Center for Services Leadership - Building Business-to-Business Relationships with Service
Building Business-to-Business Relationships with Service
It’s common knowledge that service is crucial to creating long-term relationships with your customers, but are there any special rules for business-to-business service providers? Do you treat all customers the same, or do they respond differently to services offerings based on individual perceptions and experience? Until now, research has paid little attention to service design in B2B relationships. But a new piece of research by Dr. Ruth N. Bolton, Vanderbilt University, Amy K. Smith, George Washington University, and Janet Wagner, University of Maryland (“Striking the Right Balance: Designing Service to Enhance Business-to-Business Relationships”) in the Journal of Service Research sheds light on these tough questions and offers advice on how to make the most of your service offerings.
Researchers surveyed 387 business customers of a large telecommunications company, investigating how social and economic categories of service influence customer evaluations of business relationships. The study’s key finding was that not all customers respond to service in the same way, and that organizations must learn to “strike the right balance” between things like employee-delivered services (EDS) and other operational service aspects depending on the customer. The study also underscores the importance of EDS in creating long-term and quality relationships. These, and other key messages from the study, are explored below:
Don’t underestimate the personal touch - Social bonds created through employee delivered services (EDS) were stronger than bonds created through more financial or economic aspects of service (like contract terms or commission rates). Also, social bonds had more of an effect on the customer’s perceived value of that service, which in turn predicts a customer’s behavioral intentions. In other words, good EDS create strong bonds and high value perceptions, which in turn make customers more likely to renew contracts, make recommendations about the service provider, and increase patronage.
It’s not about the money - Some customers derive more value from EDS than from service operations with more explicit monetary benefits. In fact, these customers are willing to make trade-offs and accept enhancements in EDS as compensation for reductions in operational levels of service (like slower repair times). This means business-to-business organizations can compensate for reductions in operational or financial aspects of service by providing higher levels of social resources via EDS.
Beware of blanket policies - The study found that business relationships are complex, customer reaction to change in service operations depends on how these operations are communicated, and optimal communication varies for each customer. The best way to maximize satisfaction and perceived value is to customize service mixes based on customer value perceptions, and the length, nature and quality of the relationship.
Don’t come here, we’ll call you - In an unexpected finding, researchers discovered that company-initiated on-site visits are less valuable than customer-initiated telephone calls. In fact, many customers view on-site visits as distractions or pressure tactics. Examine service policies that require a certain number of on-site visits per year. If these visits aren’t welcome, you may be alienating your customers.
Activate your customers - On-site visits are valued by customers that have a sense of prior perceived value and have a strong, active relationship with company representatives. These are the only group of customers in the study who rated on-site visits positively. Incidentally, these customers also derived higher levels of satisfaction from the same services offered to other survey participants. So, if you want higher satisfaction levels, try to get customers more actively engaged.
Get the most out of your service dollars - You can get more value-add from your service relationships if you tailor your communication to customer needs. Those customers not active in the service relationship derive less value from on-site visits, and may rely less on personal service. Don’t waste resources by paying them unwanted visits, but find ways to get them more active in the service relationship so they become more amenable to on-site visits. On the flip-side, you can get more mileage out of EDS and service operations with customers that have active relationships—their higher satisfaction levels make them easier to please.
Measure more than satisfaction - Satisfaction is necessary but not sufficient. Successfully managing a B2B relationship requires not only maintaining customer satisfaction but also creating value and encouraging behavioral intentions, because these are important influencers in the quality and longevity of a B2B relationship. Customer surveys need to measure satisfaction, perceived value and behavioral intentions to get the best picture of how you’re stacking up.
Knowledge is power - The moral of the story? Don’t expect to apply the same service mix to all your customers and get the same results. Tailor your services to your customers based on the length, quality and nature of the relationship. If you want your customers happy and in it for the long haul, you need to make sure they value your service and are actively engaged with your service representative. On-site visits can do more harm than good if you don’t know the details, so keep tabs on your customers. Create profiles that include current service offerings, perceptions of prior experience, whether or not these customers are receptive to visits, and how well they respond to economic incentives. Making the best out of your B2B service relationship means personalizing your approach.