Duct Tape Marketing

By Chris Stiehl

I have always been intrigued by company loyalty programs. I have noticed that even in my own behavior, loyalty programs do influence where I go and what I will buy, even to the point of the credit card I use. Somehow, it seems almost too good to be true to buy a ticket on Southwest Airlines, getting one step closer to a “free” ticket, using an American Airlines credit card, getting one step closer to a “free” ticket on that airline. Similar behavior and thinking causes me to purchase all of my office supplies from one vendor, including computers. That vendor gives me a 10% rebate monthly on my total purchases. That makes my next month’s supplies seem to be greatly discounted when I use their rebate coupon. It seems to me as if these loyalty programs achieve what they were designed to achieve: they cause me to make repeated purchases with the company involved because of the program – even if other objective criteria, such as price, might cause me to go elsewhere without the loyalty program.

Does the same type of loyalty extend to B2B engagements? I am not convinced. I have a client who makes durable goods, hardware for production equipment. When I have done “Voice of the Customer” interviews for this client and others like this client, a different type of behavior has emerged: loyalty to the salesperson!  For these customers, the salesperson is the key. Much of the hardware that is sold is viewed as a commodity. There are several manufacturers in this business and their products are viewed as competitive. This fact creates a lot of pricing pressure. The customers in this market can differentiate the different products a little based upon customer service and product quality, but not enough to generate true “puppy” loyalty to the company. However, these customers could articulate a huge difference in salespeople!

Each of the customers had favorite salespeople. Why? The characteristics of the salesperson that were key were easy to identify: knowledge of the customer’s business and processes, knowledge of the industry, knowledge of the salesperson’s own products, and a long-term relationship built primarily on trust. All of these attributes were assigned to the salesperson, not to the company! When the salesperson changed brands, the customers often followed. The trust factor was key, despite loyalty programs which were very similar to the type described in the opening paragraph for dealing with the public at large.

Companies have tried formal loyalty programs, getting customers to agree to special service and pricing arrangements. In exchange, the customer gains access to the latest available technology and products as well as the opportunity to test new products and ideas. For buyers at the corporate level, such agreements make sense and create the opportunity for the vending company to create loyalty beyond the trusted salesperson. This strategy shows promise for the future. The issue then becomes, where are the buying decisions made? If they are made centrally, company to company loyalty programs may have a chance to succeed. If the decisions are made locally, the trust factor for the salesperson becomes the key attribute, even to the extent that some pricing differences are overcome.

When my client wanted to enter a new market, they would hire an experienced and trusted salesperson from a competitor to penetrate the segment. This trusted salesperson could get an audience with the customers in that segment and could be trusted by them to recommend products and services that would work, since he or she would know their business and industry. This strategy worked well for penetrating a market, but the strategy was self-defeating in the long run: the loyalty was to the salesperson, not the vending company and its products and services. When I interviewed such salespeople, they told me that their most important attribute was their ability to listen to the customer. Listening was the key to selling.

How does the vending company translate this loyalty to the company and its products, rather than the salesperson? The successful strategies involve creating incentives like the airlines and office supply stores. Give the customers a good reason to continue despite a new salesperson. However, just as occurs with those programs, the loyalty programs have to be designed to not only create loyalty, but also to avoid dissatisfaction. How does one feel about the airlines loyalty program if the “free” seats are sold out? Dissatisfaction is created in that case, not loyalty. The customer is slapped in the face, not rewarded for loyalty.

Are business customers as loyal as puppies? I think not! However, creative loyalty programs that can add value to the customer have a good chance of translating the loyalty that salespeople earn to the company and its products and services.