Cultivating Loyalty at the C-Suite

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Drive business and build long-term relationships by cultivating loyalty with C-level executives.

"Selling to senior-level executives requires a different set of skills and strategies from the more traditional departmental-level transactional sale," write Stephen J. Bistritz, Ed.D, and Nicholas A.C. Read in Selling to the C-Suite: What Every Executive Want You to Know About Successfully Selling to the Top. In this excerpt from Selling to the C-Suite Bistritz and Read explain how to cultivate loyalty with C-level executives:

Client loyalty can be achieved only if relationships are consistently built and nurtured. People at the three levels of an organization (operations, middle management, and executive) have different perspectives on you, your company, and your company's solutions.

As was pointed out in Chapter 5, "How to Establish Credibility at the Executive Level," people at the operations level focus on getting the lowest price and the steepest discounts. They also want to hear the technical details of your solution so that they can compare you with your competitors and select the lowest price. Nowhere in the conversation is there any mention of value or loyalty.

At the middle management level of the organization, people want to understand how your solution can be integrated into their organization. But while their questions will be broader in nature than those posed at the operations level, they still don't focus on value and loyalty. It's only at the executive level of the organization that the focus is on value and that loyalty can be cultivated. Executives understand how value is created and delivered, and they fully understand the true value of loyalty. Loyal relationships are important at the executive level-and most executives are open to the cultivation of those types of relationships.

In his book The Loyalty Effect: The Hidden Force behind Growth, Profits and Lasting Value (Boston: Harvard Business Press, 2001), Bain & Co. director Frederick F. Reichheld uses examples from State Farm and Toyota/Lexus to illustrate that loyal clients lead to substantial profitability over the long term.

According to Reicheld:

One common barrier to better loyalty and higher productivity is the fact that a lot of business executives, and virtually all accounting departments, treat income and outlays as if they occurred in separate worlds. The truth is, revenues and costs are inextricably linked, and decisions that focus on one or the other-as opposed to both-often misfire.

Companies cannot succeed or grow unless they can serve their customers with a better value proposition than the competition. Measuring customer and employee loyalty can accurately gauge the weaknesses in a company's value proposition and help to prescribe a cure.

While every loyalty leader's strategy is unique, all of them build on the following eight elements:

  1. Building a superior customer value proposition
  2. Finding the right customers
  3. Earning customer loyalty
  4. Finding the right employees
  5. Earning employee loyalty
  6. Gaining cost advantage through superior productivity
  7. Finding the right [capital sources] and
  8. Earning [their] loyalty.

Reichheld found that those clients who give greater loyalty typically generate more profit over the lifetime of their patronage. We agree. Increased profitability from customer retention occurs because:

  • Acquisition costs are incurred only at the beginning, and are amortized over the life of the relationship.
  • Long-term customers provide annuities and are less sensitive to annual price increases, within reason.
  • As trust is developed, referrals follow.
  • Purchases of add-on products and upgrades are a natural extension over time.
  • Regular customers require less education, and repeat exposure allows the seller to build expertise with each client.

But as our own research consistently found, typically there is a gap between the value you deliver and what the executives think you delivered. In Chapter 5, "How to Establish Credibility at the Executive Level," we observed that this could happen because, although the supplier has done an outstanding job, nobody bothers to tell the executive about it!

Having coached the world's largest companies, it never fails to surprise us how businesses that are so smart in most things can be so cavalier in how they look after their customer relationship management. There's a certain lemming like behavior we see, with companies calling their salespeople "account managers" without giving much thought to what "account" and "manager" really mean. When these companies weight the sales commissions and bonuses of account managers to favor the pursuit and capture of new customers, the account managers adopt a sell-and-run mentality. By default, the customer relationship is transferred to the delivery team, whose members are usually technically proficient, but lacking in sales and service acumen.

Everybody thinks that the customer is being "account managed" because the account manager's job title suggests it. But the way the account managers are rewarded drives hunter behavior and is at odds with the mandate implied in the job title. At the end of the day, you get the behavior that you measure and reward. When customers vote with their feet, it is often to the complete astonishment of the members of the vendor's management team, who seldom recognize that their own dysfunction caused the migration and routinely slash their prices as an incentive to win the customer back.

Client executives report a strong attraction for the companies that recruit a different breed of person to farm the account (hunters and farmers are entirely different breeds, as any psychometric profile will immediately demonstrate), and then remunerate them for displaying appropriate behavior, then track and communicate the value delivered. They also indicate a higher interest in remaining loyal if the recent positive experiences remain consistent over time.

If the recent experience exceeds expectations, customer loyalty is likely to be high. Loyalty can also be high even with poor performance if the expectations were originally set low; if switching costs are high; if there are no alternatives; if the social, cultural, or ethnic relationship is not easily replaced; or if there are other lock-ins such as contractual terms, shared technology, economic codependence, or a geographical imperative to retain the same suppliers even though they do only an average job.

As shown earlier in this book, senior executives typically get involved in the buying cycle for major decisions at two specific times: early in the buying process to set the overall project strategy, and late in the buying cycle to measure the results and understand the value that the solution provider has delivered to them and their company. At the second point at which they get involved, senior executives in the client organization look to the salesperson to provide them with regular input on the value that the solution provider has created and delivered to their organization. By providing that information, the salesperson is in a position to clearly describe and communicate value-value that she can differentiate from that provided by her competitors and use to develop loyalty.

That sense of loyalty is best achieved at the executive level because this is where you can obtain the best leverage. Senior executives have a companywide view of the organization and will typically ask questions that are focused on value and the return on investment of your solution, whereas lower-level executives may be focused only on price and discounts.

In his book PowerSkills: Building Top Level Relationships for Bottom-Line Results (Nimbus Press, 2000), James Masciarelli talks about the competitive advantage of cultivating loyal customers:

[Today], more than ever, capital and products appear to be far less important for developing a sustainable competitive advantage than cultivating loyal customers and employees.

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About the Authors: Stephen J. Bistritz, Ed.D,, is president of SellXL; Nicholas A.C. Read is president of SalesLabs.

Excerpt extracted from Selling to the C-Suite by Nicholas A.C. Read and Stephen J. Bistritz, Ed.D. Copyright 2010, McGraw-Hill

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