It’s one thing winning a client, but the real value for B2B businesses is in maintaining and growing long-term relationships, and that’s where customer experience (CX) is both overlooked and invaluable. CGA’s Chief Delivery Officer, Carla Hall, explains.
The B2B space is a very particular market, with its own unique challenges and opportunities, especially when it comes to client relationship management. That’s not simply because of the (typically) long duration of those relationships, but also because B2B clients have their own customers to think about as well, creating an additional layer of consideration for suppliers. In this article we wanted to look at how shifting from the traditional ways of managing customer relationships in the B2B sector can have a profound impact on commercial success.
Falling into a pattern
As specialists in B2B customer experience and transformation, over the years we’ve observed a general trend for a few very long contracts between B2B organisations and their clients, which are usually of very high value. That makes it especially important to retain those contracts because the impact of losing one is significant.
However, while a lot of focus seems to go into winning the work in the initial instance, that investment is often not sustained across the lifetime of the relationship – not through any ill will, but simply because that’s not the way things have been done. Often, communication will be focused on ‘delivering the contract’ with no consideration for adding value to the service until around six months before it is up for renewal.
It’s understandable why that pattern frequently develops, especially if companies have grown over time and perhaps a relationship that was once nurtured by a founder has become managed by a team. However, we also know from proven practice that when you invest in maintaining the relationship over the course of a contract, rather than simply at the beginning and the end, the success and retention rates tend to be much higher.
The value of flexibility
B2B businesses often focus on ‘managing to the contract’ when it comes to long-term relationships, by which they mean that the service they provided met the specifications of the original agreement – they did what it said on the tin, so to speak. That’s a reasonable position to take in many ways, except that it doesn’t really allow for the realities of life, business, and the passage of time.
Often, B2B relationships might be five, 10, or 20 years long, so what was agreed at the outset is unlikely to be entirely fit for purpose across the lifespan of the contract. While it might be beyond criticism to ‘manage to the contract’, that doesn’t mean that it’s going to result in the best outcomes, relationship, or indeed contract renewal down the line.
If the approach is simply to keep repeating the same process for a decade, more often than not the client sees a deterioration in the level of support and engagement over time. Perhaps you have delivered exactly what was promised, but the commercial and economic environment alters, staff members change, and so forth – so the proposition is no longer as effective as it once was. In some cases, what’s delivered isn’t quite what was expected because so much effort went into winning the contract up front that the long-term management was left to assumption and chance. Either way, it can result in a lot of frustration for both parties because not only is it unrealistic to expect nothing to change over long periods of time – it would also be a shame if they didn’t, because with change comes new opportunities.
So, the question is, if you’re looking at a long-term agreement, how do you manage that relationship over time? It begins with asking what it means to support the client, and shifting to a mindset that focuses on Contract Lifecycle Management. In short, it means taking an approach that considers the lifetime of your engagement with the client with the openness to consider how you flex to client needs, maintaining communications to understand those changing requirements, and developing new ideas to enable you to deliver.
Contract Lifecycle Management
When you get client relationship management right across the tenure of the contract, it has a myriad of benefits, from the expected outcomes like driving loyalty and referrals to those that extend beyond the initial contract that’s in place.
At CGA we spend a lot of time talking to B2B clients about Contract Lifecycle Management, which starts before you bring a client on board. Contract Lifecycle Management is a proprietary process and toolkit designed to up-skill the capabilities of a B2B team, support the cultural shift required to do that, and provide resources for the best practice processes.
The objective is to improve contract performance and client relationships, resulting in higher renewal rates and more profitable contracts. The emphasis is on adding value and considering the relationship in the round, and when you take that approach, conversations become less about price and more about value. That’s important because, on balance, B2B businesses are very price sensitive, so there’s a danger of entering into a race to the bottom if the most competitive feature of your offering is cost.
A practical approach to improved customer relationships
As a case in point, we worked with one client to implement a lifecycle management approach that really considered accountability, competency and ensuring that the right processes were in place to optimise the client experience and retain the relationship over the long term. Having come to us because longstanding clients were expressing frustration at the way the relationship was managed, the goal was to make sure they were delivering to the promise rather than to the contract alone.
One client had said: “A lot of our contract discussions are based on renewals, I think, and it’s always a critical moment in the discussion. If we lived in an environment where there was competition and we could take our business elsewhere, then we would get improvements and refinements and not just in the actual quality of the service, but also in the pricing and maybe some innovation.”
This is a story we hear time and again – the good news is that it’s also a challenge with solutions for businesses that are willing to explore them. We worked with this client to lay out a four-step approach spanning financial relationships, technical delivery, relevant value and innovation areas, and a retention strategy through our Contract Lifecycle Management approach. The result was an informed and sustainable solution for client retention as well as improved profitability.
Delivering to your promise
If you want to take a Contract Lifecycle Management approach, a good starting point is to ask yourself:
- What do we promise?
- How do we deliver that promise?
Crucially, it’s important to consider the connection points with the client across your relationship, right down to how you engage with them. Rather than having meetings specifically to ask what’s changed, for example, taking a more conversational approach focused on listening, understanding, and empathy may mean you are in a position to provide solutions that no one else can.
A favourite question for us is: ‘What’s going to keep you awake at night over the next 18 months?’ People make time for that conversation, and that’s the starting point for a relationship based on trust.
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