to instill confidence in their final decisions, such as, “Will I enjoy working with this seller? Will it deliver what it is promising? Will it resolve any issues? Can I trust its people?”
At Celestica, there are less than 20 decision makers among the 10 customer companies that make up 90 percent of the company’s annual revenues. Sometimes there is just one decision maker in a customer company, sometimes it is a two- or three-person executive committee that makes the final decision to buy. Regardless, in the B2B world, while a large number of people may be involved in a sale, very few of them control your fate.
To Whose Voice Do You Listen? Whose Voice Do You Hear?
Most B2B companies are already focused on engaging end users and influencers, and they can’t avoid purchasing agents. But a surprisingly large number of them are either not paying enough attention to executive decision makers or are ignoring them altogether.
Like most B2B companies in the IT sector, Oracle is very focused on its end users. It’s easy to see why Oracle would invest millions to connect to them. Events like Oracle OpenWorld, an annual conference that drew more than 40,000 people from the Oracle user community in 2010 and includes top entertainment (Sting and Tom Petty and the Heartbreakers are on the schedule for 2011), are critical to building and maintaining the loyalty of end users, and gaining insight into what they want and need in IT products and services.
But how does Oracle address the one or two executive customers in each of its major accounts who actually decide to buy its offerings? In 2004, Oracle’s leaders asked themselves this question and quickly realized that most of their executive customers didn’t have the time to attend multiday trade shows, no matter how interesting and enjoyable they were. So, Oracle’s senior vice president and chief customer officer, Jeb Dasteel, was assigned the task of designing, launching, and overseeing an ongoing executive customer program. “End user relationships and input are critical to Oracle’s success, but end users provide only one view of the market,” explains Dasteel. “We realized how important additional input and relationships with other parts of the decision chain would be for our future. Without the perspective and insight of decision makers, we would be lacking a whole category of customer input today.”
Oracle understands and taps into the power of executive customers, and that is a major reason why its performance has outpaced its competitors. Most B2B companies, however, are not as aware of executive customers as Oracle, and they devote their customer outreach efforts almost exclusively to the other levels of the customer hierarchy. In fact, our research has found that the average B2B company spends 75 percent of its time and money marketing and selling to end users and purchasing agents, the two groups of customers who have the least say in purchase decisions. Influencers, who do play an important role in deciding purchases, receive substantially less attention. And decision makers, the executive customers who actually make the purchase, receive the least investment of all. This is far from optimal. (See Exhibit 2-5.)
Exhibit 2-5: Allocation of B2B Marketing and Sales Resources by Customer Level
When B2B companies do not actively and systemically engage their executive customers, there is a tremendous vacuum of critical information on both sides of the buying equation. On one, the B2B seller misses insight to the key business problems, challenges, aspirations, and priorities of their customer companies. The lack of this knowledge raises the risk of producing new products or services that will not succeed in the marketplace, as well as the loss of key accounts to competitive threats.
On the other side of the equation, if B2B companies do not engage their executive customers, how will these decision makers get the message about the business value the company provides? How will they learn about you as a business partner? How will they come to trust you? This level of understanding does not come through osmosis, nor is it communicated simply by delivering on your contracts. No, you have to do more.
But will they listen to you? Absolutely. There is a common misguided belief that executive customers are hard to reach and uninterested in talking to B2B solution sellers. We have always found, however, that executives are genuinely mystified by the lack of effort their key suppliers and other sellers make in reaching out to them. “When I became CEO, I was surprised I didn’t get calls from most of our key suppliers,” recalls Joe Morgan, CEO of $688 million Standard Register. This is even more surprising given the fact that Morgan was hired to grow the company after a period of restructuring. Therefore, understanding his expectations and aspirations for the company would have been critical to any B2B company that wanted to earn its business.
When companies neglect executive customers, the initial symptoms usually appear as sales woes. They include:
Poor market reception of newly launched products and services or an unwillingness among customers to pay extra for new features and functionality
Overwhelming price pressure and being treated like a commodity supplier
The loss of key accounts or reductions in their volume
Increased competition in profitable segments
Sales engagements which are reactive and focused on today versus proactive and focused on the long-term
These are reliable indicators that the voice of the executive customer isn’t being heard clearly. Often it means a company is listening only to the voice of end users and thus R&D, marketing, and sales are either not including or not fully communicating the business value essential to the executive decision maker.
Just as commonly, companies tend to listen to only the voice of their sales organization. Feedback from the sales team is very important, but it does have limitations. Most salespeople meet with users and purchasing agents, who tend to discuss lower-level issues, such as features and functionality. Salespeople are also very focused on overcoming objections and matching competitors’ offerings. They extrapolate market needs from these interactions and bring that feedback to their employers as the voice of customer.
One major consequence of mistaking the voice of other players with the voice of the executive customer in B2B sales is very evident in studies of success rates of new products. IBM, AcuPoll, and other organizations have consistently found that newly launched products suffer from failure rates of 60-70 percent. Many of these failures result from neglecting executive customers. When the needs and concerns of executive customers are not built into market offerings, companies find themselves investing valuable resources in projects that add only incremental value or worse, actually diminish a company’s ability to differentiate itself in the marketplace. This is why it’s so important that innovation is relevant …meaning that there is at least one point of differentiation in new offerings for which decision makers are willing to pay.
Reality #3: B2B Companies Rely Upon the Knowledge and Acumen of Customers
Consumers can provide input and feedback on a product, but it is usually limited to what they like and don’t like and, perhaps, what else they might want. But in the B2C world, customers can’t typically tell a company how to design a better product or help engineer it. They don’t have that kind of expertise.
In fact, consumers are rarely experts regarding the products and services they buy. In a blind taste test, for example, 90 percent of consumers couldn’t tell a $10 bottle of wine from a $100 bottle. Nor could they tell the difference between tap water and a $5 bottle of Fiji water. That’s why sophisticated and highly emotional marketing and branding programs can yield premium results in the B2C world—they are the main basis for product differentiation among consumers.
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