B2B Loyalty Programs: Top 5 Successful Strategies for Businesses
What pops up in your mind when a customer loyalty program is mentioned? Points, cards, promos, exclusives, discounts or tiers?
In fact, it is quite true that there is no one-size-fits-all loyalty program. Within the space of B2B, where the cost of contracts is significantly bigger than that of B2C, the impact of retaining customers is even more pronounced. To make it more apparent and easy to understand, this article will start with what B2B exactly means and ends with how to build effective and successful B2B loyalty programs.
Table Of Contents
- What is B2B?
- Loyalty Programs and Their Business Values
- Fundamental Differences Between B2B and B2C Loyalty Programs
- 5 Effective B2B Loyalty Programs
- Before you go
What is B2B?
If you are passionate about business publications and online e-commerce forums, you might have heard the catchword “B2B” dozens of times. But if you are still confused about this term, now it’s time to shed light on what B2B exactly is and how it works in this ever-changing trade world.
B2B or B to B is a common abbreviation for the term “business-to-business”, which is a transaction between businesses, such as a manufacturer and a wholesaler, or a wholesaler and a retailer.
Late in 2018, Forrester anticipated that U.S B2B e-commerce would reach $1.8 trillion and account for 17% of all B2B sales by 2023. Besides, a compound annual growth rate (CAGR) of 10% for B2B e-commerce was forecast over the next five years. The Internet is a fertile environment for businesses to find out products and services, as well as their partners to conduct transactions. Company websites allow businesses to get mutual understanding, learn about a business’s products and services, and initiate cooperation.
Loyalty Programs and Their Business Values
Customer loyalty is a phrase used when a consumer continues buying and proactively responding to a particular brand, company, or business. B2B customer loyalty is of utmost importance, not only to bricks and mortars but E-commerce as well. Unlike B2C, B2B companies represent a much greater pool of potential business engagements, requiring businesses to find out different ways to build long-term relationships and have more access to their clients.
According to a study by Rosetta Consulting, high-engaged customers purchase 90% more often and spend 60% more per transaction, leading to an increase of three-time value that engaged consumers to deliver to a brand over the course of a year. And it can cost five times more to attract a new customer than it does to retain an existing one. Therefore, loyalty programs are created with the mission of enhancing customer retention and increasing their buying experience.
In fact, the quality of products and services is a prerequisite factor for customers to decide to stay or leave. No loyalty program would compensate for that. However, loyalty programs are considered as an extra element to generate greater brand awareness, new customer acquisition, and new cross-sell/upsell opportunities.
Fundamental Differences Between B2B and B2C Loyalty Programs
B2B Loyalty Programs require more personalization
A significant difference between B2B and B2C companies significant difference between B2B and B2C companies is the size of their customer bases.
With a smaller customer base, B2B customer loyalty programs should personalize their participant experience and depend on the client’ needs for their business. Personalization is an act of tailoring your advertising activities, offers, and communication efforts to fit the needs of each B2B customer. It involves smarter planning and better understanding to deliver faster and expected experiences to customers.
Meanwhile, B2C loyalty programs are very effective in engaging, rewarding and retaining customers as well as growing a large customer base. B2C loyalty programs are made for their general customers - not specialized or personalized to each one.
B2B Loyalty Programs require additional communication
Businesses nowadays are a diverse and busy bunch; therefore, they prefer communication options that fit their on-the-go lifestyles. To catch up with this, B2B loyalty program creators need to build a quick and seamless communication way, by sending notices or updates through different medium channels to reach their customers. It is also considered as an approach to personalization.
VIP Rewards are essential in B2B companies
Rewarding your VIP customers with incentive programs can help you build stronger bonds with them through a shared and unique experience. Those programs show them how much you appreciate their business so that they can maintain their VIP status for continual access to your business.
Although there are existing glaring differences, both B2C and B2B business models are ready to go the extra mile to foster tighter relationships with their customers and win over their loyalty. You can refer to this blog to see differences between B2B and B2C clearly
5 effective B2B Loyalty Programs
Providing transaction-based discounts
This type of loyalty program echoes the B2C approach; however, it perfectly fits in the B2B environment. After completing an order, customers are offered an exclusive single or permanent discount that can be applied to the current or future purchase. Discounts don’t only help your customers, but also help your business. From increased sales to an improved reputation for your brand, discounts may be one necessary factor to boost your business success.
Below are key advantages of employing those discounts for your business:
Attract new repeat customers: As people prefer buying everything on sale, discounts serve as a ploy to attract more people to your business. Just show them attractive discounts that your business offers to make sure they can not resist the temptation to buy from your company.
Increase sales: Offering a lower price or a reduced price for multiple purchases will increase the likelihood that customers will want to purchase more to take advantage of the deal from the company.
Lower business costs: Discounting items enables you to lower operational business costs and get better economic resources, production equipment, and inventory management.
Boost reputation: A trade discount is an excellent way to improve customer’s perception of your business. From that, other potential businesses can maintain stable relationships with your company for continuing deals.
For example, a textile clothes distributor selling to apparel shops offers a 10% discount that applies to every order made within a specified timeframe.
Using tier incentives
Tiered systems can be understood as a way that allows engendering customer loyalty from the very start and prompt customers to purchase more. You can start with primary rewards to encourage customers to sign up as a member, and offer more valuable and attractive programs to the repeat clients as they increase their purchasing volumes.
Tiered incentive program strategies are endless, allowing you to customize your offerings based on your specific sales goals. A tiered program rewards top vendors more richly than low vendors, increasing overall motivation while matching compensation more closely with their contribution.
A furniture manufacturer provides rewards to its distributors in the form of earned points based on their sales performance. The more points they get, the more benefits, better pricing, and other incentives they are offered. By earning more points, buyers can level up from one tier to the next. The next tiers will be an amazing and valuable land for them.
Running referral programs
“Business owners tell me every day that the way they generate most new business is through referral marketing,” John Jantsch writes on ducttapemarketing.com, a website dedicated to helping small businesses with their marketing strategies. Referral programs work because they are reliable. When you are told about a business by your trusted friend, you tend to transfer the trust to that brand, even if you have never heard about it before.
Referral programs are commonly created in a way that you have more bonuses when you invite more friends. This makes participating in such programs a win-win for everyone. Referral programs bring in big bucks, not only that, they don’t just bring in new customers, they bring in good customers.
A group of researchers from The Harvard Business Review studied 10,000 accounts at a large German bank for a period of three years. The bank offered a simple referral program - they would reward anyone who referred a friend with €25. The finding shows that customers obtained through referral programs were both more loyal and valuable than other customers. In fact, on average, about 18% more likely than others to stay with the bank.
Moreover, they generate 16% more in profits (amounting to €40 each); thus, the bank earns a return of 60% from their initial €25. The study shows that referral programs have the power to take your business to the next level, working as an engine to bring new customers directly to your door.
A service provider offering different business tools and applications gives additional capacity for new referrals as well as an extended package to the newly-referred customers.
Arranging member events
B2B event arrangements are an offline channel where real-life experiences are promoted to facilitate in-person interactions that result in targeted business goals, such as customer retention, event revenue, business relationships, and brand awareness. In this regard, taking advantage of face-to-face communication, enterprises are able to build long-term and sustainable relationships with their partners and suppliers.
A well-prepared member event can benefit your company a lot, and bring back unexpected benefits:
Enhance business relationship: Being invited to such member events, attendees might have the feeling that they get appreciation and special treatment, which results in confidence and strong bond with your business.
Promote products and services: This is a unique and valuable opportunity to advertise, train and educate customers about your new products and services, increasing the possibility of generating leads and sales.
Create comparative advantages: Organizing member events is an excellent way to make your company outstanding compared to other competitors, especially when your customers remember and perceive your brand in the longer term.
An HR supplier firm launches its conference as a means of educating, delighting, and coaching its customers. The event gives members access to keynotes, interactive presentations, professional coaching, and networking opportunities.
Stimulating co-marketing and support activities
Running co-marketing and support campaigns with your partners is an effective customer acquisition tactic. As the saying goes, ‘two heads are better than one,’ many companies find that the value, expertise, and resources of two companies can create something more significant than the sum of its parts.
Some co-marketing benefits can be listed here:
Being more cost-effective by pooling resources together like budget or talents.
Sharing customers of similar people who are qualified as potential ones.
Delighting customers with outstanding services, free stuff, and co-branded products.
Providing continuous support and training courses to each other.
Creating and fostering a positive long-term relationship.
A wine company partners with major food and beverage distributors to provide wine on tap to the world’s top hotels and restaurants.
Before you go
No matter what the business model is, establishing and rewarding relationships with the customer base has an immense economic value since retaining existing clients offers higher ROI (Return on Investment) than acquiring new ones.
However, it is widely known that engaging with a collection of people is much more challenging than a single user. Therefore, building customer loyalty programs in B2B requires more in-detail personalization and a holistic view of your customers to deeply perceive their needs and expectations.
This helps you draw a clear picture of who your customers actually are, which motivations you are trying to generate, and what values you expect to get from them. Remember those key points, and your B2B loyalty should be on the right track!