Business-to-Business Loyalty: Considerations for Program Design
Consumer loyalty programs have been around for more than thirty years and penetrated numerous industries, including travel, hospitality, banking and retail. But their adoption by business-to-business (B2B) marketers has been uneven.
Just what role should loyalty strategies play in the B-to-B environment?
The goals of any loyalty strategy are the same whether you are targeting end consumers or other businesses: incremental sales, customer retention, market share growth, cross-selling, up-selling, turning customers into advocates. After all, business people are consumers too, so many of the same tactics will succeed within business-to-business contexts.
Like any customer, the businessperson is driven by a combination of behavioral and emotional motivations.
Many consumer programs provide a rational quid pro quo: Do this and get that. But in business-to-business marketing, the specific strategies and tactics can be a bit more complex. Here are a few considerations to keep in mind when developing business-to-business loyalty initiatives.
Make your customer a hero. Your business customer wants to do his job better, and you can help. Understand his needs and goals; empathize with him. A good loyalty program can provide additional tools for your customer’s success, such as preferred or expedited service, advice and information, first access to new technologies and products.
Use material rewards carefully. While consumer programs often provide material rewards such as discounts, free product, etc., B2B programs should be careful about awarding free gifts. Many companies and cultures consider accepting gifts an ethical problem. There could even be tax complications in markets like the United States or Western Europe. Most B2B companies already offer volume-based discounts or other favorable terms; your loyalty efforts should be differentiated from your pricing policies. Another problem with material rewards: who gets them? When you deal with larger B2B customers, you probably have multiple contacts and multiple levels; do you reward them all? And a reward that might be appropriate for a logistics manager may be wrong for the Vice President or Director.
Consider service rewards. Enhanced service is a highly practical and useful way to reward loyalty – and it can be viewed as far more valuable than a gift. Delivering an element of extra service – like a dedicated “Preferred Customer Desk” – can earn a business customer’s loyalty.
Use information as a reward. Knowledge is your most valuable asset – and sharing it with your loyal customer can make him a hero in the workplace. Consider publishing informational pieces on a members-only basis. Invite your customers to seminars or webcasts that bring your company’s experts directly to them. Adding knowledge is adding value; your business customers will appreciate it long after they’ve forgotten a discount.
Partner with your business customers. Ask them to act as an advisory panel or beta testers for new products. Their input could be of great value when you’re planning a product launch. And customers will perceive the early access to the latest products or technologies as recognition of their value and status.
Is an explicit “loyalty program” right for your business customers? It depends on your industry and the kind of relationships you want to foster with your clients. In some professional services settings a consumer-style program may be appropriate; in others, a more subtle approach may be right. Whatever specific tactics are right for your company and your customers, an ongoing relationship building effort should be a key part of your marketing plan.
Taking a programmatic approach to building customer relationships requires investing in data, analytics and technology. But if you invest in a well-designed program, that investment should pay off handsomely.
You’ll retain customers longer, defend your market share more successfully and turn customers into brand advocates.
Want more insights? Check out our blog on Building the Business Case for Loyalty