their perspective and input can have an outsized effect on marketing effectiveness. They can be tapped to better understand the market perceptions of a B2B company, its value proposition, and its messaging. They can tell a leadership team how their branding efforts might be off target. Executive customers can offer information regarding what, where, and how to market offerings to maximize a B2B company’s return on investment (ROI).
Sometimes the value of this feedback is instantly apparent. For example, Intesource recently previewed an upcoming marketing campaign for a group of its executive customers. They said it wouldn’t work and told the company why in some detail. “Being a former CMO, it was a tough pill to swallow,” recalls CEO Webster. “So I tested it in a small way. Our executive customers were right. We would have blown more than 20 percent of our total annual marketing budget on the initial campaign, but we adjusted it as they recommended, and the revised campaign yielded huge dividends.”
HCL Technologies received insight from executive customers to develop a global branding program. “Our executive customers provide a mechanism for us to view ourselves through our customers’ eyes,” says CMO Chatterjee. “With this vision, we were able to design much more credible messages that far exceeded our expectations.”
Sales Retention, Penetration, and References
Bonds are formed whenever people come together for a common purpose, and programs designed to engage executive customers are no exception. In fact, these B2B programs are the best and most consistent way to develop strong bonds with key accounts. They lead to increases in account retention and penetration, and they create a pool of references that is a powerful tool for winning new accounts.
The sales benefits are by-products of well-developed executive customer relationships. When a B2B company fully engages an executive customer, the customer becomes invested in the seller’s future; he or she begins to care about the seller and wants to see it do well in the marketplace. It is analogous to a new recruit in the military. As boot camp progresses, the recruit begins to internalize a larger mission—to protect his or her country and the members of the unit. Often this bond becomes so strong that a lifelong connection is formed. The same basic dynamic comes into play in executive customers programs. It is just human nature.
Executive customers can become passionate advocates of B2B sellers, both within their home organizations and the markets at large. “Even in the accounts where we aren’t performing great,” says Oracle’s Dasteel, “when executive customers participate in our engagement programs, they continue to buy, buy more, and even help us convert prospects to customers.”
This isn’t just talk. As you might expect, a high-tech company like Oracle has quantified the returns of their executive customer programs. A review of their top 400 accounts showed significant differences between customers involved in relationship programs and those who are not (see Exhibit 3-1). Oracle hasn’t shared the numbers, but we know that each percentage point of improvement equates to increases in revenue growth and profitability. And much of this growth is in existing accounts, where margins are almost always higher because they incur lower sales and on-boarding costs.
Exhibit 3-1: Oracle’s Return on Customer Executive Programs
Our own research, conducted in more than 70 client companies, reveals substantially higher percentages across industries. For instance, we found the percentage of decision-maker customers “willing to recommend” increased by more than 270 percent when they participate in an executive engagement program (see Exhibit 3-2).
Exhibit 3-2: Results of Executive Customer Programs: Geehan Group Clients
Anecdotal evidence also supports these figures:
At Intesource, the growth in accounts that participated in executive customer programs rose 100 percent in a two-year period. Referrals also rose: one customer referred and helped secure three new customers in a six-month timeframe, a substantial number in a company that had 30 customers.
At HCL Technologies, executive customer programs contributed to a customer retention rate above 94 percent. More than 70 percent of sales growth over a four-year period came from existing customers who were involved in these programs. Since the launch of HCL’s Executive Customer Council, they have not lost one of their participating customers.
Relevant Innovation
The ability to produce innovative products and services is a much-vaunted corporate quality, but innovation initiatives also consume a huge amount of corporate resources, often with little or no return. Consider Xerox’s famed Palo Alto Research Center (PARC), which pioneered many innovations, including the mouse and the graphical user interface that produces the windows and icons you see on your computer monitor. Xerox funded these innovations, but never successfully commercialized them. The lesson of PARC for B2B companies is that the only product and service innovation worth pursuing is innovation that is both relevant to your customers and for which they will pay a premium.
Relevant innovation also goes beyond run-of-the-mill improvements to the features and functions of existing products. Most “next generation” products companies bring to market aren’t game-changing enablers of business transformation. Think of the many versions of Windows that Microsoft has released over the years. How many represented relevant innovation and how many found a market simply because they were preloaded on new PCs?
Historically, B2B companies have struggled to produce relevant innovation. Research shows that new product success rates are only in the 30-40 percent range. One reason for this poor performance is that B2B companies have followed the B2C mindset in developing new products—they focus on the needs and desires of end users. The problem, of course, is that end users are not usually the decision makers in the B2B world. Further, although the B2C approach can work for product improvements and updates, end users rarely provide the level of feedback needed for B2B companies to produce new offerings containing the degree of business innovation and transformation that motivates executive decision makers to buy.
At Wells Fargo, executive customers helped transform the bank’s innovation focus. Executive customers came up with the idea of a mobile portal so that CFOs could easily access important information about their accounts when they were away from their computers. The Wells Fargo executive customer collective, a group of 15 financial leaders drawn from the bank’s most important commercial accounts, assisted throughout the development process—helping define the main components of the portal, performing reviews, serving as beta testers, and providing input and feedback on the go-to-market strategy.
When executive customers are involved in the entire innovation process, the chances of producing a hit are significantly increased. Similarly, they can identify a potential flop early in the process. Due to the success of financial programs and services in the consumer and small business markets, such as Intuit’s Quicken and QuickBooks, Wells Fargo considered offering commercial accounting services and delivering them online via their portal. It seemed a natural extension, but when the company vetted the idea with its executive customers, the response was overwhelmingly negative. They said they would not buy accounting services from the bank; what they really wanted was an easier way to integrate their existing accounting packages with their accounts. Their feedback saved Wells Fargo time, money, and credibility in the marketplace.
Relevant innovation
