The Loyalty Ladder - Evolving from Vendor to Partner

by Kay Cruse, Vice President, VOC ABOUT KAY

What criteria create the most loyal customer in the B2B world? More importantly, why should you care? Clearly, the most loyal customers deliver a stronger ROI through larger share of wallet, higher prices, and greater profitability.

According to our Voice of the Customer research spanning more than 20,000 interviews documenting hundreds of relationships, the most loyal customers are those who believe there is a true partnership between the company and the customer.

  • “There’s a feeling of anticipation,” said one B2B customer.
  • “When I have a problem, it’s addressed without hesitation by virtually anyone in the organization,” said another.
  • “There’s a sense of empowerment when you talk to their employees; everyone knows what’s expected and how to really make our relationship work not only today, but for the future,” added a third customer.

There is a five-step ladder that companies need to climb to achieve the highest level of loyalty with their customers. The components of each step must be addressed within every customer relationship. Perhaps you can identify on which level you are in building these relationships based on characteristics that are similar across different industries, services, and global regions.

  • Steps One and Two - Source and Vendor: Supply the basics in your business. If you are a manufacturing company, it’s a quality product delivered on time. If you are a tech organization—a reliable, easy to use network; or a lawyer—good, sound legal advice. If you cannot fulfill customers’ “must-have” requirements, it is unnecessary to think about anything else. You must fix the fundamentals before you can move “up” the ladder, because customers will not believe you have the capability to deliver more if you cannot supply the essentials consistently.
  • Step Three - Key Supplier: Great service—not good, but great. Your entire team is service-oriented and attentive to the customer. They are approachable and they reply quickly and consistently to customer requests. They take ownership of relationships as well as problems. Words that describe them include “dependable” and “personable.” They are the dimensional representation of your brand. This step is pivotal to progressing through the next two levels. Many companies remain here, but there is more to gain.
  • Steps Four and Five - Customer Advocate and Valued Partner: Go beyond great service and truly excel. These levels exceed expectations to surprise and delight customers. You are able to offer suggestions to help customers improve their businesses. You are proactive; you know your customer’s business as well as you know your own—and you can offer creative solutions to help your customer’s business thrive. Once achieving the top step, you are often described as a trusted adviser, a true partner. You are considered an extension of your customer’s own business.

The presence of customer loyalty starts to appear at the third step. This is the level at which bankable relationship capital begins to accrue. All businesses—including yours—at some point experience an issue that will be perceived as a “major disappointment” or “failure.” The company whose customers believe they are receiving great service will forgive. You will have the opportunity to “fix” the problem. Avoid stepping back down to the basics steps by addressing any issues that arise.

At the fifth step, the partnership level, you achieve true “stickiness.” Competitors recognize that it would take a lot of energy, time, and resources to unseat you at the client’s table. Your customers are intimately engaged, the relationships are solid, and the perception of value for the price you charge is believed to be fair.

Undoubtedly, building these types of partnerships is an evolutionary process. The timeline is dependent upon the issues to be addressed at each successive step. In many companies, this can evolve over 18-24 months. In others, with many of the fundamentals covered, it can progress in less than 12 months. The key is in determining where you are on the loyalty ladder and how well you respond to the specific suggestions and recommendations you receive from your customers.

As difficult as it might be to “climb” the ladder of relationship evolution, it is incredibly easy to slip if all your bankable goodwill capital has been diminished. Once a slip occurs, the challenge is to address the root cause of the issues.

Follow the steps of the loyalty ladder to become more than just a vendor and achieve true partnership status: cover the basics, focus on great service, and surpass expectations to surprise and delight your customers.