The key to growing your business is to have loyal customers. Customers can demonstrate their loyalty to you in three different ways. They can advocate on your behalf by recommending you to their friends and colleagues. Second, they can deepen their purchasing relationship with you by buying additional/different products or expanding your product footprint throughout their company. Finally, they can remain loyal to you and your brand by not jumping ship to your competitors. Companies who optimize these three types of loyalty outperform their counterparts who do not.
Businesses are looking to the field of customer experience management (CEM) to help them better understand how to increase customer loyalty. CEM is about managing your customers’ interactions with and perceptions about your company or brand. Improve the customer experience and you can increase customer loyalty. The question becomes: Of the different CX touch points, which ones are primarily responsible for customer loyalty and business growth?
To answer this question, I looked at customer survey results of six B2B companies in the software/technology industry. Each client distributed a standardized customer relationship survey (Customer Relationship Diagnostic) to their customers, asking them to provide ratings about the health of the customer relationship in two areas:
- Satisfaction with six different CX touch points: ease of doing business, product, sales/account management, technical support, communication from company and future product/company direction
- Customer loyalty across three dimensions: advocacy, purchasing and retention
For each of the six surveys, I calculated the average rating for each CX area and the correlations of CX ratings with each loyalty metric. The correlation coefficient indicates the strength of relationship between satisfaction with a specific CX touch point and customer loyalty. To get a picture of a typical B2B company, I averaged the results across the six different companies. Table 1 contains these aggregated results.
Satisfaction with the Customer Experience is More about Creating Advocates
As seen in Table 1, satisfaction ratings with the customer experience have a higher correlation with advocacy loyalty (r=.66) than with purchasing (r=.34) or retention loyalty (r=.39). While the customer experience is important to impacting different types of loyalty, it appears to be especially important to increasing advocacy behavior. The other two types of loyalty, purchasing and retention, are less impacted by the customer experience (as measured here) as a whole.
Maximizing Different Types of Customer Loyalty through the Customer Experience
If we look at the correlations within each type of loyalty separately (see Figure 1), we can identify which CX areas are most important to each type of loyalty. When we look at advocacy loyalty, we see that the top two drivers are “product quality” and “ease of doing business.” For purchasing loyalty, however, “future product/company direction” and “communication from the company” are the top two loyalty drivers. Finally, for retention loyalty, the top two loyalty drivers are “sales/account management” and “product quality.”
Do These Five Things Well to Grow your Business
Knowing which CX improvement initiative to tackle first is oftentimes an exercise in guesswork. The current results, however, paint somewhat of a clear picture about how to grow your business. Which customer experience touch points are the most important to driving B2B growth? They are:
- Product Quality. Customers come to you for the product/service you offer. If you’re a tablet manufacturer, deliver the best tablet in the market. If you’re a wireless provider, deliver reliable and broad wireless coverage. Satisfy your customers on the basics and you will likely get new customers through word-of-mouth referrals and keep customers around for a long time.
- Ease of doing business. Be frictionless. Try to build customer-facing processes that are simple and straightforward and minimize the number of steps your customers need to take to contact you, buy from you or resolve customer service issues. You may have the best product in the world, but if customers find it difficult to do business with you, they are less likely to become advocates for your brand.
- Future Product/Company Direction. Your customers want to know that you will be around for a long time. Their perception of your future products and company direction is likely a measure of trust (that you will be there in the future). Become a thought-leader in your space so you can shape the conversation in your industry. When you are developing your product roadmap, involve your customers to ensure your product plans address your customers’ future business needs.
- Communication with Customers. Improving satisfaction with your communications is especially important in a B2B technology setting where existing clients are inundated with sales and marketing materials. To improve these communications, be sure to include content about your company’s future plans, including product roadmaps, training events and company news, and how they align with your customers’ future business goals. The better you can communicate your long-term story, the more likely you will be to broaden your product footprint in current accounts.
- Sales/Account Management. In the B2B technology world, sales/account managers typically have the most influence on the customers, especially early in the relationship. They establish the initial tone of the relationship by communicating your company’s value proposition and setting customer expectations about the product (tell the truth about what it can and cannot do). People like to be around people they like. Look to human resources for help in hiring a knowledgeable, honest, and service-oriented sales staff. It’s hard for customers to leave you when they like your customer-facing employees.
Grow your company by increasing different types of customer loyalty. Gaining new customers, expanding existing relationships and keeping customers around for the long-haul each require different efforts. To gain new customers, you need to make a solid product and make it easy to do business with you. To improve your up-selling and cross-selling capabilities, you need to know where you are headed and communicate that path effectively. Finally, to decrease customer churn, you need to hire the right people.
It is important to note that the results of this study address the “typical” B2B technology company. The top drivers of customer loyalty might be different for your specific company. So, be sure to conduct a customer relationship survey to identify what is important to your customers. Use this information when setting your company strategy to ensure you are working on improving the right CX areas of your business.