One of the most common mistakes made by B2B businesses is believing that if they have a great product or service, customer retention will naturally follow. Customer satisfaction and positive experience play an incredibly unique and important role for B2B companies! They are imperative there is a critical connecting bridge between positive customer experience and customer loyalty which is achieved through customer loyalty programs.
The Importance of B2B Customer loyalty
While customer loyalty programs are largely associated with B2C businesses, they are even more important for B2B. In the B2B space, there is typically a smaller pool of customers to choose from and a higher value for each sale than in B2C. So when your customer is quite literally worth millions, customer loyalty could arguably be one of the most important ongoing business strategies any B2B firm can implement.
The Golden Rule of Customer Loyalty and Retention
While loyalty programs and strategies may differ across B2B and B2C, at the heart of all customer retention lies good customer experience. If a customer becomes part of something positive, memorable and walks away satisfied, they are 14 times more likely to return for another purchase, spread WOM, share their data, or re-engage with the brands in other ways. B2B companies are definitely not exempt from this rule. In fact, the need to drive and maintain positive customer experience is even greater for B2B companies due to its wider and more lucrative impacts.
For example, positive experience directly impacts WOM, which alone is powerful enough to generate more than twice the sales of paid advertising in B2B. This is because WOM, in turn, plays a role in creating referrals, which results in greater brand awareness, new customer acquisition, and new cross-sell/upsell opportunities, ultimately yielding a high ROI for customer loyalty programs.
Three Easy and Effective B2B Loyalty Program Strategies to Implement
While both, B2B and B2C loyalty programs, share the same long-term business goals of maximising revenue, retaining as many customers as possible, and encouraging repeat purchases, B2B loyalty programs differ greatly from their B2C counterparts in terms of both incentives and progression. B2B loyalty programs possess unique aspects of a B2B enterprise, and require more customised and customer-centred industry strategies. Some of the most popular and effective B2B loyalty program strategies include :
1. Tiered incentives
This is a point-based system that ignites customer engagement from the beginning and prompts clients to purchase more often or maintain longer-term deals and relationships. B2B Customers begin at the bottom of the point system with basic membership rewards and are encouraged to work their way up the points ladder through their spend, to access VIP business rewards and bonuses. This loyalty program appeals to repeat customers and offers them the most valuable rewards, in turn valuing them.
This was successfully executed by Celebrity Cruises, a luxury cruise brand which generates majority of its sales from travel agents selling their packages. By launching its B2B loyalty program Celebrity Rewards in 2015, Celebrity Cruises enticed agents to upsell clients greater value deals from higher categories in order to earn greater points. Additionally, through an intuitive and user-friendly online portal where agents could claim their booking sales, check and redeem their points, a leaderboard ranking system was also introduced to rank them against other agents on a monthly basis. Agents could earn equivalent to nearly 1000 Australian Dollars in points if they topped the leaderboard.
The results Celebrity Cruises ws able to achieve was tremendous because it motivated 12,683 agents to join the program and grew revenue by 13% by achieving higher pricing among other results. The key takeaway for all B2B businesses striving to implement a successful loyalty program is adding gamification elements to the program – making sure everyone is a winner. All participants participating in your program win but the best performers get to win more.
Most B2B companies are likely to have less than ten truly loyal and highly profitable customers who largely affect their business. In fact, for many B2B businesses, these are the top 20 percent of clients that keep them ‘afloat’. In B2B, the Pareto principle that suggests that 80 percent of a business’ sales come from 20 percent of their customers is all the more relevant. It is especially important for B2B businesses to invest in this top 20 percent of customers by giving back through a VIP program and fostering closer relationships. While initially, this may seem costly for the business, it yields a greater ROI andbeneficial for both parties in the long term.
Incentives offered do not necessarily have to come in the form of better pricing or discounts and instead can be offered through additional services such as business consultancy, specified training events or employee counselling offered to the client’s employees.
2. Referral and testimonial programs
Businesses should incentivise referrals, as partnering with clients can help businesses reach more clients and build exposure. Referral programs are among the most popular B2B loyalty programs and for good reason! They are extremely profitable, cost and time efficient and one of the easiest B2B loyalty programs to implement. They are designed to award clients for their referrals on an invite basis – the more invites, the greater the bonuses. The loyal referring customer is also awarded and the newly referred customers are eligible for bonuses too, becoming a win for everyone and allowing the business to boost customer satisfaction and thus maximise the customers they retain.
Additionally, similar to the referral channel, a testimonial program can be implemented for points/rewards. Writing testimonials and reviews can allow B2B clients to receive bonuses accordingly. Alternatively, some businesses may choose not to incentivise reviews initially but send them a small token of appreciation after they do so. This is another effective tactic of ‘surprise and delight’ (S&P). Customer loyalty can be driven by small personalised S&P initiatives where businesses delight customers with benefits and rewards that have not previously been advertised or communicated to them. These distinct moments generate positive feelings which help drive long-term loyalty and can loop back to positive word-of-mouth (WOM) and testimonials.
3. Transaction-based value propositions
The vast majority of B2B buyers are extremely rational decision-makers searching for functional benefits, which is why it is effective for loyalty programs launched for B2B to focus primarily on business costs.
Businesses should offer discounts based on the transaction value for the current or future purchase (for a limited time window). Rewards are often customised to the individual company in a B2B loyalty campaign. B2B businesses must do in-depth research and ensure value propositions are tailored to the requirements of the client rather than putting in place generic strategies to resonate with clients.
Customer-committed B2B companies are beginning to recognise the critical need for loyalty programs in the achievement of long term business goals. However, that’s the easy part! The hard part is building and maintaining a successful loyalty program that nurtures customer relationships that is actually able to reap a greater ROI than winning new clients. If you are interested in getting the most out of your customers and mastering customer retention, our B2B marketing consultants can help.
For more information, get in touch with The Lead Agency today.