Studies show that it costs five times more to acquire a new customer than to retain an existing one. Loyal customers are more profitable, spending more and costing less to serve. Loyal customers also provide authentic word-of-mouth referrals and serve as trustworthy advocates of a company’s brand. No wonder consumer-driven businesses have embraced loyalty programs. From travel and entertainment to gas and groceries, businesses have enrolled the average household in over 14 loyalty programs. Customers enroll and participate because in addition to getting what they want, they are recognized for their value and contributions to the company.
But what if you provide business-to-business (B2B) goods or services - is establishing and maintaining loyalty with your customers any less important? Facing similar challenges, finding it more difficult to get and keep customers in the current business climate, businesses in manufacturing, wholesale, distribution and services can benefit by implementing a loyalty strategy.
Your customers have greater access to information, competitive choices and to each other through social networking. Against this backdrop, businesses understand that they must continuously innovate if they want to survive. Differentiating your offering through a B2B loyalty program can create excitement and enhance your customer relationships.
Current and prospective customers are your most valuable financial assets. Rather than maximizing the value from every product you sell, think about creating the most value from each customer. When designing your loyalty program, consider the business outcomes to be achieved, the specific customer behaviors you wish to influence and the incentives required to motivate those changes. One of the most important goals of any loyalty program is to keep the lines of communication open with ongoing and relevant dialogue. Finally, a successful loyalty program requires that you maintain a long-term outlook and commitment to the program. Have a coherent value proposition and dedicate resources and funding. Don't start a loyalty program without making it part of your overall business strategy.
Decide what you want to reward first. Is it repeat business and referrals? Then answer the question how rich of an award you can afford? The most popular point metric is dollars spent (for example 5 points per $1). Others examples include double points for buying certain items or quantities or awarding points based on paying invoices on time, etc. However, don't make your program overly complex. Customers want simplicity. Be transparent. Be clear. Keep it simple.
Designing strategies that strengthen loyalty is the first step but lengthy development times are a significant obstacle to launching a loyalty program. However partnering with others can reduce time to market and costs. You don't have to develop all the enabling technologies to facilitate a loyalty program on your own. Using existing shopping, redemption, fulfillment and email communication systems along with awarding points that already have value with a significant base of reward partners, will help you focus on simply customizing your point accrual and redemption rules as well as your promotional and marketing materials.
Integrating with business partners in a loyalty program provides other benefits too by:
- Extending the opportunities for your customers to earn points
- Expanding the redemption choices
- Exposing your solutions to a community of business loyalty program members
Incorporating social responsibility into your loyalty program is a wonderful way to support both your customers and a good cause. For example, VantagePointsRewards, a new B2B loyalty point currency, provides all the tools needed to manage and deliver rewards in partnership with other business-to-business enterprises at very low costs with a charitable fundraising goal of supporting the important work of the food bank.
In conclusion, B2B organizations should not overlook the value a client loyalty program can deliver by building stronger business relationships.