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What do steel buyers want? Gallup asks, consumers answer

May 02, 2017 | 08:00 PM |

Analyzing data mined from 190 interviews conducted in the Fall of 2016, Gallup’s research takes the pulse of the U.S steel procurement sector and serves up a surprise or two.

Many American steel executives are upbeat on the future, buoyed by recent promises of major infrastructure spending, favorable trade case outcomes and rising “Made in America” sentiment.

This potentially rosy outlook doesn’t mean, however, that 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 steel consumers reveal what they want most from their suppliers and help leaders promote real customer growth.

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

• 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. Modern steel customers expect far more than the basics, however: 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. “The best vendors know my business ...,” one steel buyer said. “They ask how changes are going to affect my business and take that into account.”

To deliver value for each customer – from automotive manufacturers to construction companies – steelmakers 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. Buyers view companies that embrace commercial excellence initiatives more positively – and they believe that investing in commercial excellence generates growth for steel suppliers. Ultimately, steel customers award their business to companies that are motivated to identify and fulfill their needs.

To successfully implement their commercial excellence strategy, steel executives 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.

• Compared with smaller clients, large steel customers are less engaged. Unfortunately, a steel supplier’s largest customers are often its least engaged. A recent analysis showed, in fact, that just 16 percent of one steel supplier’s priority customers were fully engaged. Compare that with the results of a Gallup study of B2B companies across industries that found that 29 percent 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 sign 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 in situations where a major contract is in place, steel customers have higher expectations for the relationship; so high, in fact, they don’t award positive feedback for meeting basic expectations such as product quality.

High-volume steel customers expect their suppliers to do more – to consistently go the extra mile to discover and accommodate their unique business challenges. “They need to realize we are not price buyers and we want long-term relationships,” one customer said. “We want it (to be) more like a marriage.”

For B2B leaders, such a mindset 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 also holds true for smaller customers: To meet customer expectations, steel executives need analytics expertise to discover and predict customers’ wants and needs. While steel buyers share a number of 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. Many of its smaller customers were indifferent about or opposed to doing business digitally, however, citing concerns that digital transactions would reduce personal contact.

• Empowering and elevating account executives can improve business outcomes. To best align with customers’ business challenges and opportunities, steel 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.

Rather than assigning multiple sales representatives to a client – one for plates, another for bars, etc. – steel suppliers should empower a single 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 because, in a highly competitive industry, steel B2B relationships are critical differentiators.

For one steel supplier, a Gallup client, creating a central account executive position with elevated decision-making power resulted in meaningful revenue growth with key customers. 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, their customers feel more strongly that the company has the product diversity and solutions to meet their business needs.

“Before, I could have had four different sales guys running around here, and they wouldn't even know that the other was here,” one steel customer commented. “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 strengths necessary for accumulating a global view of customers’ business needs.

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

Bottom Line

In the steel industry, commercial excellence is the way of the future. During times of potential growth, steel suppliers can optimize performance gains and differentiate their brand by putting customers first. This means strategically pushing commercial excellence, relying on a data-driven approach to customer service and implementing bold changes to the sales structure. For any B2B company, customer relationships are essential to maximized growth – and leaders need to invest in their customers accordingly.

Jeff Durr and Baily Nelson

A partner at Gallup, Jeff Durr is responsible for leading large and complex consulting engagements. In addition to his work with clients, he provides strategic leadership to Gallup’s customer insights and analytics consulting business.

In preparing the accompanying report, Durr drew intelligence and insights from190 interviews conducted last Fall as well as over 3,700 surveys (web, outbound phone, and 200 in-person interviews) completed in the Summer of 2014. Companies (service centers, OEMs, construction firms, etc.) of all sizes throughout North America in both administrations were surveyed. Research is ongoing.

Bailey Nelson is a writer for on global workplace and marketplace advice and analytics.


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