Business Practice Findings, by James Larsen, Ph.D.

Satisfied Business Customers

Research reveals practices to follow and practices to avoid to enhance the satisfaction of business customers.

Fall is the season when we hear from people anxious to help us build good relationships with our business customers: If we buy their calendars, key chains, and Christmas cards and give them away, our customers will prize them and think well of us. But when the holiday season arrives, and we're flooded with loot we don't want from our own suppliers, we begin to question this practice. How many calendars did you throw away this Christmas?

This annual event highlights an uneasiness about customer relationships we all share: Should we do anything, beyond providing a quality product or service, to maintain good relationships with our business customers?

People have opinions on this subject, and the rule seems to be to do as much as you can. But there's a cost. You can't make follow-up calls with existing customers without neglecting the search for new ones. And the money you spend on calendars could go to improve the wages of your hourly employees.

Lance Leuthesser, from California State University at Fullerton, and Ajay Kohli, from the University of Texas at Austin, recently questioned purchasing managers from 454 companies looking for connections between customer satisfaction and relationship behaviors practiced by their suppliers. They wanted to discover practices that impact satisfaction and to learn when it was best to use them. On both counts, they succeeded.

Here's what they learned:

Customer satisfaction improves when suppliers search for ways to increase the value of their products to their business customers . . .

by helping customers find ways to lower the cost of using their products and services,
by helping customers find ways to gain a maximum benefit from their products and services,
by keeping abreast of evolving customer needs and competitive challenges in their businesses, and
by showing an interest in how customers' businesses work.

Customer satisfaction improves when suppliers warn their business customers of impending changes that will affect them, such as changes in . . .

price,
delivery, and
billing.

And changes in the product or service such as . . .

quality, and
after-the-sale service.

Customer satisfaction improves when suppliers reveal what goes on behind the scenes in their own firms, such as manufacturing setbacks, company weaknesses, and practices and policies normally not made public.

Customer satisfaction improves with increasing frequency of contact -- when suppliers contact their business customers more frequently than the average.

Leuthesser and Kohli also learned when these practices have the greatest impact: when relationships are young (with new customers rather than old), and when the products and/or services provided are of low to moderate importance to customers' businesses. They learned it doesn't help to involve many functional areas in making these contacts. It doesn't help to involve different levels within supplier companies in these contacts. And it doesn't help to make these calls in person rather than on the phone.

Best of all, Leuthesser and Kohli learned that satisfied business customers really do steer more business toward suppliers they like, so there's money in satisfied customers. But you already knew that.

Reference: Leuthesser, Lance, and Ajay K. Kohli (1995) Relational Behavior in Business Markets - Implications for Relationship Management. Journal of Business Research, 34 (1995), 221-233.

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