b2b – Page 7 – Deep-Insight

B2Bullying

Management Today has an interesting article about bullying in this month’s edition. No, not online bullying or workplace bullying, but B2Bullying. B2Bullying is what happens when a (typically large) buyer makes continued unreasonable demands on a (typically small) supplier. In many cases, the buyer represents a significant proportion of the supplier’s business.

Case Study

The scenario is this:

“Our biggest customer is a bully. It never pays us on time – every piece of work we do for it has to be followed by a flurry of emails and phone calls demanding payment – and the boss of the company is rude and arrogant. If I had my way, I’d tell them to shove it, but the work we do for them represents 35% of our sales. Help!”

Jeremy Bullmore dispenses sound management advice about how to handle such a client. He is Management Toady’s agony aunt and a former chairman of J Walter Thompson and his response is solid and pragmatic, but it begs the wider question about what a typical or even excellent buyer-supplier relationship should look like.

The Deep-Insight View

Here’s our take on the subject.

In the business-to-business (B2B) world, long-term relationships can only be built on a foundation of mutual trust and cooperation. Academics talk about exchange theory (think of an exchange between two equal partners rather than a traditional buyer-seller model) and equity theory (the exchange has to be seen to be fair and equitable by both parties involved in the transaction. Indeed, a long-term relationship is based on a series of such fair and equitable exchanges.

That’s not to say that from time to time one or other party gets the short end of the stick on a particular transaction. However it evens out in the long run and both parties feel pretty comfortable with a bit of give and take. You scratch my back and I’ll scratch yours. Or even: “You need to help me out this time but don’t worry, I’ll make it up to you later.”

Long-term relationships built upon such transactions. But if one party (often the larger party and typically the buyer) starts to B2Bully his way or continues to usurp his position of power, the relationship is doomed. It will eventually fizzle out. If you read between the lines – Jeremy is saying that this is a one-sided arrangement. It’s not a true partnership. The supplier needs to lay down some ground rules for the buyer if in a position to do so. If not, the supplier should grin and bear it for the moment but work towards a dissolution of the so-called partnership when the timing is right. If your biggest customer is a bully, think about getting out of the relationship – at a time that suits you.

What does ‘Good’ look like?

On the other hand, an excellent buyer-supplier relationship is one that will stand the test of time. Such partnerships are based on those principles of exchange and equity. You’ll recognise the signs. The parties in the relationship trust each other implicitly. They are committed to helping each other. Both parties collaborate on joint initiatives. They innovate together. Rarely do they wait for RFPs to be issued – they bring ideas to each other. They have an emotional bond that makes it extremely difficult for a competitor to get a look-in.

Customer Relationship Quality

So, what’s the quality of your relationship with your top clients? If you’re unsure or if you think your biggest customer is a bully, why not contact us today and we’ll check out your Customer Relationship Quality (CRQ) for you.

Peter Lavers is a director of Customer Attuned, Brand Ambassadors for Deep-Insight.

Trusted Relationships

At Deep-Insight, I spend a lot of my time trying to help our clients figure out how to build strong trusted relationships with their B2B (Business-to-Business) customers. Trust is all about honesty, fairness and acting with integrity. It’s one of the most basic elements of human interaction. And perhaps the most basic element of good account management. As they say:

“People buy from People” and
“You don’t buy from a person you don’t trust”

B2B is all about establishing strong people-to-people relationships. Trusted, committed relationships. And yet, here’s an interesting statistic. When we look at the correlations* between the various drivers of customer retention in our Customer Relationship Quality (CRQ™) methodology, guess what the strongest correlation is?

It’s between Service Performance and Trust.

When I first noticed this correlation, I was somewhat puzzled. It didn’t surprise me that Trust was strongly correlated with Service Performance. But why is it the strongest link of any of the elements in our model? Why does the level of service have such a strong impact on the degree of trust between the client and a service provider?

The Importance of Consistently Good Service

The answer is actually straightforward, when you think about it in real life. Many – no, most – of our clients operate complex businesses where their interaction with customers is based on a complex (and sometimes bewildering) array of services. Even manufacturing companies are heavily service-orientated these days. As an account manager or account director, you might like to spend your time having meaningful conversations with senior executives about where their business is going and how you can help. That is important but the reality of day-to-day interaction is often explaining why that critical piece of machinery has not been delivered on time, or why the network that manages their business has fallen over again.

When the basic delivery of service is a constant issue and source of frustration for customers, account managers find the trust built up with key client contacts erodes quickly. Responses like “I’ll sort that out for you” are fine, as long as the service issue really is sorted out. But ongoing service problems can be notoriously problematic. This is particularly true when processes or technology need to be changed in order to fix what’s broken. It’s frustrating for the client and it’s frustrating for the account manager but, most important of all, it’s damaging to the long-term relationship. Ultimately the revenue stream from that customer will erode.

Trusted relationships are based on consistently good service delivery. That’s what the data says. And that’s why getting the service right (and right first time) is so critical.

* Correlations based on tens of thousands of customer responses over more than a decade. Service – Trust R-Squared = 0.74

Our Biggest Customer Is A Bully. Help!