that can blind them to external developments that could have a powerful effect on the company and its markets. Further, the personal ambitions of leadership team members can stifle alignment and consensus, and limit support for critical initiatives.
There is no better means of overcoming these sources of conflict than executive customers. When the leadership team of a B2B company works directly with executive customers, it becomes more unified and aligned. These customers, especially when gathered together in a group, provide an unimpeachable source of information, insight, and opinion that acts as a filter—quickly dispatching the conflicting views that can splinter a company’s strategic focus or create barriers to change. An executive customer collective provides a single point of reference for the entire leadership team—in contrast to the information overload and endless debates, which can paralyze companies when key decisions and faster and bolder moves are most needed.
We’ve seen first-hand how executive customers deliver this benefit at many of our client companies. At Springer Science+Business Media, a global leader in scientific and professional publishing, customer executives have provided valuable input that enabled the company’s leaders and directors to make important decisions about pricing and business models in an industry that has been buffeted by technological change. Executive customers also provide Springer’s leaders with the clarity and focus they needed to speed market and product planning, and build internal support and performance.
Executive customers have had a similar effect at Wells Fargo, which has quadrupled the number of its programs aimed at engaging top customer decision makers from 5 to 12 in recent years. “Our executive customer programs have been incredible for our leadership team,” explains senior vice president Jeff Tinker. “They continue to validate our challenges, our thinking, and where we should be going. They definitely help keep us aligned to their needs, which in turn ensures greater internal alignment.”
Strategic Insight
Because executive customers are the leaders of their companies, they face many of the same business challenges with which B2B executives grapple. Both must make the same hard decisions involving investment trade-offs, prioritization, budgeting strains, and resource limitations—and they must make them in good time and deliver returns that justify their decisions. Executive customers not only relate to the challenges B2B sellers face, they also have the expertise in the industry to offer tangible strategic insight on how to address them.
When this insight, experience, and knowledge is combined with the internal expertise of a B2B leadership team, it creates a springboard for solving what often seem to be intractable management problems. And of course, the market insights of executive customers, individuals who have the most B2B buying clout, are unparalleled. They bring new perspectives and fresh ideas that give B2B leadership teams the clarity and confidence they need to make bold strategic decisions.
As Lisa Campbell, the general manager at Autodesk’s geospatial business unit attests, “Our customer executive programs have been instrumental in both our business and product planning. They have impacted so many areas of our business and have definitely changed our approach and our results in positive ways.”
Marketing Direction
Since executive customers are leading the industries to which B2B companies are selling, their perspective and input can have an outsized effect on marketing effectiveness. They can be tapped to better understand the market perceptions of a B2B company, its value proposition, and its messaging. They can tell a leadership team how their branding efforts might be off target. Executive customers can offer information regarding what, where, and how to market offerings to maximize a B2B company’s return on investment (ROI).
Sometimes the value of this feedback is instantly apparent. For example, Intesource recently previewed an upcoming marketing campaign for a group of its executive customers. They said it wouldn’t work and told the company why in some detail. “Being a former CMO, it was a tough pill to swallow,” recalls CEO Webster. “So I tested it in a small way. Our executive customers were right. We would have blown more than 20 percent of our total annual marketing budget on the initial campaign, but we adjusted it as they recommended, and the revised campaign yielded huge dividends.”
HCL Technologies received insight from executive customers to develop a global branding program. “Our executive customers provide a mechanism for us to view ourselves through our customers’ eyes,” says CMO Chatterjee. “With this vision, we were able to design much more credible messages that far exceeded our expectations.”
Sales Retention, Penetration, and References
Bonds are formed whenever people come together for a common purpose, and programs designed to engage executive customers are no exception. In fact, these B2B programs are the best and most consistent way to develop strong bonds with key accounts. They lead to increases in account retention and penetration, and they create a pool of references that is a powerful tool for winning new accounts.
The sales benefits are by-products of well-developed executive customer relationships. When a B2B company fully engages an executive customer, the customer becomes invested in the seller’s future; he or she begins to care about the seller and wants to see it do well in the marketplace. It is analogous to a new recruit in the military. As boot camp progresses, the recruit begins to internalize a larger mission—to protect his or her country and the members of the unit. Often this bond becomes so strong that a lifelong connection is formed. The same basic dynamic comes into play in executive customers programs. It is just human nature.
Executive customers can become passionate advocates of B2B sellers, both within their home organizations and the markets at large. “Even in the accounts where we aren’t performing great,” says Oracle’s Dasteel, “when executive customers participate in our engagement programs, they continue to buy, buy more, and even help us convert prospects to customers.”
This isn’t just talk. As you might expect, a high-tech company like Oracle has quantified the returns of their executive customer programs. A review of their top 400 accounts showed significant differences between customers involved in relationship programs and those who are not (see Exhibit 3-1). Oracle hasn’t shared the numbers, but we know that each percentage point of improvement equates to increases in revenue growth and profitability. And much of this growth is in existing accounts, where margins are almost always higher because they incur lower sales and on-boarding costs.
Exhibit 3-1: Oracle’s Return on Customer Executive Programs
Our own research, conducted in more than 70 client companies, reveals substantially higher percentages across industries. For instance, we found the percentage of decision-maker customers “willing to recommend” increased by more than 270 percent when they participate in an executive engagement program (see Exhibit 3-2).
Exhibit 3-2: Results of Executive Customer Programs: Geehan Group Clients
Anecdotal evidence also supports these figures:
At Intesource, the growth in accounts that participated in executive customer programs rose 100 percent in a two-year period. Referrals also rose: one customer referred and helped secure three new customers in a six-month timeframe, a substantial number in a company that had 30 customers.
At HCL Technologies, executive customer programs contributed to a customer retention rate above 94 percent. More than 70 percent of sales growth over a four-year period came from existing customers who were involved in these programs. Since the launch of HCL’s Executive Customer Council, they have not lost one of their participating customers.