In the B2C world, “Customer Loyalty” has become synonymous with points or rewards membership programs which are used to aid in the acquisition of new customers rather than building value in existing customers.
Such loyalty programs are rarer in the B2B landscape yet the tactical importance of loyalty is equally misunderstood and underutilized.
91% of B2B executives questioned in a Sensei Survey listed “increasing sales” as the purpose for generating customer loyalty. If a purchase was the end or final point of the customer lifecycle, then these executives might be correct; however, increased sales are a by-product of loyalty, not the end result. The goal of increasing loyalty is to establish the foundation of customer advocacy.
Creating true advocates, those with the personal dedication and passion required to recommend your business or with the power to truly influence their peers towards a purchase decision, requires unquestioned loyalty. Without it, referrals are infrequently given and rarely without direct solicitation from you. Creating these advocates should be the business’ guiding principle when developing customer loyalty programs.
Relevance is Key to Loyalty
This degree of loyalty is not earned by volume price breaks but through relevance. How relevant is your relationship to the customer on any given day? How relevant are your products and offers to the customer when they’re received? How relevant is the response to customer service requests?
Most B2B businesses group customers by industry, size, purchase volume, share of wallet, etc. and formulate general loyalty strategies to coerce increased purchase orders. Using such general categorizations as the basis for loyalty programs is a short-term plan that limits the value of the customer from reaching its potential.
Sensei recommends the following strategies to generate advocate-worthy loyalty.
1. Align with Your Customer’s Value Proposition
Understand the value proposition that your customer proposes to the end-user and adjust your products, packaging, and options to help them deliver upon that promise. Remember that your existing customers are not only your customers; through their advocacy they are a conduit to many potential new customers. Adjusting your products and services to better align with the channel’s value proposition ensures the unquestioned loyalty required to drive advocates.
2. Monitor and Be Flexible Enough to Adapt In Real-Time
Monitor the changes in the economy, competitive factors or other issues that impact your customer’s businesses. How has their business’ focus had to change? What are their current attitudes towards the future? Have their short- or long-term strategies changed? Market conditions are evolving at increasingly frequent intervals; what was once a motivator is now an obstacle to doing business. Your business’ ability to proactively adapt to such changes will demonstrate leadership and solidify fervent loyalty.
3. Personalize, Personalize, Personalize
Relevance is not expressed in offers and promotions that anyone in the business’ category or geography can also access. Personalization requires rewards, education, ancillary products or support that is specific to the business, not their category.
Further, don’t confuse loyalty with reward programs in B2B industries. To demonstrate relevance, consider incentives that include premium packaging or personalized marketing collateral that will increase their ability to generate more revenue. Or consider providing the customer an outside consultant to create a customized social or marketing engagement strategy to better connect with their customers. Or for customers with time-sensitive or mission-critical end-user engagements, consider offering priority customer service handling.
Ironically, when you eliminate the goal of increased sales from your loyalty programs, you achieve the greatest sales increase. Shifting tactics from cash incentives or general point-for-purchase schemes to relevant and personalized services builds a longer-term loyalty that produces brand advocates.
Among these customers you’ll earn a greater share of wallet and increase their life-time value to your business. However, of even greater value are the referrals generated by these customers, which have the power to drive more qualified leads than most customer acquisition strategies.
Join the conversation! What’s your take on Loyalty in B2B? Should the end goal be advocacy as I suggest here or increased wallet share from existing customers?
Sam Fiorella – Sensei
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