Because B2C and B2B customers are different in so many ways, B2B companies normally don’t treat their enterprise clients as regular consumers. However, the B2B sector gradually borrows best practices from the consumer-centric environment to bring their customers unique user experience traditional shoppers enjoy. One of the effective strategic initiatives B2C companies use to engage, reward, and retain their customers is various kinds of loyalty programs. Does this technique translate well in B2B space too? Is there any business value in customer reward programs in B2B space, and if so, what should be considered when planning to launch a successful loyalty program? These are the issues we’re going to address in today’s blog.
Loyalty programs and their business value
Engendering and rewarding customer loyalty is essential for B2B companies since it eventually morphs into referrals resulting in new business and new cross-sell/upsell opportunities.
B2B loyalty programs allow to enhance customer experience, minimize if not avoid natural customer churn rate, and retain existing clients which is a strategic imperative for any B2B enterprise. Although both B2C and B2B loyalty programs pursue the same purpose, the methods of implementing a B2B program are somewhat different.
What makes B2B program strategies different
Unlike B2C, B2B is a smaller, more focused target market with specific customers. Along with the most important differences between both models’ target audiences, to successfully approach business customers with a loyalty program, one should understand
- Business customer buying potential along with the peculiarities of a buying cycle
- What stakeholders should be addressed, how to incentivize them, what aims they follow and what benefits they seek
- Importance of value propositions: as in the B2B space, product and vendor properties influence product selection (in contrast to B2C counterpart driven by promotions), the loyalty programs launched for B2B should focus on providing value propositions
- Nuances of industry, marketing segment, and submodel within the B2B sector a company you’re gratifying with a loyalty program operates in (i.e. loyalty programs for a manufacturing company selling to retailers and for a company providing its services to a manufacturer should not be the same).
Planning B2B loyalty strategies and key factors of their success
To start developing a meaningful B2B loyalty program, you should first define how to use customer data to enhance customer relationship. As a rule, B2B organizations run a smaller customer base which makes it in theory possible to carefully analyze the information and get to know them better.
Here’s an approximate scenario to begin with:
- Define your profitable accounts and customers
- Ensure you understand strategic goals of your business and tailor your loyalty activities respectively
- Consider internal situation within the company you sell to and think of a personalized (ideally competitive) loyalty solution
- Research customers, monitor interactions with your customers throughout all touch-points
- Segment your customer base to target each segment in a most effective manner
- Develop a system for scoring and ranking most valuable customers
- Initiate and encourage dialogue with your clients, collect customer feedback
- Determine what triggers or incentives facilitate meeting mutual objectives
- Measure and track progress towards these objectives.
Successful B2B loyalty programs: Suggestions and real-life examples
Using tier incentives
Tiered systems allow to engender customer loyalty from the very start and prompt business clients to purchase more. You can begin with petty rewards to encourage customers to sign up for the loyalty program and offer more valuable rewards to the repeat clients already enjoying a program membership as they get promotions within it. Unlike the points system, tiered system enables its participants redeem the gratification points without having to wait too long.
Virgin airline company provides tier points to its club members. By gaining more points, the program participants level up from one tier to another, each of them offering more benefits than the previous one.
Partnering with third parties to give customers extra bonuses
By establishing a strategic partnership with a company providing affiliative products or services out of your scope, you can offer all-inclusive packages relevant to the business activity of your business customers.
If your company sources raw materials used by other businesses for production, you may partner with a firm that offers services that can streamline production. As a company selling tires to an automobile manufacturer, you can partner with a windscreen reseller and offer your customers a combined products package at a discount price.
Arranging member events
As a rule, enterprise customers tend to build long-term and sustainable relationships with partners and suppliers. In this regard, in-person events give businesses a great opportunity to recognize their clients, expand and strengthen ties with them, and simply encourage giving feedback on customer experience.
Litmus, a major email marketing software provider arranges both free and paid conferences, trade shows, meetups and retreat events for its B2B users to increase loyalty and educate them on the industry-related issues.
Providing transaction-based immediate discounts
This loyalty program type echoes B2C approach, however, perfectly fits in B2B environment. When completing an order, customers are being offered exclusive single or permanent discount that can be applied to the current or future purchase. This method is used to encourage the clients to join the loyalty program membership.
A textile clothes distributor selling to the apparel shops offers an instant discount applicable to every order made within a certain timeframe.
Despite the business model, customer-committed companies design gratification programs to cultivate loyalty in their clients. Establishing and rewarding relationships with the customer base has an economic value behind it since retaining already existing clients costs your business less effort, boosts up revenue and allows to gain faster ROI.
It pays to know though that not all B2C loyalty initiatives smoothly apply to B2B environment, first of all due to different purchase behaviours and purposes of both target markets.
Building effective loyalty programs in B2B implies having a holistic view on your customers to clearly perceive their expectations, knowing peculiarities within the branches they are active in, and coming up with a customer-tailored reward strategy.