Avoiding the Pitfalls to B2B Success: Third in a four-part series

(c)Geehan Group

In my B2B Executive Playbook, I take my readers through the four steps that can simplify strategic planning, focus product development and sales and marketing efforts, and most importantly, create a clear path to market leadership. In this four-part series, Avoiding the Pitfalls to B2B Success, I review the common pitfalls that challenge B2B firms. Be aware of them and act quickly if they surface in your company.

Pitfall #3
Following a single customer 

It’s a common story: a new CEO takes the reins and goes to visit the company’s key customers to establish relationships, make sure promises are being met, say thanks, and offer access. On each of these visits, the CEO asks the CEO at the customer company, “What are your biggest issues?” and “What keeps you up at night?”

Terrific questions. 

But then things start to unravel. The CEO hears something at one account that strikes a chord. A big idea; a game changer. He comes home and redirects the company’s development teams, strategy, and resources, based on a single conversation. 

(c)Geehan GroupImagine having your entire leadership team, including functional heads, tethered to a single reference point – and that one reference point is a group of 10 to 25 true decision makers from your most important customers. Once or twice a year, they gather offsite to discuss developments in their industries, markets, companies, and specific areas of responsibility.

Executive Customer Advisory Council meetings have a transformative effect of leader-to-leader relationships, both externally and internally. The executive customers who attended the meeting now seek you out because you provided such a valuable forum for them to network and learn from their peers. They want to do more. They have become part of your team.

Case:

The CEO of a $10 billion manufacturing services company met with the president of his company’s biggest customer. The president suggested a solution to a problem with which he said twenty other major players in his industry were also struggling. This convinced the CEO to invest more than $100 million in developing the solution. Two years later, no one, including the original customer, was willing to buy the solution. The B2B seller had rechanneled its key resources, lost credibility in the market, fallen behind its competitors, and ended up writing off the entire project. 

(c)Geehan GroupBottom Line:

The only way to secure market alignment is to enlist a market collective to validate direction and major development projects. Most B2B offerings need a market, not just one customer. ©2017 Geehan Group

 

Read the other articles in this series:

Pitfall #1: Inside-only Thinking

Pitfall #2: Limiting Input to End Users

Pitfall #4: Chasing the Competition

 


Sean Geehan is founder and CEO of Geehan Group, National Best Selling Author of The B2B Executive Playbook and a celebrated speaker. Sean has more than 25 years’ experience successfully guiding B2B executives to sustainable, predictable, profitable growth for their organizations. To schedule Sean as a speaker, contact him at (877) 226-1621 or visit www.geehangroup.com.

Looking for more information on how to be successful in your B2B business? Download Sean Geehan’s free article “B2B: A Different Game.” Click here

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Customer Retention is 24K Magic

It is simple: Everyone gets excited when a new customer is signed. There’s a celebration, bells are ringing, and lots of recognition and rewards are handed out. Song’s like the Bruno Mars' “Uptown Funk” or “24k Magic” are blasting in the hallways and everyone feels as though the most popular person in school just asked them to prom.

Been there, done that: But let's think about your customer retention for a minute. How much celebration is there when a long standing customer renews for the 6th straight year? Forget that they haven’t bid out the work in 3 years (no competition=greater margin) and they are already in your system (low cost of support, faster payment = greater cash flow).

It still only generates the excitement of listening to a has-been, one-hit wonder backup band like the frosted haired Vanilla Ice. Yes, you’re at a concert, but it’s short and stale.

Now the reality: Here's the bottom line. It costs 3-5 times more to acquire vs. retain a customer. Getting your current customers buying more of your stuff means it’s harder for them to leave you (increased switching cost) and current customers are much less likely to bid out your work (increasing profitability). Shouldn’t you evaluate how your how you are spending your sales and marketing dollars? If that sounds like your firm, don’t fret. Even carpools and Karaoke can be cool (thanks to James Corden). 

Opportunity: Evaluating your sales and marketing mix today re-prioritizing the balance of acquisition to account growth can make a huge difference in top and bottom line results. Now that’s something the entire leadership team will be thrilled to hear about. 

 

Just maybe then you’ll become the most popular person in the company (or at least the leadership team) and the CEO throws you the keys to the company G6, backstage passes, and VIP access to the after-party on the Bruno’s current tour. Now that’ll generate 24K Magic in the air!

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Customer Success: Applying Science to the Art of Customer Engagement

Over ten years ago, our team built a model to describe what we believe is the core of B2B sustainable growth. Called the “Customer Engagement Lifecycle,” it depicts the importance of active, meaningful engagement with your customers and why you cannot realize profitable growth without it.  Market leading companies such as Oracle, AmerisourceBergen and HCL have long understood this principle, and their return to investors shows it.

Others have not been so easily convinced, and I have always scratched my head wondering why stock charts and sales figures have not provided sufficient proof.  Perhaps “end results” metrics such as these do not provide the short term measurements needed to guide the daily, monthly, and quarterly activities that lead to profitable growth.

Enter Customer Success, the professional function which is becoming increasingly critical to companies in the subscription economy.  Unlike Marketing, who historically has been criticized for not applying enough math to its art in order to demonstrate returns, the basic function of Customer Success is measured by a key metric, churn rate.  And since churn can be measured almost daily, it is a number that can galvanize the efforts of an entire organization.

In a recent interview in the Huffington Post, Shreesha Ramdas, CEO of Customer Success Automation platform Strikedeck, explains that Customer Success has quickly become essential for companies to retain and expand their customer accounts, especially those in SaaS and subscription businesses because they feel the pinch of churn much more than other type of business. According to Ramdas, “There is pressure on public companies utilizing a subscription model to report on churn, since venture capital firms give high weightage to churn rates. As such, Customer Success has become equal in importance to Sales, Marketing, Engineering, and Product teams within SaaS companies.

“Today many companies use Customer Success as a competitive differentiator and lever for growth.  The importance of Customer Success can be understood by looking at four statistics:

  1. There are currently more than 200,000 jobs open for CS.
  2. Google search traffic volume for Customer Success has tripled in last five years.
  3. More than $150M in investment has gone into the industry.
  4. There are now more than 500 new meetups, conferences, and events on this topic.

Making Customer Success a priority is no longer an option, but rather an imperative.”

To me, this means customer engagement, which is a key driver to Customer Success, now has a metric to which CXOs must pay attention and invest.  Successful customers are often the ones willing to proactively endorse your company and product to the world.  If you sustain long-term relationships with customers, your business will be able to use that revenue to expand and improve your offerings, resulting in more sales with higher margin.  In one of our previous blog posts, 3 Keys to Retaining and Growing B2B Revenue, we discussed how 80% of most companies’ revenue comes from 20% of their established customers.  By that measurement, losing just 5% of your customer base to churn can potentially sink an organization. The solution for churn is Customer Success, the post-sales retention team who ensures engagement and encourages advocacy.

Given the expansion of the Customer Success field in the past five years, toolsets to help manage its operations (and of course measure and monitor churn) have become extremely prevalent.  Forrester has called Customer Success a Hot New Software Category, and points to the growth of the subscription economy as the catalyst. Vendors such as Amity, Bluenose, Gainsight, Natero, and Ramdas’ Strikedeck all provide software in this space to operationalize the way customer accounts are managed in order to “preserve revenue, expand revenue, and boost customer advocacy.”

Last week, we witnessed first-hand the Strikedeck platform bring together customer engagement and advocacy to define, enable, monitor, and optimize Customer Success.  Impressed by the approach they have taken, we believe that tools like Strikedeck will be required by almost every company, be it a SaaS, Subscription, eCommerce, Service, or even non-software companies.  Simply measuring happiness using customer surveys has become passé.  Strikedeck’s ability to collect data on customer happiness from a variety of sources, including drops in product usage, increases in support ticket volume, and degrading sentiment in customer communications, is amazingly simple, yet innovative.  

What is most powerful about the Strikedeck platform, however, is its ability to provide not only predictions on causes of potential churn in a given organization, but also guidance on actions to prevent it from occurring, such as additional user training, enhancing the skills of support staff, and even how to proactively engage with all levels of the customer base.  Automation is important for scaling customer engagement, but their tools such as workflows and playbooks help standardize best practices and optimize economic value for customers.

Even further, this use of predictive analytics can help organizations proactively retain and grow its current customers by using the toolset to understand what drives their satisfaction.  In his recent article on CMS Wire, Ramdas summarizes the role platforms like Strikedeck play, “The game is no longer a race to acquire new customers, but rather to hone in on retention and upsells.  What can companies do to prevent churn, ensure renewals and drive upsells? The first step is to know which customers are likely to churn, and which ones are likely to renew and/or expand.  This sets the stage for predictive analytics to become the hero.”

For over 15 years, our team has delivered services around customer engagement, from conducting assessments to planning and delivering the initiatives that lead to sustainable, profitable growth.  I am excited to see how the profession of Customer Success management applies the science necessary to give customer engagement the credibility and funding it deserves.  

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3 Keys to Retaining and Growing B2B Revenue

In the B2B World, 80% of your revenue comes from 20% of your customers. The reality is that losing just 5% of those customers could potentially sink your organization. So in this age of big data and rapidly evolving technology, what are the best ways to retain and ultimately grow those customers?

B2B companies must meaningfully engage with their customers to evolve loyalty into advocacy, and engagement begins with a relationship.  Through our work with over 50 leading B2B companies, we have found time again the following three key relationship building practices lay the foundation for account retention and growth:

1.    Educate, Don't Sell.  B2B relationships start with education, not a sales pitch. Educate yourself on your customer's industry, market, challenges, and opportunities, and then demonstrate how you can show them a path forward.  Providing relevant content through discussions and forums, blog posts and articles, and research is an excellent way to establish your credibility and begin the customer loyalty to advocacy journey.

2.    Customer Advisory Boards create a platform where you can leverage happy customers and drive innovation through customer co-design and collaboration. The end result is overall market alignment in offerings, communications, and strategy.

3.    Executive Summits bring key decision-makers together to preview a strategy, product, or market innovation. Through these focused exchanges, customers become first-to-know, first-to-buy, and first to advocate your solution in the marketplace.

Structured, proven, and dynamic educational forums, customer advisory boards, and executive summits help organizations develop a deep understanding of market conditions while building the rapport with key executives. This powerful formula turns customers into true advocates and is the best recipe for retaining and growing your top customers.

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3 Keys to Retaining and Growing B2B Revenue

In the B2B World, 80% of your revenue comes from 20% of your customers. The reality is that losing just 5% of those customers could potentially sink your organization. So in this age of big data and rapidly evolving technology, what are the best ways to retain and ultimately grow those customers?

B2B companies must meaningfully engage with their customers to evolve loyalty into advocacy, and engagement begins with a relationship.  Through our work with over 50 leading B2B companies, we have found time again the following three key relationship building practices lay the foundation for account retention and growth:

1.    Educate, Don't Sell.  B2B relationships start with education, not a sales pitch. Educate yourself on your customer's industry, market, challenges, and opportunities, and then demonstrate how you can show them a path forward.  Providing relevant content through discussions and forums, blog posts and articles, and research is an excellent way to establish your credibility and begin the customer loyalty to advocacy journey.

2.    Customer Advisory Boards create a platform where you can leverage happy customers and drive innovation through customer co-design and collaboration. The end result is overall market alignment in offerings, communications, and strategy.

3.    Executive Summits bring key decision-makers together to preview a strategy, product, or market innovation. Through these focused exchanges, customers become first-to-know, first-to-buy, and first to advocate your solution in the marketplace.

Structured, proven, and dynamic educational forums, customer advisory boards, and executive summits help organizations develop a deep understanding of market conditions while building the rapport with key executives. This powerful formula turns customers into true advocates and is the best recipe for retaining and growing your top customers.

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Three Sure Fire Ways to Guarantee Customer Advisory Board Success

Are you considering starting a Customer Advisory Board (CAB), or do you have one in place and are wondering how to ensure continued success? We've executed hundreds of CAB meetings, and while there are many keys to success, when someone asks me what makes a CAB program successful, I respond with these three important elements:

  1. The right people in the room
  2. Relevant content
  3. Follow-up communication

 

The Right People in the Room ... on Both Sides

Based on your CAB strategy, make sure the customers you invite are able to help you think through key issues and areas of your business, and answer the critical questions you will pose to them that will help drive your strategy, future services and/or product direction. People who can answer these questions are typically the decision-makers and high-level influencers, and you want to hear their combined perspectives. Also, attendees from your organization should be made up of the leadership team and/or P&L owners, plus functional leaders in Marketing, Sales, Development, Finance, and Strategy. Their only requirements are to be good listeners, ask probing or clarifying questions and never, ever fall into "selling" mode.

 

Relevant Content ... and Listening

Put an agenda together that includes topics of interest to your customers as well as to your internal team. What are customers' market needs and aspirations? Identify gaps; understand where they believe your organization may be able to help. What does your internal team need feedback, guidance, and input on - strategy, marketing, sales, product? Use this forum to listen and validate your team's perspectives on how they view customer needs. Leverage your time together to share ideas and learn from each other.

 

Follow-up Communication ... and Act

The final element to ensure CAB success is to follow-up with your advisory board members after the meeting. Based on their feedback, determine with your executive team what actions to take, who will be accountable, and the timing to complete. Let your CAB members know you've taken their feedback seriously by developing an action plan and sharing it with them. See another blog I wrote on this topic: Take Action After Your CAB Meeting.

 

 

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Don't Think You Have Enough Customers to Warrant a Customer Advisory Board? Think Again!

A Customer Advisory Board (CAB) or Council, is made up of your top, most strategic customers – whether that equals 7, 12 or 20, they are the driving force of your success. Having a CAB program in place gives the leadership team the perfect forum to meet with these important decision makers.

How Many Customers Should You Have Before Forming a CAB?

We’ve delivered CAB meetings with as little as 5 customers to as many as 22 and found that the smaller groups are just as powerful as the larger ones. A good example is a $3B client of ours with 9-10 customers who account for 90% of their revenue. They typically have 5-8 members in attendance at their CAB meetings. Alternatively, another example would be a much larger $20B client with hundreds of top customers. Their CAB meetings typically have 20-25 attendees and we include breakout groups and roundtables, allowing all members an opportunity to provide feedback and share in smaller groups. These very different companies get the same benefits: robust discussions, collaboration, brainstorming and clarity on our client’s strategic direction.

Would a Customer Survey be as Effective as Holding a CAB Meeting?

Nothing really takes the place of face-to-face meetings for better understanding your customers and building relationships. So if you’re considering surveying customers as an alternative to a face-to-face meeting, just know that your results will be much different. Without a ‘live’ audience to provide context to, you’re more likely to get just a ‘snapshot’ on something more specific. You won’t benefit from the dialogue among customers that occurs at face-to-face meetings; there won’t be peer-to-peer sharing and learning; and last but not least, a survey doesn’t offer much in the way of relationship-building opportunities.

Building a CAB program and holding in-person meetings (once or twice a year) creates a “safe” environment for an open, interactive exchange of ideas. While surveys serve a purpose, don’t use them in lieu of a face-to-face meeting – use surveys for more quantitative feedback. Hold in-person CAB meetings to allow members to build on one another’s thoughts and work on solutions together. This peer exchange will also create an emotional commitment, strengthening relationships and improving retention.

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Why a Customer Advisory Board is NOT the Same as a Focus Group

With the myriad customer engagement programs so popular today, Customer Advisory Boards (CABs) and Focus Groups often get “bucketed” together, yet they have clear and very different objectives.

Here's a "quick reference" chart detailing some of the key differences: 

Participant Attributes

The diagram below shows the core attributes of participants for CABs and Focus Groups, and another reason why these two programs are so different.

 

 

 

 

 

 

 

 

 

Sample Discussion Topics

And finally, here are some sample topics most common among the two initiatives.

Customer Advisory Board

  • Strategy
  • Direction of industry
  • Organization's goals/objectives to develop alignment
  • Discussions on: what services or offerings are missing; pricing/business models; overall product roadmaps; go-to-market programs (sales, marketing); account management

Focus Group

  • Reaction to logo/tagline
  • Emotional state (look and feel)
  • Usability study
  • Behavioral patterns/processes
  • Product feature/functionality

As you plan your customer engagement programs for 2013, be sure to target the right program format for the input you are seeking.  If you want to gain a deeper understanding of your customers' business, build closer executive relationships, and gain strategic mid- to long-term market insight, a Customer Advisory Board is the answer.  If on the other hand, you need qualitative short-term feedback on a product or branding message; or opinions/perceptions on a concept, service, packaging, etc., then a Focus Group is the right program.

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Advisory Council Model: Makeover Edition, Part 1

At times, companies can lose sight of the value they gain from Advisory Councils, and for various reasons.  Be on guard—do not let yourself get discouraged to the point where you recommend discontinuing this strategic engagement tool.  Instead, consider an Advisory Council Makeover.

Time for a Reality Check

Assuming you conduct post-meeting surveys with both internal team and council members, what kind of feedback are you receiving? 

  • Are your members still getting a high level of value from their invested time?
  • Are your stakeholders still getting a high level of value from the insight gained?
  • Are overall scores trending downward?  If so, for how long and by how much?

A Makeover is the best alternative, considering a small percentage of top accounts typically contribute the largest percentage of revenue in B2B companies.  They hold the heart of your business in their hands.  And, most of the research-based market insight you acquire is also available to every one of your competitors.  Making strategic decisions based on insight gained from your most important customers is too critical to give up! 

In Part 2 and following, we will address several areas that impact scores and your perception:

       Members:                              

  • Overall experience
  • Discussions
  • Perception of your commitment
  • Follow-up
  • Willingness to partner further

       Internal Team:

  • Pre-meeting preparation
  • Overall experience
  • Insight gained
  • Application
  • Between-meeting interaction

 

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Achieving Client Loyalty in B2B World Event Summary

Earlier this spring, Kim Hammond (from QTS) and I had the opportunity to present at the Loyalty 360 Engagement Expo.  The audience was highly engaged as we talked about some of the common challenges organizations face Achieving Client Advocacy in the B2B World.  The top five challenges discussed were:

1)       Being focused on the wrong customers

2)       Being focused on the wrong level within accounts

3)       Disproportionate marketing spend

4)       Retention

5)       Profitable growth

As we shared there, building true advocacy comes from engaging your most important accounts at the decision-maker level in a meaningful way.  Market leaders must consider the opportunity of shifting their marketing spend to 60% on retention and 40% on acquisition.  In most organization, the reverse is the case.  In addition, investing 35% at the decision-maker level of the most important accounts will provide marketing leaders the desired retention and profitable growth.

I was energized by Loyalty’s research that came out in 2012 for marketers.  Their research shows the top two objectives for marketers in 2012 are, 1) customer retention, and 2) profitable revenue.  This reinforces what the IBM CEO and Fournaise Marketing Group studies said, which basically came down to marketing leaders need to be focused on the business, not the brand.  They need to focus on building the ROI if they want to earn a true seat at the C-suite table.

Cheers to a sustainable, predictable and profitable 2012 for all marketing leaders!

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