Why customer delight doesn’t always equal customer loyalty
B2B buyers are loyal (or disloyal) for different reasons, explains Andrew Dalglish, director of Circle Research, and brands should take note of their motivating factors
Customer loyalty is critical to any business. This may be obvious but it’s true, particularly for B2B companies who, unlike their consumer-focused counterparts, have a relatively limited pool of buyers to target.
This truism sees many B2B companies striving to satisfy and even delight customers. After all, logic goes that if customers are happy they won’t feel the need to change supplier – satisfaction leads inexorably to loyalty. But is this actually the case?
Here at Circle we recently surveyed several thousand B2B buyers to explore what really determined their levels of loyalty to suppliers. We found that in most B2B markets there are four distinct customer segments, each of which are loyal for very different reasons.
The ‘functionally loyal’ will stick with their incumbent supplier because they offer a tangible advantage when compared to competitors. This is usually in one of four areas – product/service quality, customer service, ease of doing business, or price. The ‘emotionally loyal’ value functional performance too, but what shapes their opinion are things like trust, personal relationships and brand affinity.
With the other two segments, although there may be moral and long-term sustainability reasons to delight, it’s not a commercial necessity. The ‘locked in’ are loyal not because they want to be, but because they have to be. Either change isn’t an option or it’s simply unpalatable – the cost, effort or risk of moving supplier is just too high.
The ‘disengaged’ are loyal because they don’t care enough not to be, which could be because the supplier community pushes them towards inertia. All suppliers are seen by this group as largely identical so there’s little perceived benefit in switching – or it could be that they’re inherently inert.
So rather than simply measuring satisfaction across the customer base and then developing action plans to improve it, be sure to identify the prevalence of different ‘loyalty segments’ before deciding what actions, if any, to take.