Loyalty initiatives have been traditionally considered a better fit in the B2C rather than B2B space. With long, complex sales cycles and buyers that aren’t as responsive to discounts and coupons, many B2B marketers have rejected the concept of loyalty programs. However, due to increased competition and price wars, B2B companies are realizing the value in investing in loyalty. Let’s take a look at the reasons more and more B2B companies are turning to loyalty to help them attract and retain customers and some of the tactics they are using.
Incentivize customers and increase retention
Customer churn can cause serious concern for B2B businesses. Despite having a lower number of customers compared to B2C businesses, B2B transaction value is much higher. This is because B2B customers are likely to order in bulk and are tied into longer term contracts and subscriptions.
Retaining customers and keeping them satisfied is a huge priority. Forrester Research says that a 2% increase in customer retention has the same effect on profits as a 10% cost cut, and the average company loses 10% of customers every year. Customers need to be incentivized to repeat purchase from your company. Forrester Research recommends B2B marketers develop an engagement plan featuring a mix of rewards falling into three categories:
Material rewards that incent and reinforce desired behaviors
Experiential benefits that engage channel partners, customers, and end users alike
Recognition and customer acknowledgement that appeals to advocates
Differentiate and attract
B2B companies have fewer customers than retailers and brands, and the cost to acquire new customers is considerably higher than in the B2C markets. This is because customer segments are narrow, and competition is extremely fierce.
In a study Google conducted with CEB, 86% of B2B buyers perceived no significant difference between competing company products. When products are non-differentiated it can be difficult to communicate competitive advantage, and as a result, many B2B businesses engage in price wars in an attempt to win market share. According to B2B International, 80% of business-to-business buyers do not prioritize price. This means that price-focused businesses do not appeal to the majority of B2B buyers. In order to avoid competing on price, B2B companies need to be very targeted in their marketing efforts and build in ways to add more customer value. A loyalty program that adds true value to the target customer can set your business apart.
Reward for referrals
Referrals are extremely important in B2B customer acquisition. 84% of B2B buyers start the purchasing process with a referral, and peer recommendations influence more than 90% of all B2B buying decisions.
By implementing a robust loyalty program, you can motivate and encourage customers to become more active and engaged with your brand. Make referrals easy for already satisfied customers by building a referral program into your loyalty initiative that rewards existing customers for successful new business opportunities.
Capture data and personalize experiences
Using data effectively allows B2B marketers to understand their accounts better and target them with more relevant and personalized communications and experiences.
B2B companies are finding value in adopting data and analytics to drive marketing efforts and identify customer needs. According to a survey of B2B marketers by Dimensional Research, 70% of respondents use big data, historical information and predictive analytics to improve their marketing effectiveness.
Loyalty programs, such as those powered by CrowdTwist, capture not only transactional, but engagement data and use it to serve customers with relevant content, communications, and product recommendations.
Effective B2B tactics
Create customer tiers. By using a tiered loyalty program design, you can segment your customers based on contract size and value to your company and offer different rewards and perks at different tier levels.
Offer exclusive access. To build in value with B2B customers, offer exclusive access to new products, new enhancements, events or services.
Collect information. Motivate your most loyal customers to provide feedback on their level of satisfaction with your products and services through surveys and use this data to drive future enhancements.
Educate through content marketing. Utilize customer data to understand your customers’ specific business needs and create content that addresses their challenges and pain points. Customers will become more engaged and brand loyal when they feel that your company understands their business. Furthermore, educational content can also help B2B customers get further along in their career, helps strengthens the bond, and positions your company as a trusted content resource.
Provide discounts and perks. Give customers incentive to repeat purchase from your company by offering valuable rewards such as shipping discounts, free products and % off orders. By offering these incentives to your more valuable accounts, you can drive brand advocacy and referrals.
Offer relevant rewards. Rewards also drive brand advocacy and referrals. Offer free products, or invitations to client dinners and events, conference passes and so on to your top, most influential customers.
Surprise and delight. This is where a B2B business with a great loyalty program and great customer service will really shine. Make your customers feel valued for every positive interaction with your company, whether it’s for promoting your business in their company news, or because they’ve just purchased an add-on product. Let them know they’re appreciated by surprising and delighting them with an unexpected perk or reward.
In the B2C world it’s easy to offer loyalty programs with membership perks and discounts to encourage repeat purchase and loyalty. In the B2B world, customer acquisition and retention challenges are very different. B2B businesses compete in their space based on the value they can add to keep their existing customers satisfied and attract new business. Effective use of data, personalization, and customized content helps set B2B businesses apart from competition and provide exceptional customer experiences.
In the experience economy, the walls between B2C and B2B are crumbling. What does this mean for digital marketers? Read “The Experience Economy Is Here: What That Means for Digital Marketers and How They Can Thrive.”