When designing a loyalty or incentive program, one of the first steps is to identify the specific pain point that your business aims to address. These are five common issues shared among B2B companies. By identifying which one your business is looking to solve, we can align our design process to provide a unique and robust solution.
As with designing a custom and unique program for your business, we’ll start this piece by defining the five B2B pain points:
Over the next few months, we will release a series that breaks down each pain point, identifies how they can emerge in your market, and answers the key questions to explore when planning a B2B loyalty or incentive program solution within your business.
Let’s start with Share of Wallet!
Within B2B industries, it’s common for customers to purchase from a wide range of suppliers due to the sometimes niche offerings required from manufacturers and distributors. On the flip side, many B2B manufacturers and distributors often focus on acquiring new customers but don’t spend time optimising spending from existing ones.
The definition of “share of wallet” within a B2B market is the percentage of a customer’s total spend in a category that goes to your business instead of competitors. Suppose your customers are purchasing from a wide range of suppliers. In that case, they may not be aware of your complete offering of products or solutions. This could be due to existing relationships, a common driving factor within B2B markets, a lack of awareness, or simply resistance to change.
This may invite immediate comparisons to the concept of market share, but the two are distinct when examined in key factors. Share of wallet measures the percentage of a single customer’s total spending that goes to you. In contrast, market share measures a company’s total sales as a percentage of the overall industry sales.
Similarly, share of wallet is customer-centric, while market share is industry-centric. They both identify similar financial drivers, whereas share of wallet identifies your customers and provides a solution to swing a larger piece of the pie to your brand.
B2B businesses are leaving money on the table by not pursuing the opportunity to capture a share of wallet away from their competitors and direct it to their own business. By growing your share of wallet, you can capture more spending from your existing clients, reducing reliance on price competition and increasing the lifetime value of your customers.
It’s a well-known fact that it costs five times as much to win a new customer as to keep an existing one. But what if you could turn an existing customer into a new one while increasing the potential for retention? It seems like a win-win!
Now that we’ve defined share of wallet, the next step is identifying whether your business is receiving a smaller share of wallet from your customers than it should.
There are clear signs that can identify that your business is struggling with share of wallet – provided you know what to look for. Here are some of the indicators of share of wallet concern within your organisation:
Customers purchasing from multiple suppliers can be harmless, but you must know your market and competitors. Suppose your customers only buy specific items from you, and you know what they need to operate. In that case, you need to know where they’re obtaining the remaining stock and why they aren’t consolidating their purchases with a single business.
Competitors winning more of your customers’ spending: Once you’ve identified where they’re purchasing from, with an awareness of their operation requirements, you can determine how large of a share you’re winning from your customers. This can be an engagement issue, supply issue, pricing issue, or more – take time to research and determine the cause of your customers’ purchase habits.
Customers frequently switch suppliers based on price or promotions. This is a simple fact: if your customers are shopping around or making infrequent purchases with your business, they’re likely buying from elsewhere.
Order values are stagnant/declining with relationships remaining intact: Why would purchase habits change if you’re on good terms with the customer? Answering this question can identify concerns within your customer base.
Now that you know what to look for, the next step in identifying these factors is to use various data sources.
Employing a B2B loyalty or incentive program can greatly assist these factors. The data insights gained from customer activity are closely monitored, and customers are motivated by the additional sources of value within the program.
Once your business has identified that you’re not capturing a sufficient share of wallet from your customer’s purchasing habits, it’s time to answer a few critical questions to shape an effective strategy to increase your organisation’s share!:
These may seem like leading questions, but the key to solving a share of wallet concern in your business is to move away from price-driven strategies and focus on long-term incentives and behaviour-changing strategies to make switching to competitors less attractive to customers.
The solution within B2B loyalty programs is quite simple. These programs offer a continuous source of value to your customers in exchange for their ongoing purchase support. These programs establish a pattern of behaviour, and using marketing communications and strategic promotions, your business can demonstrate that by purchasing more of your stock from your business, they’re able to derive a greater benefit from the transaction.
The customer is already spending with you, so there’s no pushback. This solution requires only demonstrating an understanding of their business needs and presenting attractive reasons to pay more—especially considering these items they’re already purchasing!
Similarly, incentive programs deploy an attractive reason to switch their purchasing habits to your business, with the backdrop of a sprint rather than a marathon. Employing an incentive program featuring specific stock lines or product bundles over a set period can cause your customers to find a more significant reason to purchase with you, with the added benefit of spending valuable face time on an incentive travel experience. This also creates a sense of emotional connection between the trip and the brand, forcing them to think of your business whenever they look back on the experience.
By demonstrating your ability to provide solutions to their business problems and providing an attractive incentive to work with you, an incentive or loyalty program is a guaranteed way to solve any share of wallet concerns your business is currently facing.
Come back next month for the next entry in our Pain Points series – price protection!
