B2B brands: loyalty suffers from economic pressure

One common finding in our branding and voice of customer surveys over the past two years is that many customers are moving away from their usual practice in sourcing. In the aftermath of the Covid 19 pandemic, its side effects, supply chain disruptions and widespread supply shortages, we observed suppliers across virtually all B2B industries struggling with keeping their and their customers’ business running. While single sourcing is still a common practice among B2B companies, particularly for specialties, the current situation is putting everyone on the spot who has not adopted a parallel strategy or secured fallback options.

Brand loyalty – if we want to name it like that – has its advantages in process consistency from procurement to production. Switching products or suppliers is usually prevented by sometimes considerable barriers, e.g. including accreditation procedures as well as product application and processing tests. But, faced with supply bottlenecks, massively rising prices, plant shutdowns and the threat of scaring away customers, many companies are rethinking their sourcing approach: they are widening their view towards an approach with enough suppliers and products with a sufficient level of quality.

This usually does not change satisfaction with the supplier per se. Everyone is aware of the situation, no one expects miracles, and usually this struggle is observable everywhere with, be it for the same or different products. Furthermore, as long as the supplier supports its customers with best effort and communicates openly, the situation does not affect loyalty indicators such as recommendation rate or Net Promoter Score. Nonetheless, it affects the loyalty itself and customer attitude. Brand loyalty demonstrably decreases, calling into question the validity of these indicators in special circumstances.

This erosion of brand loyalty was also observed in the past, e.g. in the aftermath of the economic crisis in 2009, affecting both B2C and B2B brands. With economic pressure, the costs associated with switching product or supplier is put into perspective. Even strong brands and long-term business relationships are called into question. This opens up the scope for finding acceptable alternative suppliers.

What can you do? You may not be able to stop your customers from looking for other suppliers. But: you can make it really hard for them. Above all, it is about further increasing customer orientation, communicating in a truly customer-oriented way, being transparent and fair when making decisions, showing alternatives – from the own portfolio or from another – in order to keep their business running, about putting the customer first.

Although many shy away from it at the moment, it does make sense to conduct voice of customer surveys, although possibly with a slightly different focus. Right now, asking for your customers’ opinion can be a good idea: how well they feel their supplier is managing the situation, how well they feel informed and supported in this difficult times, what unmet needs and perhaps new requirements they have, and how the supplier could improve the performance or support them further beyond that.

Interested in further information?
Please do not hesitate to contact:
Dr. Helmut Weldle, phone +49 6201 9915 52,
Helmut.Weldle@SchlegelundPartner.de

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