Why are Trust and Commitment so Important in B2B?

Trust and Commitment

 
The following words are from two American academics Rob Morgan and Shelby Hunt. We’ll come to these guys shortly.
 

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“Commitment and trust, rather than (or at least in addition to) power and dependence, are now central to discussions of business relationships.
Researchers and practitioners have come to view most interactions between business parties as events that occur over the course of a relationship between two or more partners.”

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The funny thing about business-to-business (B2B) is that it’s less about business and more about relationships. In fact, B2B is really P2P: person-to-person. People buy from people. In large organisations, the decision to go with one particular service provider over another is often down to the answer to one simple question: “Do I really want to work with this person?”

The answer to that question is usually based on the perception of whether the individual can be trusted or not. Without trust, there can be no commitment.
 

I thought companies bought mainly on price?

Large business contracts are often put out to tender. Companies will often produce a clear set of evaluation criteria to help guide the choice of service provider. Price is always one of the evaluation metrics. Even so, the final decision is often made on softer and unwritten criteria. Few decisions are made solely on the basis of price. Often, they are made on a combination of price and solution/ functionality. But when it comes to making the final choice to award any contract, subtle psychological elements come into play.

“OK, I know these guys seem to have the [INSERT: ‘best product’, ‘lowest price’, ‘most innovative solution’]. But what if it all goes wrong? Will they sort out the issues or will they leave me in the lurch? Will I lose my job?”

Fundamentally, we like to buy from people we think are honest, who treat us fairly and who act with integrity. In other words, we buy from people we trust. Price is generally a secondary consideration. It can’t be ignored but rarely is it the most important factor in the decision-making.
 

Morgan and Hunt

Two American academics figured this out a long time ago. In 1994, Rob Morgan and Shelby Hunt wrote a seminal paper on what really drives a long-term relationship between two business partners.

The Commitment-Trust Theory

The Commitment-Trust Theory of Relationship Marketing quickly became a hit, not just in academic circles, but among senior business executives who were trying to identify why people were likely to do business with you.

Morgan and Hunt realised that long-term business relationships are built on a mutual and cooperative working relationship between two partner firms. Focus on Trust and Commitment if you want to foster and nurture such relationships. That’s why we built these key metrics into the heart of our Customer Relationship Quality (CRQ) methodology.


 

Customer Relationship Quality (CRQ)

Deep-Insight’s CRQ model works on three levels. Let’s take a quick look at each level. From the bottom up:
 

The Relationship Level

Trust and Commitment are the most important building blocks for a good relationship but don’t ignore Satisfaction. This is simply a measure of whether the customer’s expectations have been met or exceeded. Satisfaction is quite transactional. Customers can be happy one day and deeply unhappy the next, if they experience a problem. If the problem is solved, satisfaction levels increase quickly.
 

The Uniqueness Level

Experience is a measure of how easy you are to do business with and if you are seen as a trusted partner. You can have the best products or services in the world but if your clients can’t work with you and don’t see your people as trusted partners, you will not be seen as ‘Unique’. Deep-Insight defines Solution as a combination of Innovation, Leading Edge and Value-For-Money. These are three related but slightly different concepts but if you score well on all three, you have an offering that can help your clients compete in the marketplace in a way that none of your competitors can do. When we talk about ‘Solution’ we’re not just talking ‘Product’. It’s as much about how the account managers, sales and delivery teams position your company’s product or service, as it is about the product or service itself.
 

The Service Level

Service covers three separate elements: Reliability, Responsiveness and Customer Care. Reliability measures whether or not you do what you say you do. Do you walk the talk? Do you do what you promise? Essentially, can your clients rely on you (and the ‘you’ refers to both the brand and the individuals working with the client). Responsiveness measures whether or not you react quickly to issues that arise. Better, still, are you proactive in anticipating customers’ needs or issues. Customer Care is all about making the customer feel valued.
 

Are you interested in building Trust and Commitment with your key clients? Would you like to find out more about our Customer Relationship Quality (CRQ) model? If the answer to either question is yes, contact us today.
 
 
 

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