12/17/07

‘Customer Affinity’ New Measure of B2B Marketing Effectiveness

Despite an increased focus on customer engagement, most B2B technology companies continue to fall far short of meeting customer expectations and commitments, according to the results of a new research initiative by the Chief Marketing Officers Council.

Most technology vendors badly overestimate their effectiveness in addressing customer needs, while a majority of customers feel ignored and trapped in vendor relationships that are marred by broken promises, according to the research.

The “Profitability from Customer Affinity” study, which uncovers major disconnects between vendors and customers, argues for a new measure of marketing performance, called customer affinity, which incorporates critical elements of the customer lifecycle experience.

Some 99% of customers surveyed said they would either scale back or terminate relationships with vendors who fail to build customer trust. Moreover, less than 7% of customers said their vendors are extremely well-aligned with their needs.

Among key findings of the new study:

  • 56% of vendors perceive themselves as being extremely customer-centric, but only 12% of customers agree.

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  • An overwhelming majority of vendors - 85% - are convinced that they are getting better at responding to customer needs, but 45% of customers disagree.
  • More than half of customers surveyed described their relationships with vendors as “dependent and captive,” “struggling for common ground,” or “combative and adversarial.” When asked to describe their relationships with the channel, 45% of customers surveyed evaluated their channel relationships similarly.

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  • More than 30% of customer respondents said they would terminate relationships with companies that fail to gain their trust; 62% would scale back existing engagements; and 7% would no longer consider the vendor for future business.
  • Co-innovation with customers is vital to building customer affinity: Nearly six out of 10 customers say co-innovation is extremely or very important, with another 30% agreeing that it is at least somewhat important. Customer responses indicated that collaborative, two-way conversations - followed by continuous improvement - build customer affinity.

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  • Vendors seem to understand that channel partners truly are partners in their success, and that going to market effectively with the channel is critical to maximizing their value to customers. Yet, only 8% of vendor marketing respondents said they do an extremely good job of teaming with the channel to build stronger customer affinity.

The survey’s findings indicate that customer affinity - not brand awareness - is the most accurate predictor of customers’ purchasing intentions and decisions, the CMO Council found:

  • Customers say brand awareness and existing relationships - often thought to be leading factors in purchasing decisions - have little bearing on their decision to do business with a vendor or channel partner.

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  • Instead, customer decisions are influenced by competence, quality service and support, and a sense of true commitment from vendors -yet vendors continue to direct budget toward initiatives that are ineffective at building customer affinity, the study argues.

“Marketing has a critical responsibility to define and build customer-centric businesses,” said Donovan Neale-May, executive director of the CMO Council. “Based on the findings of this study, we have a long way to go. To be more successful, marketers should adopt new performance measurements, like Customer Affinity, that are actually tied to the customer experience. We believe traditional brand metrics, taken by themselves, may actually reinforce ineffective behavior and practices.”

The report coincides with the CMO Council’s release of the first annual Customer Affinity Index of IT brands, led this year by Network Appliance, followed by Juniper Networks, InterSystems and Polycom:

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About the study: The study was conducted by the CMO Council and is based on surveys and interviews with more than 1,000 leading B2B technology buyers, IT marketing and customer relationship executives, and their channel partners. The Customer Affinity Index as developed in conjunction with Dr. V. Kumar, professor and executive director of the ING Center for Financial Services at the University of Connecticut, and Dr. Girish Ramani, assistant professor of Marketing at Drexel University’s LeBow College of Business.

http://www.marketingcharts.com/direct/cmo-council-customer-affinity-new-measure-of-b2b-marketing-effectiveness-2765/?camp=newsletter&src=mc&type=textlink

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