When was the last time you reviewed the objectives for your B2B incentive program?
When was the last time you reviewed the objectives for your B2B incentive program? If your program design is on autopilot and still operating without review, you are flirting with disaster. Chances are that if your program doesn’t have a strategic design with share of wallet at the forefront, then your competitors’ program does. But it’s not too late to adapt the design to the changing market.
In simple terms, share of wallet determines how much a B2B customer can spend on required business goods and services. This is not different to how you view your wallet with groceries and supermarkets are all vying for their piece of your weekly spend. Promotions, offers, advertising are the levers to get your attention. In the B2B market, you can follow a similar pattern but increasing share of wallet is one of the primary challenges that can be solved by a rewards and incentive program.
Share of wallet becomes even more important to have as the core of your program when market conditions change, are economically challenging or your competitors are active in the market. For instance, while a market and your vertical may see a downturn (in hard times), spending by customers typically remains, although not at the same volume, value, or frequency as it was. The challenge becomes how to attract repeat purchases from your customer database without having to resort to price reductions, offers or discounts.
An incentive and reward program with share of wallet at its heart helps navigate that price problem. Rather than using price to gain new customers, you use rewards to shift the spending of a customer more heavily to you (especially if they’re also buying from a competitor). This is “Loyalty Programs 101”, especially for airlines, who drive repeat purchases with status points. Customers often choose a more expensive airfare (which means a greater share of wallet for the airline) simply to get the gold status and the benefits that come with it!
Transfer this concept to the strategy of your B2B programs. The aim is to not just reward a transaction, but recognise customer loyalty and shift the value beyond a single purchase to one of the benefits for both individual and business. Increasing a customer’s share of wallet is much more reliable and profitable than trying to acquire new customers.
Tracking customer spend and visually displaying the wallet share shift within a dashboard gives you a powerful tool: the ability to quickly calculate and defend a reward program’s return on investment. While this information is important to your program, the benefits extend beyond just an incremental sales value and into other areas.
Protecting margin in a tough market delivers huge dividends to the business in their efforts to gain higher wallet share. In fact, the margin could be given back to the customer in reward values, which gives you the flexibility to retain prices while offering attractive benefits. Being able to maintain your margins while increasing purchases is one of the easiest ways to extract maximum ROI out of a program and defend its position as a key plank in your customer offers.
Save on Sales & Marketing Resources
Incentive and reward programs can be your silent salesperson as they drive sales through recognition of purchases. You can send targeted communications and offers to existing customers through the program, maintaining (or enhancing) the relationship with them, rather than increasing overheads with new sales staff or marketers.
New Customer Acquisition Marketing
It’s been often quoted that attracting new customers can cost up to five times as much as keeping existing ones. With that in mind, shifting even a fraction of your customer acquisition resources to promoting your program can reap enormous benefits. Plus, the ability to track sales through a reward program gives you justifiable results and ROI from a campaign compared to more nebulous sales acquisitions, which can come from various avenues.
In competitive markets, you don’t want to find yourself on the discretionary side of share of wallet. That will only lead to a price and margin fight. If you haven’t considered share of wallet as a pillar of your incentive program, it’s time to take a closer look.