What pops up in your mind when a B2B loyalty program is mentioned? Points, cards, promos, exclusives, discounts or tiers? The reality is there is no one-size-fits-all loyalty program. In simple terms, B2B loyalty program is a customer retention tool that includes specific features and loyalty logic to assist businesses in establishing brand loyalty with their channel partners.
The B2B space differs significantly from that of B2C. Customer churn can be a major source of concern for B2B companies. Despite having fewer customers than B2C businesses, B2B transaction value is much higher. This is due to the fact that B2B customers are more likely to order in bulk and are bound by longer-term relationships.
A 2% increase in customer retention affects profits as a 10% cost reduction, and the average company loses 10% of its customers yearly. So the idea is to encourage your customers and channel partners to purchase more from you, and that is what business loyalty program intends to do.
Although the overarching benefit is customer retention, several B2B Loyalty Program designs with enticing rewards can nudge your customer’s long-term behaviour and give your business the desired outcome.
Once you have a customer engaged, it’s important to find ways to keep them around – after all, acquiring a new customer can cost five times more than retaining current customers. From a cost point of view, customer retention is integral to business success, and this cannot be understated. So, what is the best way to ensure that your customers engage with your brand, and decide to stay around? Why, the best way to build loyalty is through demonstrations of the benefits building customer loyalty!
Customer loyalty programs provide additional value to your customers beyond their initial purchase of your goods or services – they provide additional perks that the customers will associate with your brand. These positive impacts will assist in finding a way to build relationships with your channel partners by creating an emotional connection with your brand.
In addition, the B2B buyer’s journey will generally take longer due to additional decision-makers being required to sign off, and far less impulsive. As such, by providing additional value for simply doing business with your brand through a well-crafted customer loyalty program is a great way to encourage customers to increase customer lifetime spend while providing an effective way to retain existing customers.
Providing a successful customer loyalty program does more than just simply incentivise customers to stick with your brand from the rewards you offer your best customers. When your most valuable customers succeed, you are then provided with additional marketing materials to communicate with other customers.
Aspirational stories of happy customers who are achieving real value by doing business with your brand encourages existing customers to make repeat purchases in order to try and capture that for themselves. A good loyalty program will allow you to gain access to more money and share of wallet, turning success stories into brand advocates that you can share!
The lazy conclusion would be to provide an exceptional reward for the top-achieving customer. However, would that work for everyone or just the top-achieving channel partners? The B2B loyalty program aims to generate interest and maximise the number of participants. It needs to be independent of the reward on offer, for which your program requires robust branding that will outlast the reward.
A B2B loyalty program’s brand identity is its backbone, its strength. A strong and identifiable brand ensures it is compelling, secures attention, and draws a targeted audience into the offer. A strong program identity allows program managers to adapt strategy and reward offers without damaging customer goodwill.
Most important of all is to look beyond a first year customer retention and build in elements that will influence change in your business. A loyalty that has the best rewards but fails to return on the investment or meet any objectives will never truly be deemed a success.
As a business leader, you must understand your customers’ psychological desires and motivating forces to continue or even grow their business with you – or move their business elsewhere.
Rewards that create great behaviour changes are considered motivators or extrinsic rewards. Some external motivations cause a strong emotional reaction in a person and reinforce their behaviour change.
The best way to use an extrinsic motivator is when someone is used to doing an activity and you add elements to enhance their performance of that activity – but not so much that it becomes a ‘job’. The reward must provide a benefit beyond the frequency of effort.
This knowledge of your customers will determine the success of any incentive that a B2B loyalty program offers. If you offer something that doesn’t cause an emotional response and corresponding behaviour change, they won’t work to achieve the reward. Your program will fail.
However, when you get the reward mix right, you can move people away from a ‘job’ mentality and give them a powerful, extrinsic motivation to achieve their reward. Everybody wins!
Here’s Maslow’s Hierarchy of Needs with the B2B Loyalty and Rewards program lens.
It’s the top levels of the hierarchy – “love and belonging”, “esteem”, and “self-actualisation” – that fit into a B2B loyalty and incentive program designed to influence a behaviour change. The top 3 motivators in the model are needs that must be met through your rewards on offer to maximise participation, and the best way to ensure that is to create a tiered program.
Tiered incentives ignite customer engagement right from the start and prompt business clients to purchase more. You can begin with basic rewards to encourage participants to sign up for the programme and offer more valuable rewards as they increase their purchasing volumes and hit targets to qualify for the next level.
Check out the Aspire Incentive Program case study that drove exponential growth using tiered incentives.
Although it sounds obvious, a successful B2B loyalty program must drive sales and generate revenue. It goes hand in hand with customer retention. The most customers you retain, the better for your bottom-line number!
Having a tailor-built strategy to give you high returns means understanding your business pain points, what you’re up against, and what you’re trying to achieve before building the critical parts of your program design.
Share of wallet determines how much a B2B customer can spend on required business goods and services. A well-designed B2B loyalty program can shift your customers spend or share of wallet in your favour – and then should retain it! At 212F, we believe that share of wallet should be one of the pillars of your program when thinking of the design elements of the program.
If you are in a competitive marketplace, the typical spending from your customers is different. The easiest strategy is to resort to price reductions, offers or discounts, which is detrimental to long-term profitability.
A B2B loyalty program aims not just to reward a transaction but to recognise customer loyalty and shift the value beyond a single purchase to one of the benefits for individuals and businesses.
Increasing a customer’s share of wallet is much more reliable and profitable than acquiring new customers, which could be a make-or-break deal for businesses in a competitive market.
Loyalty programs can feature design elements that encourage customers to try out more products and services, thus increasing their purchase frequency and spend. Maintaining or growing margin is critical to business success because it shows if your current pricing covers your cost of goods sold.
B2B loyalty programs can also include elements that are based on factors such as “promotion season” or customer purchase behaviour to promote the sale of higher-margin products. Having your sales teams focus on higher-margin products – and on the customers who buy them – will build a strong foundation sales database for the future, rather than the short-term approach of reducing margins to achieve high “volume now”.
Your customers and channel partners regularly interact with several vendors and suppliers. Your B2B loyalty program must consider these relationships and ensure your brand remains competitive and in front of mind. A loyalty program requires the same attention as any other product or service your organisation provides. If done right, loyalty programs are great marketing tools aiming to secure partner loyalty.
Some relationships in B2B are transactional, with the ultimate aim of driving sales. But what if we combined the human connection at the heart of most B2B selling with data to optimise the relationship? Data that gives insight into future transactions, current preferences, buying behaviours, and networks.
With B2B programs, the database is generally smaller than that of B2C. This allows you to deep-dive into your database and get actionable insights into your customer behaviour. With a smaller member base, the personalisation of communications and services is much more achievable. This provides a good opportunity to build a positive brand connection with your stakeholders.
All communication that is sent to a B2B loyalty program customer database should support the overall business marketing strategy. Whether these shift from one-to-many to the ultimate one-to-one touch points. Segmentation on actions rather than demographics can help great organisational communications teams know what they’re selling and can demonstrate the benefits of your products and brand.
