power,” “trust,” and “commitment,” among others. Even against a backdrop of increasingly electronic transactions, these unique B2B characteristics hold.

Loyalty in B2B settings

Framing loyalty in B2B should take into consideration these unique characteristics. If loyalty in B2C brand contexts has been argued by academics to involve not only repeat buying behavior, but that which wells up from underlying psychological affinities, how much more must psychological elements come into play for B2B, given the more complex, interpersonal, high-involvement, collaborative, relational exchanges? Thus we find some academic B2B researchers using concepts like “commitment” (typically described as a pledge of relational continuity) to describe psychological bases of repeat business. However, I believe even more is needed to conceptualize loyalty in B2B. Some of the most miserable marriage partners pledge relational continuity. Some very disgruntled employees hate their jobs but are unequivocally committed to staying. The pledge of continuity is there. But does that really capture the essence of loyalty? Somehow, loyalty seems loftier. The word loyalty makes me think more about a young soldier willing to fight and die for his country. There, I see clear alignment between underlying psychology and behavior.

I like the clarity brought by professors John Meyer and Natalie Allen (see their book Commitment in the Workplace (1997), Sage Publications). In the employee realm, Meyer and Allen argue conceptually and empirically for three different types of underlying psychology that may lead to continuation behavior — the desire to continue (want to), the need to continue (have to), or the obligation to continue (ought to). All three may involve pledges of continuity. But only employees who “want to” stay, are expected to be the best, most aligned, productive, bought-in workers. “Need to” and “ought to” cases are not the type of “loyalty” a company really seeks.

Transferring back to B2B, sellers who are pleased because they have repeat purchase behavior from their customers could well be deceiving themselves. A number of factors could be creating undesirable “have to” or “ought to” scenarios (e.g., lack of available alternatives, contractual obligations, high perceived risk of switching, high cost of changing current systems/processes, interpersonal obligations, etc.). Consider a multi-year contract where the first-year experience falls miserably below a customer’s expectations. Though they will continue through the end of the contract (because they have to), could anyone rightly call that customer loyal? Certainly, we would expect some very non-loyal behaviors, like negative word-of-mouth, search for alternative suppliers, openness to future competitive bids, and total aversion to expanding volumes or purchasing additional products/services. “Have to” customers can be downright negative! “Ought to” customers can be ambivalent. Only “want to” customers embody true loyalty. Only they will continue out of the kind of psychological attachment that leads to the highest levels of business-enhancing advocacy behaviors (e.g., positive word-of-mouth, increased volume, etc.).

Building true loyalty in B2B

B2B is a fertile seedbed for generating ongoing “want to” psychology given all the special characteristics I previously described (e.g., more complex, technical, interpersonal, high-involvement, collaborative, relational exchanges, etc.). The key is proper management of those unique characteristics, and excellent supporting B2B business fundamentals at the individual customer/account level. For example, the product or service itself must be perceived as differentiated and superior. Since the buyer’s technical experts are likely to be evaluating the seller’s technical specifications, there can be no competitive deficiency in the core offering. The quality of people on the seller’s sales and service team(s) must create strong assurances of credibility and competency with the multiple organizational decision-makers on the buyer’s side. Relational strength and chemistry essential to good working relationships must exist in the web of associations between key players on both sides, particularly in B2B services.

In short, all the “must have” B2B essentials need to be in place with excellence and competitive differentiation. That alone can create true underlying “want to” customer psychology and desired continuity. Any scenario missing that level of seller output, and/or that level of buyer response, falls short of earning the label “true loyalty.” Clarifying the “want to” basis of continuity raises the bar for the seller, and distinguishes “have to” and “ought to” repeat buying from true loyalty.

Implications and considerations for B2B loyalty research

Companies interested in researching and managing the true loyalty of their B2B customers must do more than simply track periodic purchase behaviors and sales amounts. Certainly those metrics can indicate patterns of purchase continuity. But in isolation, they reveal nothing about the underlying psychological dynamics. They cannot speak to “want to” continuity. Further, they look backward across time only to what has happened, not forward to what will happen in the future. Perhaps the shortcomings of this kind of backward-looking-behavior-only measurement help explain some of the disappointment and dis-empowered promises of expensive CRM systems!

This is where survey-based B2B loyalty measurement and research adds crucial value. Only by talking to customers in disciplined, systematic ways can we learn - at the individual customer/account level - whether or not there is a pledge of relational continuity based on an underlying “want to” psychology. Only through such research can we learn about customer perceptions on fundamentals that build “want to” continuity relative to competition: value, price, quality and other corporate and performance dimensions. Wherever the company falls short on such metrics, clear guidance from customers themselves now exists to target improvement efforts. Behavior alone cannot be so diagnostic. Finally, actionability of that customer information is most super-charged when the information is widely distributed and accessible throughout the organization, so that all appropriate individuals and functions can understand specific shortcomings reported by particular customers, and act to create the best possible total experience for each individual B2B customer/account.

To implement the points of this article in creating or modifying B2B customer loyalty research programs, I offer the following summary list of critical considerations:

1. Does the program/design rely only on observations of behavior to infer customer loyalty? If so, consider special B2B characteristics that call for measurement of the psychological dynamics underlying continuity. Particularly strive to understand the “want to” basis of true loyalty.

2. Is the program/design capturing perceptions and experiences regarding unique B2B complexities like budget approval processes, technical considerations, and competitive bid procedures, etc.?

3. Are there metrics designed to assess competitive differentiation and superiority on core fundamentals like products/services, pricing, people, and corporate credibility - essential components of value perceptions?

4. Is there a comprehensive understanding of specific customer requirements regarding the sales process, delivery times, customer service, technical support, post-sales follow up, etc., and have explicit measures been designed to capture customer opinions about quality on these dimensions?

5. Does the program/design capture elements of the spectrum of interrelationships on both sides, especially multiple sales and service team members and the multiple decision makers and influencers on the buyer side?

6. Are there measurements of the unique interpersonal, partner-oriented, collaborative, relationships common to many B2B settings? If it is a service context, are there metrics on critical “intangibles” represented by and provided by customer-facing employees?

7. Is there built-in ability to examine customer loyalty information and metrics at an individual customer/account level? In B2B settings where a smaller set of powerful, high-involvement relationships are more the norm than the exception, this “one-to-one relationship marketing” concept should be applied.

8. Are there systems planned or in place to leverage technology so that all key service and support personnel have access to up-to-date customer/account information from B2B loyalty measurement programs. Voice-of-the-customer information is most valuable when it is timely and available for ready use by those externally and internally involved with specific customers/accounts.

Right mix of fundamentals

B2B contexts have definitive characteristics that must be understood and managed to create ideal customer experiences. The quality of customer experiences, and customer perceptions about the company relative to competition, all work together to create an underlying psychological state in the B2B relationship. Only the right mix of competitive B2B fundamentals can create “want to”-based continuity. Other forms of continuity do not imply true loyalty. Gathering customer information to measure, understand, and manage customer relationships to achieve this “want to” continuity means more than simply tracking customer behavior. It means intentionally collecting detailed voice-of-the-customer inputs, and acting in targeted ways based on that information. When carefully designed and executed in light of B2B characteristics, drivers of “want to” continuity can be measured, understood, and managed at the customer/account level to build true B2B customer loyalty - the ultimate goal of B2B loyalty research.