When all else is equal, how do B2B customers choose between competing suppliers? As we have shown above and in our previous book, Winning Behavior, when competing suppliers offer essentially the same technical skills, experience, solutions, and price, behavior becomes the most important factor in the customer’s selection decision—and this is happening with greater frequency today as competing companies become more and more alike. In one of the epigrams that opened this chapter, Jean-Pierre Jacks of KBR said that today’s market works to render the technologies and services his company and its rivals sell as commodities. Because competing suppliers look very much alike and offer fundamentally the same products, services, and advantages at much the same price, the customer’s final selection decision will not be driven by the question, “Can you do the work?” That question has already been answered. The customer’s key question now is, “Do we want to work with you?” and the answer, positive or negative, will reside in what the customer has observed in each finalist’s behaviors.
Consequently, once you have passed the first hurdles in pursuit of a new business opportunity and are technically, contractually, and financially acceptable to a customer, the greatest potential you have for creating a competitive advantage and winning the work is to out-behave your competitors. Furthermore, as we show in the rest of this book, you should be building that behavioral advantage throughout the entire business development process.
This process begins before you even start contacting customers. It begins with market positioning and communication that influence how potential customers think of you, and it ends with proposal development, presentations, and contract negotiations if you win the work. Before exploring this process further, we discuss the fundamental principles of behavioral differentiation:
1. Behavior that differentiates is, by definition, beyond what people normally experience. We are using the term behavior in its broadest sense: “the manner of conducting oneself.” To behave means “to act, function, or react in a particular way.”² In every interaction customers have with someone in your company, they are experiencing and observing how you conduct yourself. Those interactions include face-to-face meetings, telephone calls, e-mail messages, faxes, advertisements, product installations and service, shipments and deliveries, invoices, executive lunches, sales calls, proposals, product demonstrations, maintenance, and inspections. We refer to these events as touch points.
In each of these touch points, the person representing your company makes behavioral decisions, often unconscious, including how he or she greets customers, listens to them, answers their questions, shows them options, explains something, handles a problem or complaint, addresses a need, gathers information, challenges a perspective, solves a problem, communicates, handles conflict, and tries to influence customers. The choices your people make can reflect courtesy, respect, helpfulness, and professionalism; indifference, apathy, and benign neglect; or disdain, rudeness, and outright hostility.
As a buyer of goods and services, you have no doubt experienced each of these behaviors from time to time. Most of our experiences with sellers are undifferentiated, which means that they behave the way sellers normally behave. Sometimes, however, sellers behave in ways that are noticeably better or worse than what we normally experience. These memorable behaviors can differentiate sellers and lead us to conclude that these sellers are either better to work with or worse. The key point here is that behavior does not differentiate sellers unless it is beyond what we, as buyers, normally experience. Some people and some companies (like Edward Jones, Marshall Field’s, Nordstrom, Ritz-Carlton, Adobe Systems, Harley-Davidson, Volvo Cars, and EMC) have been able to outbehave their competitors so consistently that they have created behavioral differentiation in their markets.
2. Behavior can differentiate both positively and negatively. As Figure 3-2 illustrates, behavior that negatively differentiates (the left wing of the bell curve) has a repulsive effect on customers. When sellers behave so badly that customers take notice, customers will prefer not to buy from that seller again and will choose other suppliers if they can. Moreover, customers who are treated badly sometimes strike back at sellers by advising other customers not to buy from that seller and even actively campaigning against the seller. Conversely, behavior that positively differentiates (the right wing on Figure 3-2) has an attractive effect on customers. It causes customers to prefer to buy from that seller again, so it builds customer loyalty, referrals, and repeat business. In Winning Behavior, we offered numerous examples of positively and negatively differentiated behaviors in a range of industries.
3. Behavioral differentiation applies to employees as well as customers. Companies that excel at external behavioral differentiation are generally also excellent at internal BD. They treat their employees exceptionally well. It stands to reason that employees who are well treated will be more motivated to treat customers well, and this commonsense assumption is reflected in the fact that so many of the companies that excel at behavioral differentiation appear in Fortune’s annual lists of Most Admired Companies and Best Companies to Work For.
Behavioral differentiation is not a customer service gimmick. It arises from shared values about the importance of people, shared attitudes about how people should be treated, and behaviors throughout the organization that reflect these beliefs. Southwest Airlines has been able to sustain its behavioral differentiation for three decades because the company’s leadership is deeply committed to its people as well as its customers. In contrast, Enron collapsed in part because its leaders created a cutthroat culture that devalued people, treating employees and customers as objects to be used rather than assets to be respected and nurtured.
FIGURE 3-2. Behavioral differentiation bell curve. The behaviors customers normally experience from sellers fall into the middle hump of the curve and do not differentiate. Behaviors at each extreme, however, are one or more standard deviations from the norm and will have a differentiated impact on customers, either positively or negatively.
4. You are onstage with your employees and customers all the time. This is a critical lesson. There are no time-outs. Everything you do or say creates a behavioral impression that the stakeholders in your business, including your customers, use to compare you to your competitors and other organizations they have worked with or been part of. Imagine that your company’s business model is complicated and customers are not sure who to call to resolve an issue. A customer named Joe calls your company, is put on hold, and is then transferred to the wrong person. At this touch point, you have just created a negative behavioral impression. Imagine that Joe now calls your key competitor, which has a simpler, easily understandable business model and an excellent process for handling customer inquiries. Joe is sent to the right person, gets the information he needs very quickly, and later receives a follow-up call from the person he spoke to, as well as an invitation to a free seminar the competitor is sponsoring on the matter in question. In this example, your competitor has behaviorally differentiated itself from you and put you at a competitive disadvantage with this particular customer, no matter whom Joe works for in the future—because Joe will take his biases and impressions with him.
Now add the behavioral impressions you create at hundreds or thousands of other customer touch points every day. The plain fact is that your business fortunes will rise or fall based on how your employees behave toward your customers every day and in every interaction. Individual behaviors may not have much overall impact on your business, although sometimes a single negative act can cost you not only a particular contract but the entire business relationship. However, the cumulative impact of your employees’ behavior toward customers will always be reflected in your top- and bottom-line performance. That’s why it’s important to manage how your people behave and to consider behavior an important strategic business asset (or liability, if your employees routinely behave badly or indifferently toward customers).
Goodwill is the only asset that competition cannot undersell or destroy.—Marshall Field
5. Your behavior is the truest expression of your attitudes and beliefs. You are how you behave, and you behave how you are. Many companies claim that customers come first, that they are relationship oriented, that they value people, and so on, but their behavior often does not reflect those ideals. No matter what you say, your behavior communicates what you actually believe. If you say that you’ll stand by your customers, then when they lose a critical shipment of gear assemblies, you will open your plant on an emergency basis and drive through the night to get the parts to customers when they need them. If your senior managers claim that they value customers, then they will spend more of their time with customers than they do in their offices. However, we have known senior managers who made that claim but rarely left their offices. And we’ve seen suppliers who claim they are easy to work with but won’t itemize their invoices or provide information in the form that is easiest for customers to use.
It’s common for people and companies to express lofty ideals, especially during the selling process. After all, everyone wants to make a good impression. But your behavior communicates what you really think of customers, what you consider important, and whether you really want their business. Moreover, the difference between your espoused values and your values in action will almost always be evident to your employees and customers. You may fool all the people some of the time, as Abraham Lincoln said in his debates with rival Stephen A. Douglas, you can even fool some of the people all the time, but you can’t fool all of the people all the time. Invariably, the truth about your attitudes toward customers will be reflected in your behavior, no matter what you claim.
6. To customers, your person currently interacting with them is your company. Some customers may make the distinction between the organization and its representatives, but most won’t. They will consider the treatment they are currently receiving from a company’s employee to be emblematic of how that company treats customers. As they interact with more employees of the same company, they will develop more individualized impressions (as in “Ellen is more responsive and better to work with than John”), and then their cumulative impression of employee behavior will create their institutional impression. The bottom line is that every employee is a symbol of his or her company’s attitudes toward customers, so if you are going to behaviorally differentiate your company, you must find ways to help each employee differentiate himself or herself while interacting with customers.
7. Your behavior is the strongest component in customers’ perceptions of you. As we researched customers’ perceptions of suppliers, we learned that more than 90 percent of these perceptions are based not only on the quality or features of the product or service they buy but on the supplier’s behavior toward them. Common sense would suggest that this applies more in the B2C (business-to-consumer) world than in B2B, but it’s not true. Remember that nearly all of the purchasing executives we surveyed said that supplier behavior absolutely makes a difference in which suppliers they choose to partner with.
8. You can manage behavioral differentiation. A final important lesson about BD is that it can be managed. In fact, if you don’t manage it carefully, it’s not likely to occur. Most people, most of the time, will behave within the vast, bland, undifferentiated middle hump of the bell curve shown in Figure 3-2. To differentiate yourself positively, you must ensure that the people in your company consistently treat customers in ways that are significantly better than the way your competitors treat them. In Winning Behavior, we argued that there are three drivers of BD: leadership, culture, and process.
To create and sustain behavioral differentiation, you need leaders who understand the value and importance of positive BD, a culture that supports and encourages superior behaviors, and processes that both permit and reinforce superior behaviors throughout your day-to-day interactions with customers. The important lesson here is that BD is not the result of serendipity; it is the result of vigorous and sustained leadership of the kind that Horst Schulze brought to Ritz-Carlton, that George Zimmer brought to Men’s Wearhouse, and Herb Kelleher brought to Southwest Airlines.