The business relationship with customers in B2B is more complex than that of the consumer relationship with a brand, and it has the ability to be much stronger and more powerful. While both B2B and B2C may use loyalty programmes, they both need to be crafted differently. Business customers expects a lot more from their suppliers. They expect a deeper understanding of their requirements, their challenges and a value-add relationship that helps them to solve those issues. Get all this right and you have a customer for life.
In every form of customer marketing, it costs more to attract new customers than it does to retain an existing one, and this is where loyalty programmes can prove their value. A customer loyalty programmes can improve not only the customer relationship but can also drive revenues, growth and market share.
In a Harvard Business Review article on building loyalty in business relationships, they noted that almost every customer requires a customised version of the product, quantity or price and for this reason it is impossible to use the same marketwide selling tactics in B2B as it is in B2C. In the consumer relationship you are only trying to deal with the pain points of an individual whereas in the business relationship you are trying to solve the challenges of the business and align those to the needs and desires of the individuals who are purchasing from you. To further complicate the relationship, you can have multiple stakeholders in the chain, from procurement to purchasing to end users.
To ensure that your marketing efforts aren't wasted, it is vital to really understand what your customers need from you in the first place.
We are going to look at some of the different customers states that you might encounter in the B2B relationship and how you can identify these within your customers segments:
- The Antagonistic Buyer
- This customer might be forced to purchase from you because of purchasing rules set by head office or procurement.
- The Transactional Buyer
- The transactional buyer is reactive; they contact you once they know that they have a problem and have decided how to solve it. All they need from you is a proposal for how you can deliver the proposed solution.
- The Predisposed Buyer
- This buyer is already pre-disposed to use your services, so will contact you as soon as they have a problem that they know you can solve. They know what you can offer them, and they trust you to help them scope and deliver a solution.
- The Trusted Advisor
- This buyer isn't coming to you to ask for your help; you are already so embedded in the values and vision of their business that you can proactively suggest solutions to challenges which they may not even know that they have yet. You are a trusted advisor.
The latter two customers states are where you can start to really harness the power of loyalty. In the business buyer relationship it is even more important to harness personalisation to improve the customer experience. Loyal customers don't just appear overnight, they require time, effort, thought and attention.
Implementing a B2B loyalty programme
Here are some tips to think about before starting a loyalty programme:
- Complete some market research
- Understand your competitors and their offering
- Understand who your valuable customers are now and how many more you can service
- Ensure that your products or services are of a high quality (loyalty programmes will not negate poor quality or service)
- Define what you want to achieve with a loyalty programme. Is it:
- Greater brand awareness
- More customers
- More repeat purchases
- Better sales performance
- Greater brand stretch
- Greater share of wallet
- New customer acquisition
- Data collection
- Better customer experience
- High customer lifetime value
All of these can be targeted using a loyalty programme and with good campaign software, like that provided by LoyaltyStream, you can target multiple behaviours and actions at once. The key to creating the metrics behind these campaigns is to understand what value you would attribute to each action or behaviour. What is it worth to your business? Once you know that, you can start to create the rules around your programme.
The Carrot or the Stick
With loyalty programmes we all know that it is about the carrot. In fact, is anyone using the stick approach anymore? We hope not! Getting to the trusted advisor state with your clients requires you to really know their business and their challenges. Knowing what keeps them awake at night, and designing solutions for them, will cement the relationship and create a strategic partnership which will guarantee you future value.
Part of knowing what drives your customers is knowing what motivates them. Will they be motivated by content, education, business benefits, 3rd party products, own brand products. You could offer your VIPs early access to new products or services. All of these valuable rewards and many more can be made available via tiered incentives encouraging the customers to adopt the behaviours that you have identified as most valuable.
To increase your loyalty programme membership you are going to have to appeal to more than just one customer, so you need to build flexibility and personalisation and unique value into your programme early on. You need to encourage customers to adopt the behaviours and the actions you want and, in order to do that, you need to offer more valuable rewards and incentives which you know they will want.
The Benefits of B2B Loyalty Programmes
A well-defined loyalty programme can impact customer engagement, customer satisfaction, customer acquisition and customer retention. A customer loyalty programme can provide vast amounts of data and you need to identify which data will help you to target the most valuable customers and the customers with the most potential. Brand loyalty appears when a user feels that your values are aligned with theirs and that they can clearly see how you can help them.
Customer loyalty programmes are widely recognised as playing a vital role in customer retention and new customer acquisition in B2C, but they are not as widely adopted in B2B. This could be because of access to data, the difficulty in personalising the programme, or the fact that some businesses just don't think loyalty will work in B2B. If anything, it can have even greater value in B2B than it can in B2C. A customer loyalty programme that has been designed correctly will create more value from your existing customers and will enable those customers to start recommending you to their peers.
We have seen outstanding results in some of our B2B loyalty programmes:
- Showroom Rewards delivered a 125% return on investment with a Spin-to-Win campaign designed to motivate lapsing customers back into purchasing with the brand.
- Dentsply Sirona delivered a return on investment in just 6 months with their B2B loyalty programme designed to reward high street dentists for purchasing online. They attracted 80% of the market to sign up to the loyalty programme within the first 3 months.
Loyalty Starts From Within
To deliver the desired level of results, you need a customer loyalty programme that is part of your culture. In B2B, the relationship between your customers and your staff is often very strong and an element of that needs to be retained. However, instead of your staff being 'order takers', a B2B loyalty programme should free them up to become more consultative. They can use the data to recommend new products, understand more about the customer and their challenges, and identify solutions.
Integrating an internal incentive into your customer loyalty programme, which will also motivate and incentivise your staff at the same time as your customers, will have the double benefit of motivating your staff to promote the programme, thus driving the right behaviours from your customers as well as enabling your staff to have the same experience as your customers.
Choosing the right B2B loyalty programme partners
You might have all the skills in house to design your own programme, but few businesses do. Loyalty is a skill in itself, and you will need to consider everything from the strategy, to the software, to how you are going to fulfil rewards. Within the loyalty industry there are numerous solution providers with whom you could partner, including consultancies, software providers and reward agencies. Stream Loyalty have created a network of consultants who can create, advise and monitor loyalty strategies for you. Depending on the needs of the programme, we can then deploy our LoyaltyStream software to take care of the technology part of the loyalty programme. The rewards can be fulfilled via the platform, or new providers can be integrated into the software to ensure that you have the flexibility you need.
Choosing the right loyalty consultant - some questions to ask:
- Have you worked with any similar companies in the past?
- What level of experience do you have in B2B?
- What sectors have you had the most success with?
- What have you found to be the biggest blocker to companies implementing loyalty programmes successfully?
- What support can you provide in monitoring the strategy ongoing?
Choosing the right loyalty software provider - some questions to ask:
- Do you have any similar companies using the software?
- What level of experience do you have in B2B?
- What have been the most successful campaigns run on the software
- What product features are available and how often are these updated?
- How often do you release new features to the software?
- What flexibility is there in the software to be able to customise the metrics?
- How accessible is the data?
- Who owns the data within the loyalty programme?
- How do you manage loyalty fraud within the programme?
- What analytics and reporting are available?
Choosing the right reward provider - some questions to ask:
- What range of products do you have available?
- How often is stock updated and new items made available?
- How do you manage the delivery process and how are customers advised of deliveries?
- How do you manage returns and faults with reward items?
- What discounts are available for bulk orders?
- What are the most popular reward items?
- What issues might you have with stock availability and how do you mitigate those?
These questions represent just the tip of the iceberg and there are lots more you could ask, but these will provide you with a good starting point and then you can focus on whether you think that you could work together.
Guaranteeing Success with B2B Customer Loyalty
There are some truths to generating success with customer loyalty that can’t be ignored:
- You have to be selling something which the customer needs
- You have to deliver quality service and support
- You need to understand the customer’s challenges and drivers
- Your loyalty programme must provide a value add for the customer, both at the organisation level and at the individual user level. They need – and want - to feel like you are 'in it together'
The key metrics to get right in your loyalty programme are:
We all talk about personalisation, but few businesses get it right. Personalisation plays a vital role in B2B loyalty programmes because of the range of customers you have interacting with the programme. It is crucial that the programme is designed to allow you to segment the audience, target different people with different campaigns, and provide different reward options to different members.
Key takeaways for success with B2B customer loyalty
- Identify the behaviours that you want your customers to adopt
- Define the value that each behaviour brings to the business
- Reward the right behaviours at the right time
- Integrate an internal incentive within the customer loyalty programme
- Question and challenge the industry providers in order to find the right partner(s)
- Create and monitor the KPIs of the programme using the data available to you and have the flexibility to continuously evolve the programme