Business Journal

Strategies to Save Big B2B Customers in Steel Industry

Strategies to Save Big B2B Customers in Steel Industry
by Jeff Durr and Bailey Nelson

Story Highlights

  • Steel suppliers need to deliver more than operational excellence
  • Large steel customers are less engaged than smaller customers
  • Empowering account executives can improve business outcomes

Many leaders in the U.S. steel industry are optimistic about the future, with recent promises of as much as $1 trillion in infrastructure spending over the next decade, favorable trade cases and an increase in "made in America" sentiment.

In fact, a recent New York Times front-page article said the steel industry now sees a "new dawn" and that "stock prices -- and spirits -- have been on the rise."

However, this potentially rosy outlook doesn't mean business-to-business (B2B) steel suppliers can sit back and watch their margins expand. Now more than ever, B2B leaders in the steel industry need to proactively ensure their business is winning new customers in a changing and competitive marketplace.

After decades of research covering millions of customers, Gallup has discovered powerful insights and best practices for B2B leaders seeking to support a customer-centric organization. For steel suppliers, Gallup's in-depth interviews with the industry's customers reveal what they want most and can help leaders promote real customer growth.

Here are three key takeaways from Gallup's research with B2B steel suppliers and customers:

  1. Steel suppliers need to deliver more than operational excellence.

    For any steel supplier, operational excellence -- including providing exceptional quality and on-time delivery -- is an important driver of organizational outcomes. However, modern steel customers expect far more than the basics: Commercial excellence is increasingly critical for fostering meaningful relationships with customers.

    Demonstrating commercial excellence means showing a deep interest in steel customers' businesses and offerings. These customers want suppliers that have a robust understanding of the economics of the industry and provide tailored offerings and services. According to one steel customer, "The best vendors know my business. … They ask how changes are going to affect my business and take that into account."

    To deliver value for each customer -- from car manufacturers to construction companies -- steel companies need to understand the competitive pressures customers face, how they aim to increase revenue and how they satisfy their consumers.

    Gallup finds that steel customers want their firms to be more proactive in all aspects of B2B relationships.

    Steel customers have more positive views of companies that embrace commercial excellence initiatives -- and they believe that investing in commercial excellence generates growth for steel suppliers. Ultimately, steel customers give their business to companies that are motivated to identify and fulfill their needs.

    To successfully enact their commercial excellence strategy, steel company leaders should strive to meet the needs of all key customer stakeholders. For example, an automotive company's procurement manager and environmental efficiency department often have vastly different priorities. It's up to suppliers to map these disparate needs and provide solutions that best satisfy them all.

  2. Compared with smaller customers, large steel customers are less engaged.

    Unfortunately, a steel supplier's large customers are often its least engaged ones. A recent analysis showed that just 16% of one steel supplier's priority customers were fully engaged. Just for comparison, a Gallup study of B2B companies across industries found that 29% of customers were fully engaged. Since customer engagement drives critical outcomes such as revenue and customer retention, very low engagement among large customers is an ominous trend for steel company leaders.

    Engagement may be lacking among large customers due to the highly complex and dynamic nature of these client relationships. Gallup finds that when a major contract is in place, steel customers have higher expectations for the relationship; in fact, they don't award positive feedback for basic expectations such as product quality.

    Big steel customers expect their suppliers to do more -- to consistently go the extra mile to discover and accommodate their unique business challenges. According to one customer, "They need to realize we are not price buyers and we want long-term relationships. We want it more like a marriage."

    For B2B leaders, this underscores the importance of a data-driven understanding of customers' most pressing needs -- and cutting-edge predictive analytics to forecast how those needs change over time. With major contracts, which go hand in hand with higher customer expectations, steel suppliers can better engage customers when they have a thorough understanding of customers' business demands.

    This holds true for smaller steel customers: To meet customer expectations, steel company leaders need analytics expertise to discover and predict customers' wants and needs. While steel customers share some common needs, one size does not fit all -- and steel suppliers need to deliver customized service to optimize customer engagement.

    For example, one Gallup client discovered through in-depth customer analyses that moving to digital transactions and communications was a top priority for many of its larger customers. However, many of its smaller customers were indifferent about or opposed to doing business digitally, citing concerns that digital transactions would reduce personal contact.

  3. Empowering and elevating account executives can improve business outcomes.

To best align with customers' business challenges and opportunities, industry leaders should consider reshaping their sales and service approach to implement an account executive role. This primary point of contact for B2B customers is responsible for developing a global view of customer needs -- and assumes decision-making authority to serve customers' best interests.

For example, rather than assigning multiple sales representatives to a client -- one for plate, another for bar, etc. -- steel suppliers should empower one account executive to proactively uncover and manage all client concerns. Account executives should be encouraged to act on each client's behalf (e.g., by adjusting roll schedules to meet client needs).

By fostering connections and serving as gatekeepers and problem solvers, account executives can thoroughly understand customers' needs and form deeper, more lucrative customer relationships. This is paramount for steel leaders because, in a highly competitive industry, B2B relationships are critical differentiators.

For one steel supplier, creating a central account executive position with elevated decision-making power resulted in meaningful revenue growth with key customers. For this Gallup client, customers are now more likely to strongly agree that the supplier has a significant impact on the success of their business and is responsive in addressing their requests. Further, its customers feel more strongly that the company has the product diversity and solutions to meet their business needs.

Here's how one steel customer put it: "Before, I could have had four different sales guys running around here, and they wouldn't even know that the other was here. Now we have that funnel -- that one point of contact. Now I can leverage things that I couldn't before, like volume and capabilities and where the best fits for my company are."

The role demands for central account executives are uniquely challenging and require a specific set of innate talents. Individuals in this empowered position require not only detailed knowledge of a supplier's many offerings and services but also the talents necessary for accumulating a global view of customers' business needs.

To achieve positive outcomes with a central account executive approach, steel companies need to follow proven best practices for implementing and sustaining the change. This means understanding the new role, selecting the most talented candidates and amplifying success with proven performance management tactics.

A version of this article originally appeared in American Metal Market.

Gallup World Headquarters, 901 F Street, Washington, D.C., 20001, U.S.A
+1 202.715.3030