Susan and Bill have Relationship Problems!

The Susan & Bill Trilogy

Susan and Bill have relationship problems.

When we updated our Customer Relationship Quality (CRQ™) methodology in 2014, we created a storyline around two fictitious characters. The first was Bill, a thoughtful but somewhat introverted Marketing Director. His counterpart was Susan, a more aggressive but low-attention-span Sales Director. They may be fictitious but they bear more than a passing resemblance to some sales and marketing directors we have met in the past.

Episode 1 finds Susan and Bill having relationship problems. Well, their problems are primarily related to understanding the relationship their company had with its main corporate clients. However, there is also some evidence of tension between Susan and Bill themselves. This is the sort of natural tension that exists between Sales and Marketing in any large organisation.
 

EPISODE 1: Susan and Bill have Relationship Problems!

Susan – Sales Director

“I need real customer feedback. Something that helps my sales teams manage their key accounts. For the long-term. All Marketing are interested in is some box-ticking exercise for the folks in HQ.”

Bill – Marketing Director

“I need to provide HQ with Net Promoter Score (NPS®) metrics. It’s our corporate policy. For some reason, Sales just don’t seem to get it. NPS is a useful tool if they could only figure out how to use it properly.”
 

Net Promoter Score

Net Promoter Score (NPS) is a simple easy-to-use metric for measuring customer loyalty. Many large, well-known companies now use it as a key business metric. The concept behind NPS is simple: loyal customers are more willing to recommend you to a friend or colleague. To find out how loyal your customer base is, measure their willingness to recommend. The higher your NPS score, the more loyal your customer base is.

NPS is easy to calculate. It’s based on a single question: “Would you recommend Company XYZ to a friend or colleague?”. The problem is that Sales Directors find it hard to turn the answer to that question into a clear set of actions. Actions that can be used to improve a complex web of relationships in a large corporate account – or across an entire customer portfolio.
 

Does NPS work for B2B Organisations?

Yes, but!

On its own, NPS is not sufficient for understanding complex B2B relationships. It does provide a good starting point but in complex B2B relationships it must be supplemented by other metrics. These metrics must help account managers take action at an INDIVIDUAL account level, as well as helping senior executives focus on a small number of strategic initiatives across ALL accounts.

Deep-Insight’s unique Customer Relationship Quality (CRQ™) methodology helps Sales Directors do exactly that. CRQ identifies which accounts are its greatest Ambassadors, and which on the point of defection (Stalkers and Opponents). More important, the CRQ methodology identifies – for each account manager – what needs to be done to transform an Opponent into an Ambassador.

Relationship Segmentation

NPS tells you if you have a problem but not how to fix it. CRQ tells you what the problem is and exactly how to address it.
 

Back to Susan and Bill

Bill needs NPS data in a comparable format to data from other parts of the organisation, with feedback on brand, image, product and pricing. With Customer Relationship Quality (CRQ™), Bill gets his NPS data in exactly the way he needs it. That keeps Bill and his Marketing team happy.

On the other hand, Susan gets detailed account-level customer relationship feedback for her sales teams. Each account manager gets an account report for every client. They can looking at levels of Trust and Commitment for each client so that they, and Susan, can avoid any surprises when contracts come up for renewal. That keeps Susan and her Sales team happy.

Join us next week for EPISODE 2.
 
 

Do Americans REALLY score more positively than Europeans?

In a previous blog, I wrote that Europeans were more stingy than Americans when it came to customer feedback. Or words to that effect.

 
Since then, people have been asking if this is REALLY true, and where is the evidence for this claim.

Well, yes it IS true and while I’m not an expert in the area, I do know somebody who is: Anne-Wil Harzing, Professor of International Management at Middlesex University, London.

In 2006, Professor Anne-Wil Harzing conducted an analysis of different response styles across 26 different countries.

We recently sat down with Anne-Wil Harzing to discuss these differences.
 
 
 

John: Professor Harzing, if I look at our own clients – which are mainly headquartered in Europe, USA and Australia – their customers can be based anywhere in the world. When we often report results back by country, we often identify differences from country to country in Customer Relationship Quality (CRQ) or Net Promoter Score (NPS). How should we interpret those differences?

Anne-Wil: Good question – let me answer that in two ways. First, there are characteristics at a country level such as power distance, collectivism, uncertainty avoidance and extraversion which all have a major influence on the way people respond to questionnaires and surveys. This is particularly true when you use Likert scales – you know, the 1-7 scales that you use, or the 0-10 scale that’s used in Net Promoter Score surveys. Second, there are differences based on whether the respondent is replying to a questionnaire in his or her native tongue. Also, English language competence is positively related to extreme response styles and negative related to middle response styles.

John: Can you explain the difference response styles?

Anne-Wil: The main styles that people talk about are Acquiescent Response Style (ARS) where respondents are more likely to agree or give a positive response to a question, and Extreme Response Style (ERS) where the response is more likely to be highly positive or highly negative than Middle Response Style (MRS) where there is a greater tendency to go for an ‘average’ response. High ARS implies better/higher scores while ERS gives you more varied or extreme (and possibly higher) scores than MRS.

John: Can you give us a few examples of those country differences?

Anne-Wil: Sure. Respondents from Spanish-speaking countries show higher ERS and ARS while Japanese and Chinese respondents tend to be far less extreme in their response styles. Across Europe, the Greeks stand out as the highest levels of acquiescence and ERS. Countries across Northern and Western Europe – where many of Deep-Insight’s clients are based – tend to exhibit fairly similar response patterns.

John: And Americans?

Anne-Wil: High ERS and high ARS – you’ll generally get a more positive response from an American audience than from a Western or Northern European audience.

John: That’s very much in line with our own findings. We also see it in a lot of discussions around Net Promoter Scores (NPS). On some American websites, you will read that the average NPS for B2B companies is between 25% and 30%, yet our experience at Deep-Insight is that the average NPS score is closer to 10% and this may well be related to the fact that the majority of our customers (or more important, their clients) are European or Australian, rather than American.

Anne-Wil: It just goes to show that you need to take great care when interpreting cross-country scores. When people complete a survey, their answers should be based on the substantive meaning of the questions. However, we know that people’s responses are also influenced by their response style, so differences between a company’s geographically-based divisions might simply reflect differences in the way clients respond to surveys, rather than picking up real differences in the ways those divisions are going to market.

 

So Europeans ARE more stingy than Americans!

Our own research – although more anecdotal than Professor Harzing’s – backs up her results. Apart from the higher NPS scores I mentioned in the discussion, I also see Americans give higher Customer Relationship Quality (CRQ) scores than Europeans. We pick this up on the standard deviation figures from our results as well. This often results in fewer “Rationals” in the customer base of American clients. (Rationals are good, but not extremely loyal, customers who typically make up 50% of a typical customer base for any of our clients.) In contrast, American clients tend to have more “Ambassadors” and sometime more “Opponents”, which reflects the ERS and ARS styles that Professor Harzing describes.

In her paper, Harzing concludes that:

“Regardless of what remedy is used to eliminate or alleviate response bias, the first step towards finding a solution is acknowledging that response bias can be a serious threat to valid comparisons across countries. We hope this article has provided a step in that direction and that in future response bias will receive the attention it deserves from researchers in the area of international and cross cultural management.”

Good advice!
 
 

* Net Promoter® and NPS® are registered trademarks and Net Promoter SystemSM and Net Promoter ScoreSM are trademarks of Bain & Company, Satmetrix Systems and Fred Reichheld

Our Biggest Customer Is A Bully. Help!

B2Bullying

Management Today has an interesting article about bullying in this month’s edition. No, not online bullying or workplace bullying, but B2Bullying. B2Bullying is what happens when a (typically large) buyer makes continued unreasonable demands on a (typically small) supplier. In many cases, the buyer represents a significant proportion of the supplier’s business.
 


 

Case Study

The scenario is this:

“Our biggest customer is a bully. It never pays us on time – every piece of work we do for it has to be followed by a flurry of emails and phone calls demanding payment – and the boss of the company is rude and arrogant. If I had my way, I’d tell them to shove it, but the work we do for them represents 35% of our sales. Help!”

Jeremy Bullmore dispenses sound management advice about how to handle such a client. He is Management Toady’s agony aunt and a former chairman of J Walter Thompson and his response is solid and pragmatic, but it begs the wider question about what a typical or even excellent buyer-supplier relationship should look like.
 

The Deep-Insight View

Here’s our take on the subject.

In the business-to-business (B2B) world, long-term relationships can only be built on a foundation of mutual trust and cooperation. Academics talk about exchange theory (think of an exchange between two equal partners rather than a traditional buyer-seller model) and equity theory (the exchange has to be seen to be fair and equitable by both parties involved in the transaction. Indeed, a long-term relationship is based on a series of such fair and equitable exchanges.

That’s not to say that from time to time one or other party gets the short end of the stick on a particular transaction. However it evens out in the long run and both parties feel pretty comfortable with a bit of give and take. You scratch my back and I’ll scratch yours. Or even: “You need to help me out this time but don’t worry, I’ll make it up to you later.”

Long-term relationships built upon such transactions. But if one party (often the larger party and typically the buyer) starts to B2Bully his way or continues to usurp his position of power, the relationship is doomed. It will eventually fizzle out. If you read between the lines – Jeremy is saying that this is a one-sided arrangement. It’s not a true partnership. The supplier needs to lay down some ground rules for the buyer if in a position to do so. If not, the supplier should grin and bear it for the moment but work towards a dissolution of the so-called partnership when the timing is right. If your biggest customer is a bully, think about getting out of the relationship – at a time that suits you.
 

What does ‘Good’ look like?

On the other hand, an excellent buyer-supplier relationship is one that will stand the test of time. Such partnerships are based on those principles of exchange and equity. You’ll recognise the signs. The parties in the relationship trust each other implicitly. They are committed to helping each other. Both parties collaborate on joint initiatives. They innovate together. Rarely do they wait for RFPs to be issued – they bring ideas to each other. They have an emotional bond that makes it extremely difficult for a competitor to get a look-in.
 

Customer Relationship Quality

So, what’s the quality of your relationship with your top clients? If you’re unsure or if you think your biggest customer is a bully, why not contact us today and we’ll check out your Customer Relationship Quality (CRQ) for you.
 

Peter Lavers is a director of Customer Attuned, Brand Ambassadors for Deep-Insight.
 

Trusted Relationships = Consistently Good Service

Trusted Relationships

At Deep-Insight, I spend a lot of my time trying to help our clients figure out how to build strong trusted relationships with their B2B (Business-to-Business) customers. Trust is all about honesty, fairness and acting with integrity. It’s one of the most basic elements of human interaction. And perhaps the most basic element of good account management. As they say:

“People buy from People” and
“You don’t buy from a person you don’t trust”

B2B is all about establishing strong people-to-people relationships. Trusted, committed relationships. And yet, here’s an interesting statistic. When we look at the correlations* between the various drivers of customer retention in our Customer Relationship Quality (CRQ™) methodology, guess what the strongest correlation is?

It’s between Service Performance and Trust.

When I first noticed this correlation, I was somewhat puzzled. It didn’t surprise me that Trust was strongly correlated with Service Performance. But why is it the strongest link of any of the elements in our model? Why does the level of service have such a strong impact on the degree of trust between the client and a service provider?
 

The Importance of Consistently Good Service

The answer is actually straightforward, when you think about it in real life. Many – no, most – of our clients operate complex businesses where their interaction with customers is based on a complex (and sometimes bewildering) array of services. Even manufacturing companies are heavily service-orientated these days. As an account manager or account director, you might like to spend your time having meaningful conversations with senior executives about where their business is going and how you can help. That is important but the reality of day-to-day interaction is often explaining why that critical piece of machinery has not been delivered on time, or why the network that manages their business has fallen over again.

When the basic delivery of service is a constant issue and source of frustration for customers, account managers find the trust built up with key client contacts erodes quickly. Responses like “I’ll sort that out for you” are fine, as long as the service issue really is sorted out. But ongoing service problems can be notoriously problematic. This is particularly true when processes or technology need to be changed in order to fix what’s broken. It’s frustrating for the client and it’s frustrating for the account manager but, most important of all, it’s damaging to the long-term relationship. Ultimately the revenue stream from that customer will erode.

Trusted relationships are based on consistently good service delivery. That’s what the data says. And that’s why getting the service right (and right first time) is so critical.
 

Correlations based on tens of thousands of customer responses over more than a decade. Service – Trust R-Squared = 0.74