Product quality was excellent but differentiation was lacking.
Armed with Customer Insights, a Strategex client grew their wallet share from 75% to 100%, increasing revenue from their top customer from $43M to $57M – in 6 months.
Background
When a B2B equipment manufacturer approached Strategex, they were under pressure to improve profitability, particularly in their EU business where op profit was hovering at only 10%. The top 25% of their customers generated 88% of revenue. The bottom 50% of customers only represented 4% of sales.
However, all customers were treated equally – there was no difference in the CX strategy between their multi-million-dollar accounts versus their 25K accounts. As part of an 80/20 Profit & Growth implementation, a Customer Insights study was used to understand the most profitable accounts' needs, perceptions, and customer experience.
Customer Insights
The Customer Insights study analyzed the state of customer relationships and their impact on the bottom line. The Strategex team performed in-depth interviews with 25 top accounts. We analyzed findings from our research of end-users and distributors, primarily in product roles.
Competitors were fast-approaching the same level of quality, diminishing the price/value proposition.
Over 40% of customers reported lost business opportunities in the past 12 months.
Customers reported that our client was not easy to do business with.
At the # 1 account, there had been no customer engagement for over a year.
Competitors were meeting with the customer on a quarterly basis.
Findings
At top accounts, our client's NPS was a dismal 0. We sought to report why and present actionable solutions.
The customer experience scores were lowest in engagement and equipment features, functionality, and technology. The client’s innovation efforts were falling dangerously behind in digital technology and predictive software. Both were required to secure future business.
Our lead time and delivery findings were particularly eye-opening for our client. We uncovered they were losing business to competitors who were transparent and communicative. As the pandemic wreaked havoc on supply chains, it came as no surprise that our client's lead times were exceptionally long. However, one of our client's top customers reported long lead times were not the actual source of tension. Rather, it was the fact that our client overpromised on ship dates and kept them in the dark about delays. The top customer stated he could live with long lead times if our client simply communicated tenable, reliable ship dates and provided prompt notification if those dates could not be met.
"I haven’t seen anyone in over two years. They need to start showing some engagement activities and enthusiasm for us. If they were more active in their customer care and support, they could become our number one supplier.”
Strategex CX Recommendations
New Product Development
We helped our client establish a co-development strategy with their top account. We assembled a dedicated NPD team to work with the customer’s R&D/innovation staff. Using our findings, the team launched a design improvement roadmap.
Customer Engagement
It was essential to increase customer engagement. Per our recommendations, our client increased their key account management team from one to five.
Software Quality
We recommended they improve software quality with a strong QA process. Our client hired new software development talent with complementary skillsets.
Results
With an in-depth understanding of its top accounts' needs, our client dedicated a five-person support team to the account. They made improvements to their operations and outreach, careful to deliver ample communication and immediate notification of shipping delays.
At the time of the study, our client had 75% of its top customer’s business. In less than a year, their customer saw a dramatic improvement in delivery reliability and communication. Not only did wallet share grow to 100%, revenue from this account increased by $14M.
