How do B2B customer loyalty programs differ from B2C? What are the biggest challenges? What do they need to succeed? Snipp VP of Loyalty Solutions Carlos Dunlap-Beard shared his thoughts in an in-depth Q&A with Loyalty360.
B2B Customer Loyalty: A Q&A with Carlos Dunlap-Beard
Q. So much attention is given to customer loyalty and B2C programs, but how is customer loyalty shaping the success of B2B programs?
A. Dunlap-Beard: I think it would be fair to say that most innovations in customer loyalty and engagement strategies emanate from the B2C side of things. Whether it's mobile applications, fitness tracker integrations, social follows/sharing, or experiential events, every one of them has had its origins on the consumer side. This is where they were tested, innovated, and validated before migrating over to B2B. And when you think about the fact that, traditionally, the average B2B customer is much more valuable than a consumer, then it makes sense.
You wouldn’t really want to take too many risks with an enterprise business customer worth millions of dollars in annual revenue. However, that’s not to say that brands that sponsor B2B customer loyalty programs shouldn’t take some calculated risks and innovate at times based on an opportunity, because all programs should be constantly evolving to maintain member interest and engagement.
Q. What is the biggest difference between a B2B loyalty program and a B2C program?
A. Dunlap-Beard: Loyalty programs for consumers primarily focus on retention. Once customers are retained, attrition decreases and they demonstrate their loyalty to the brand. Then tactics should shift more towards growth, in terms of frequency, average purchase amount/share of basket, and overall customer lifetime value.
Business-focused programs are generally more concerned with growth in terms of penetrating more departments and developing relationships with more decision-makers to increase annual order value. Retention is important too. However, businesses usually aren’t as finicky as consumers and are less likely to jump to a competitor based on a weekend sale or limited-time offer.
Q. What are B2B loyalty programs doing well and where do the challenges lie?
A. Dunlap-Beard: Brands that sell to business customers are showing more willingness to implement a loyalty program than ever before. B2B customer loyalty programs are, seemingly, everywhere these days, although many times they are restricted in their audience, scope of benefits, and products that are eligible for the program. Having a program is good, but having a differentiated program in which the benefits are evident and realistic to the target audience is so much better.
I’ve found that most programs in a sector/industry are very similar. I try to counsel brands I talk with about the benefits and the opportunity to break away from the herd and offer something that’s truly unique and inspiring. Although competitive brands are somewhat similar in products/offerings, their business priorities and approach are usually quite different. This creates the opportunity for a different approach to customer loyalty and brand engagement… if those brands are willing to take advantage of the opportunity.
Q. How does a brand use loyalty concepts to manage both its distribution channel and end-users?
A. Dunlap-Beard: The channel is critical to identifying and influencing the end-user, so a winning strategy for brands looking to launch a new program or augment an existing program is to include your channel partners as members of the program. A distributor/dealer/reseller has the ability to make or break a program, so it’s best to have them on your side. Perhaps, utilizing some form of override spiff that’s based on the amount of product to sell to the end-user is a good way to start. But that approach doesn’t work for everyone because many channel partners will have compliance or regulatory control systems that won’t allow personal gifts. Therefore, a brand may need to offer more rewards and benefits that are business-related and not of a personal nature.
Those same compliance and regulatory rules may also exist for the end-user. Best-in-class programs understand that all channel partners and business customers are not equal. As such, they must ensure that the program they’ve deployed can provide the ultimate administrative control for the program manager and flexibility for both channel partners and business customers.
Q. What advice do you have for layering further mechanics on top of evergreen B2B customer loyalty programs?
A. Dunlap-Beard: My advice is to do it!
Integrate promotions, sweepstakes, and events directly into your B2B customer loyalty program. Business customers want value, but they also desire more than just a discount on their next purchase. What if they could become a member of an advisory council? You can’t put a price tag on that. And do you think a valuable business customer who's a member of your advisory council would ever leave? Additionally, sweepstakes (branded swag gift packs, factory tours, etc.) and periodic promotions (seasonal, new product introductions, events at specific channel partners, etc.) serve to add extra sizzle to the program and keep the member wondering about what’s next.
Utilizing social channels for business purposes is also a winner. More business owners/managers/decision-makers follow the brands they prefer on Facebook, Twitter, Instagram, and LinkedIn Plus. They're also a responsive group and frequently engage in online promotions via those sites. And let’s not forget about YouTube because there are a lot of B2B brands that have thousands of subscribers on their YouTube channels. Recognizing and rewarding members for watching product videos on YouTube, sharing a tweet on Twitter, or hash-tagging and uploading a photo on Instagram is a great way to add business beneficial dynamic elements to a traditional loyalty program.
Q. Can you talk about the attributes that a B2B customer loyalty program needs to succeed and prosper?
Smart Data. Use the data collected to understand the uniqueness of end-users. This allows you to segment and differentiate the experience to make it feel personal and individualized.
One Voice. Manage all program loyalty, promotions, and engagement strategies from a single database and source of truth. Even if a brand uses a third-party email service provider, social agency, etc., make sure all touch points and messages speak with one voice and all member actions are captured and consolidated within a single database.
Base Plus. Use the base loyalty program as a constant engagement tool and a reminder of the benefits of connecting with your brand. Layer on periodic promotions (both short and long term) to create excitement and drive increased engagement from members.
Balance. Don’t sacrifice long-term goals and benefits (customer insights, moderate sustained growth, etc.) for quick-hitting discount offers that won’t lead to repurchase and new product trials. Find the balance that lets you accomplish both.
Partner. Use channel partners and other partnerships to provide additional value to members. Sometimes this approach may not lead immediately back to your brand. However, customers have a more favorable opinion of brands that don’t make it all about them.
Focus on Objectives. At the end of the day, the name of the game for a B2B customer loyalty program is to create loyalty. But what happens when a B2B company actually keeps loyal customers? Aside from continuing to buy from your business, what other objectives can you achieve? Having your customers spread word of mouth, helping you improve your business and your service levels by maintaining an open and honest relationship, expanding your customers’ needs to other product areas. These are all salient objectives that should be identified from the outset of a B2B initiative.
B2B Loyalty Requirement Checklist. The last thing I’ll leave you all with is a quick summary of some of the key requirements that I sometimes see slip under the radar. If you can cross all these off, it’s more than likely that you’ve got a good set of fundamentals with which to achieve lasting success.
• Business benefits & services
• Certification & training
• Regulatory control
• Institutional vs. individual
• Business-only rewards, sales rep rewards, or a combination
• Segmented earning, rewards & benefits by member type