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B2B Loyalty Programs: Best Practices for 2020

man pressing B2B on touchpad

Business-to-business loyalty programs are an excellent way to reward clients for their ongoing loyalty. When structured properly, B2B loyalty programs can incentivize various behaviour from the businesses you sell to.

But first, what are we talking about when we discuss B2B loyalty programs? Obviously a business-to-consumer (B2C) loyalty program refers to any marketing strategy which rewards consumers for repeat purchases, bigger basket-sizes and increased brand engagement.

Most of us see this every day in the form of paper punch cards on hair salon counters, tablet-based digital rewards programs integrated into POS at fashion retailers, and digital loyalty apps that send subscribers targeted communications and tailored offers via text and push notification.

B2B loyalty programs, on the other hand, can vary greatly depending on what behaviour a business is wishing to drive.

The Ultimate Guide to Customer Loyalty Programs

 Learn how to create a successful loyalty program that retains customers and boosts sales.

Why create a B2B loyalty program?

There are numerous reasons why a B2B company might be inclined to implement a loyalty program.

Customer Retention

retaining customers

Just like B2C brands, businesses selling products/services to other businesses also need to provide an incentive for repeat transactions.

An electrical wholesaler might incentivize electrical services companies with bulk discounts and free upgrades. The wholesaler might also use this ongoing relationship to cross-sell other items and increase basket-size with store credit incentives.

The same electrical wholesaler could incentivize sole trader electricians with more personal rewards, such as gift vouchers and round-the-clock pick-up benefits, for example.

Corporate Social Responsibility (CSR)

corporate social responsibility initiatives

I.T. giant HP offers loyalty points to companies that return their used ink and toner cartridges. Once a company accrues enough loyalty points, they receive a gift voucher for free or discounted HP products.

The HP Planet Partners Program is ingenious on multiple levels, as it achieves numerous things:

  • illustrates HP’s good corporate citizenship and concern for the environment
  • offers companies an easy and convenient way to be environmentally conscious
  • provides HP with an influx of used cartridges, which the business can reuse and re-sell
  • positions companies all over the world to purchase HP products with their gift vouchers, thus increasing brand awareness

Training, Education and Advocacy

growing staff knowledge and brand advocacy

Image Source: Primeum

To take things in another direction, brands can implement B2B loyalty programs as a means to incentivize product training. Mitsubishi Electric Cooling & Heating adopted this method in order to strengthen sales of its ductless HVAC units.

Specifically, Mitsubishi wanted to increase market share and brand awareness by:

  • motivating contractors to quote Mitsubishi HVAC units on every job they were called to
  • converting contractors who were currently selling competitor brands

Participants were awarded with prepaid VISA gift cards that could be reloaded each time new rewards were earned. The limited-time campaign resulted in a 45% increase in Mitsubishi HVAC units sold, and generated a 307% return on investment.

For brands that rely on third-party contractors and intermediary retailer salespeople to sell their products, this technique is ground-breaking.

It motivates salespeople who previously had no vested interest in one particular brand over another, to educate themselves on your brand’s products and sell them over your competitors’.

FYI: For B2C brands looking to directly engage customers despite selling their products through intermediaries, check out our article onHow FMCG Brands Can Increase Customer Loyalty.

These are just three reasons why a B2B company might implement a rewards program, but the possibilities are endless.

After all, the same mind-blowing B2C loyalty statistics also apply to B2B. For example, thelikelihood of selling to an existing customer is 60% to 70%, vs. 5-20% for a new one.

However, it’s crucial to understand that a B2B loyalty program works nothing like your standard café punch card system.

While it might be very tempting to simply mimic a B2C rewards structure that’s proven successful for other brands, there’s a good chance this strategy will fall short of your expectations.

Why? Because a customer’s motives are different to that of a business’s motives.

B2B Loyalty Programs vs. B2C Loyalty Programs

B2B vs B2C

When a consumer engages a loyalty program, they usually have a very clear goal in mind:

  • A free coffee at the end of the week
  • VIP access to product launches and other events
  • $X gift voucher after spending $250 with this brand, and so on.

The brand uses this goal to incentivize repeat spending, bigger basket-sizes, increased engagement and other consumer behaviour.

But in a B2B situation, the person in charge of purchasing your brand’s products or services might not even be the person who’s using them. It could be the Chief Financial Officer, or the Supply Manager. If it’s a smaller company, you might be selling directly to the CEO.

Personal rewards are not going to interest these kinds of customers, because they are buying your product or service on behalf of the company. Discounts and store credit are more enticing offers, because they will save the company money.

However, what if the employee making the purchase is also using it? Let’s say your business creates project management software for companies to use for their internal operations on a subscription basis.

If you are selling directly to a company’s Head of Internal Operations, they are going to be interested in rewards such as:

  • free product upgrades to access higher tier features and functions
  • exclusive one-on-one customer support when required
  • similar products and add-ons that can boost productivity in the workplace

The CFO, who is purchasing the product but not using it, will be more satisfied with incremental discounts, freebies, and other cost-saving rewards.

Only customers who are both purchasing AND using the product, could be considered to have a similar mindset to that of a customer in a typical B2C rewards program – they are interested in saving money where possible, but are also concerned with having the best value product for their needs.

For a B2B loyalty program to work, you need to cater for your clients’ varying motives. If your rewards don’t reflect their specific needs, there is nothing stopping them from jumping ship down the line.

This brings us to our next point on where B2C and B2B loyalty programs differ.

With B2B Loyalty Programs, the stakes are higher

losing a customer

In comparison to brick-and-mortar businesses like cafes, restaurants, beauty salons and retailers, the customer pool for B2B companies is usually much smaller. The average medium-sized B2B business receivesa third of its revenue from existing customers.

Therefore, when a B2B business loses a customer, it often has a far greater impact on the company’s bottom line.

For this same reason, referrals are much more important in the B2B sector. In fact,Loyalty 360 found that about 85% of B2B decision-makers begin the buying process based on a referral from a friend or colleague.

All of this to say, B2B loyalty programs cannot survive on a “one size fits all” approach.

At Stamp Me, our advice is to stay on top of:

  • what kinds of businesses you are selling to
  • what those businesses want from your loyalty program
  • who/which employee roles you are directly selling to within those businesses
  • what these individuals want from your loyalty program
  • what YOUR business wants from the loyalty program

If your head is spinning from all of this information, here are the bare essential steps to get you started:

1.

Identify your B2B loyalty program’s target audience

2.

Review your clients’ interactions to gain a clear insight of your long-term B2B relationships

3.

Use this insight to map out a rewards structure that mutually benefits both businesses

Like any loyalty program, you might find it needs tweaking and reinventing as you go along. Find some tips onhow to measure your loyalty program’s ROI here.

Otherwise, if you’re ready to discuss how Stamp Me Loyalty Solutions can provide you with an enticing and highly effective B2B Loyalty Program,get in touch with a friendly member of our team today.

Stamp Me provides loyalty solutions to businesses large and small, from our own Customer Loyalty App to fully customised loyalty and rewards programs for enterprises and brands.

Contact us if you would like to discuss a loyalty or rewards solution for your business or brand.

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