Multiple markets have been looking at how to improve suppliers’ standing with their corporate customers. Amid longer — and later — bill payments and the cost of accepting some payments technologies to appease clients, suppliers face an uphill battle to manage cash flow.
To some extent, this realization has led smaller businesses to begin cutting off corporate buyers that pay late from their business.
But often, the reality is that large, corporate buyers have the market power to enforce these payment behaviors on their smaller suppliers.
A slew of new data from Gallup uncovers that, while some market players have been looking at how to help suppliers fight back at unfair payment policies, they may want to instead appease customers’ demands or risk losing a major chunk of their business.
B2B suppliers, manufacturers and vendors are not providing an adequate level of customer service to their clients, Gallup found, with 71 percent of corporate customers admitting that they are not fully engaged with their B2B partners — that is, they are not emotionally and psychologically invested in these suppliers — and are willing to take their business to a competitor.
In communicating with more than 100,000 respondents and more than 19,000 businesses, researchers at Gallup found that suppliers risk losing up to two-thirds of their customer base unless they can fully engage with them.
“Realizing the effect a customer-centric strategy has on their business performance is crucial to creating authentic growth, and companies in Gallup’s database that are actively measuring and managing their customer-centric framework are finding that problems are occurring less frequently than before,” said Gallup Global Practice Leader Ed O’Boyle in a statement that announced the research earlier this month.
Breaking Down The Data
There are several key data points highlighted in Gallup’s research:
Twenty percent of B2B customers reported having some kind of problem either with a supplier’s product or with the supplier itself.
Only 40 percent of B2B customers that experienced a problem said that their issue was resolved by their supplier or vendor.
Even worse, just 5 percent of B2B customers said that they were “very satisfied” with the way their problem was fixed by their supplier.
The financial impact of this cannot be ignored for suppliers that aren’t living up to their clients’ standards.
According to Gallup, the suppliers that provide a higher level of customer service outperform their counterparts that fall short of customer service offerings in an array of areas by at least 30 percent, including across profitability, customer retention and sales.
Specifically, high customer engagement is associated with 50 percent higher revenue, 34 percent higher profitability and 55 percent higher share of wallet, researchers concluded.
It’s a flurry of numbers, but the message is clear: Suppliers and vendors that engage their customers are more likely to experience stronger customer loyalty, and the positive financial impact of such performance is evident.
According to Gallup Chairman and CEO Jim Clifton, a focus on customer engagement performance and strategy can prove to be an effective way to grow in a market faced with consolidation.
“Companies aren’t growing, so they’re acquiring competitors,” Clifton said in an introduction to the research. “However, there’s often as much or more growth potential in customer strategies.”
He pointed to the nearly two-thirds of businesses that would not mind switching suppliers to find better customer service and engagement.
“That means there are hundreds of millions of dollars of lost growth within your B2B customer base,” the executive added. “You don’t have to bust the bank to get the most out of your existing B2B customers. You need the right analytics and advice.”