Are you suffering deep dependence with your B2B customers?
In the next three blogs we highlight what happens when you suffer deep dependence on your customers and what affects it has on your company – The Trust Ladder can show you how to improve your value.
Signs that you suffer Deep Dependence:
- You suffer deep dependence on a core group of customers for 80% of your business
- It feels as if they are holding you to ransom
- The relationship is a one way street
- It continuously erodes your margins and customer profitability
How do you break out of this negative spiral, yet keep the customer onboard and push for profit? The Trust Ladder shows you where your supplier/customer relationship sits and how to manage the relationship.
Using The Trust Ladder to identify deep dependence and know where you stand:
The Trust Ladder outlines the levels of trust in a supplier/customer relationship where you can identify where your relationship sits, you can then decide whether to keep it where is it and maximise the relationship to its full potential, or you can take steps to move it up the trust ladder. Each approach has a different journey that we will explain over the next three blogs.
As a supplier with consolidated or consolidating customers, it probably did not start this way. The sense of working together for mutual benefit which brought you together has dissipated over time. Now the customer seems to be the one in control, letting you know what they wanted on value and volume. This is a common point where many suppliers get stuck within a cycle of holding on to business with decreasing levels of value, or holding it any cost as they work on internal cost savings and efficiencies.
How to manage deep dependence:
Deep Dependence in itself is not all bad news and sits near the top of the trust ladder. It can act as the springboard to strategic development and co-working; it can offer operating efficiencies through economies of scale and push suppliers to improve their commercial skills.
The downside is that it can also lead to adversarial relationships and never get you to the top of the trust ladder; it can force customer service resources into fire-fighting activities, and towards over dependency as one division can mask an interdependent relationship in another.
What you can do to manage deep dependence
Positive and healthy B2B customer relationships revolve around the level of Trust, interdependence and equitability and their relative balance.
The way to manage deep dependence lies in developing a B2B CM experience that triggers trust, interdependence, and equitability together. Any plans to change deep dependence should take the long-view and be based on customer insight, market knowledge and organisational strategy.
They should include:
- Effective stakeholder mapping to identify all the interested parties, mapped to their importance within the organisation.
- Contact strategy development and implementation based on risk sharing and mutual benefits.
- Pro-active development of joint business plans
Identifying your place on the trust ladder is done through an assessment factoring in your company’s market knowledge, organisational strategy and your customer insight. Once you know your company’s level of trust, you can begin to use the trust ladder to your benefit.
Have a view on this? Tweet to @MarkHollyoake or // Tweet to @CustomerAttune//
He is an expert in B2B Customer Experience and Customer Management. This includes CM strategy development; execution of improvement plans (incl. organisational modelling for customer management); programme design; and partnership & alliance development.
Mark's applied work across FMCG, industrials, medical devices, financial services, business services and construction has led to organisations making, significant improvements to their customer management. A large focus of this work has been moving organisations up the Trust Ladder to enable them to benefit from reduced cost to serve, while continuing to innovate and deliver mutual value.
Mark is a Fellow of the Chartered Institute of Marketing and Member of the Institute of Sales and Marketing Management. He holds an MBA in strategy from Henley Business School.
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