The Ultimate Guide to B2B Loyalty Programs
B2B loyalty programs are fast becoming the antidote to poor customer retention. Those who leverage them will avoid the devastation that comes with customer churn and bask in the riches of a loyal customer base that generates higher revenue.
This is important given how cutthroat today’s economy is. Times are tough and things are expected to get worse - economists predict that there is a 70% chance of an incoming recession.
For many, a loyalty program will be the tool that keeps their head above the water. And for others, it will be the asset that accelerates business growth faster than ever before.
But what springs to mind when you think of loyalty programs? What are their benefits? And how do you even build one?
In this article, we’ll walk you through what a business to business loyalty program is, what it looks like, how it can benefit you and reward most valuable customers more, and how you can integrate one into your own business model.
What is a B2B loyalty program?
A B2B loyalty program is a customer engagement and retention tool that is designed to help companies cultivate loyalty from the businesses to which they sell. These loyalty programs have unique features and loyalty principles that aim to improve customer retention and foster strong brand connections.
B2B Loyalty: The Facts
B2B companies with loyalty programs experience up to a 20% increase in customer retention.
B2B companies with loyalty programs also report up to a 10% increase in sales.
According to a survey by Salesforce, 80% of B2B buyers say that experience is as important as the products and services they're purchasing.
B2B customers who are emotionally connected to a brand are more than twice as likely to recommend it to others.
Personalization is key in B2B loyalty programs, with 72% of B2B customers stating that they only engage with personalized messaging.
Implementing data insights alone from loyalty programs can increase profits by 25%.
According to a survey by The B2B Institute at LinkedIn, 58% of B2B marketers believe that customer loyalty is the most important metric to track.
B2B buying cycles are often longer and involve more complex decision-making processes. Loyalty programs shorten and ease this decision-making process.
B2B companies that invest in customer experience and loyalty programs can outperform their peers by up to 85% in sales growth and more than 25% in gross margin.
How Loyalty Works in B2B
Contrary to what you may think, B2B loyalty programs differ significantly from B2C rewards programs. Both uses have a rewards system in place but the way incentives and progression are used are not the same. Here’s how they differ:
B2C loyalty programs tend to be available to the customer base for free and provide immediate benefits for joining. On the other hand, B2B loyalty programs typically involve a contract or purchase requirement, and rewards tend to be tied to a subscription model, but only if the program offers substantial advantages in return.
Loyalty Program Type
There are many different types of loyalty programs in the B2B space. Point collection and redemption (commonly known as 'earn and burn') may not be the most effective reward system for a B2B market, as it was originally designed for frequent, lower-value transactions.
Given that deals in this sector often revolve around subscription or commitment-based models, tiered loyalty programs with personalized perks would be a more suitable fit.
Discounts, double points campaigns, and early access to products or services do not fit in the rubric of a B2B loyalty program. In contrast, incentives either revolve around rewards that can enhance a client’s business or offer unique experiences for employees, such as business consultancy, cash rewards, or even holidays.
Because onboarding clients requires a longer and more stringent decision-making process, B2B businesses can’t leverage short-term tactics such as FOMO to entice people to enroll in their loyalty program. However, this does not mean that B2B loyalty programs ary less effective for new customer acquisition. Instead, it would be more effective to emphasize the long-term value that new customers can receive when joining.
B2B companies tend to have a smaller and more demanding customer base than their B2C counterparts. Having a more intimate customer relationship and business relationship requires B2B businesses to customize incentives, such as training, to each individual client in order to foster closer customer connections.
The Benefits of Loyalty Programs for B2B
The benefits of B2B loyalty programs are wide-ranging and will help you accelerate business growth. Incorporating this strategy into businesses will help you level up your business in several different ways.
Reduce Customer Churn
Customer churn is costly. Research suggests that it’s five times more expensive to acquire new customers than to retain existing ones. Having a B2B loyalty program in place increases customer loyalty and retention, with studies showing that 77% of customers are more likely to stay with a business if there is a loyalty scheme in place.
The probability of making a sale to a new client is estimated to be between 5-20%, whereas the likelihood of selling to an existing customer can range from 60-70%. Customers feel that it's less risky to buy from businesses they are already familiar with.
Having a customer loyalty and referral program already in place will encourage customers to prioritize doing business with you instead of your competitors. Striving to achieve a certain level of customer loyalty will only help you maximize sales.
Research suggests that a 5% increase in customer retention can more than double your revenue. Implementing a B2B loyalty program can enhance rates and cultivate customer loyalty, ultimately retaining customers and leading to increased revenue generation.
Attract New Clients
Over 70% of customers are more likely to recommend a brand if they have an effective customer loyalty program in place. With a bespoke rewards program that fosters customer loyalty, clients will be more inclined to share their positive experiences with others, helping you to attract new clients through word-of-mouth marketing and support activities.
How to Increase Loyalty in B2B
Improving B2B loyalty goes beyond the expectation of providing premium customer service. Below are a number of different ways you can enhance brand loyalty in B2B.
Provide Tier Incentives
Tiered loyalty programs can drive customer engagement and pull them closer to your brand from the get-go. This can revolve around a points system where clients are rewarded for completing certain actions, such as making a. As customers gather more points and break into different thresholds, they’ll be entitled to certain bonuses that reward them for their commitment.
Arrange special member events
B2B offline events allow motivated business leaders to create new relationships that will propel them closer to their goals. If you’re the bridge between parties then your perceived value as a business will skyrocket, providing you with a range of benefits:
Strengthen Business Relationships: Inviting customers to exclusive events creates a sense of appreciation and special treatment, fostering confidence and stronger bonds with your company.
Market Products and Services: Hosting events provide a valuable opportunity to showcase, train, and educate customers about new offerings, increasing the potential for lead generation and sales.
Establish a Competitive Edge: Organizing member events distinguishes your company from competitors and enhances brand recall over the long term.
How to Build a B2B Loyalty Program
Define your target audience
Your first goal is to identify the type of customers you want to reward in your b2b loyalty programs, such as frequent buyers, high-volume buyers, or loyal customers. This will enable you to create bespoke customer loyalty programs that are tailored to their goals and objectives.
Use sales data to define your goals
Loyalty programs are built around customer data. Without it, you won’t be able to identify your goals or those who can enroll in your customer loyalty program. Below are some metrics that will help shape your customer loyalty programs further:
Repeat Customer Rate (RCR) to identify how many repeat customers you have.
Customer lifetime value (CLV) to discover how much each of your existing customers spends on your business.
Net Promoter Score (NPS) to measure customer loyalty.
Customize the loyalty program for each customer
A one-size-fits-all approach will not be effective. Each customer's buying habits are uniq, and each account's sales potential will vary. Determine what type of content resonates best with each customer by addressing their specific pain points.
Go deeper with your analysis and identify the marketing channels that will maximize the visibility of your loyalty programs amongst existing clients.
Choose your technology
Select the technology platform that you will use to manage your loyalty program. Look for a platform that integrates with your existing systems and provides robust analytics and reporting capabilities.
Market your program
Launch your loyalty program and market it with targeted content to maximize its full potential. Look for a platform that integrates with your existing systems and provides robust analytics and reporting capabilities.
Examples of Top B2B Loyalty Programs
Back in 2014, Lenovo was still an inexperienced company finding its feet in the tech realm. This sparked unrest amongst former business partners on whether to stay or leave the company.
Lenovo then introduced its loyalty program, ‘Lenovo Expert Achievers Programme (LEAP),’ to prevent existing partners from leaving the brand.
How the LEAP program benefits its incentivized partners
Educational content: Business partners would be granted points for completing two educational modules or servers.
Sales performance: Business partners could measure their sales performance and convert sales into points.
Celebrity Cruises, a renowned luxury brand, primarily relies on travel agents to drive its sales. However, in 2015, due to the saturation of the industry, the brand launched a loyalty program called Celebrity Rewards.
The objective was to incentivize high-performing agents to work exclusively for the brand by offering points for each booking made by them. As a result, 12,683 agents were motivated to join the program.
The program's success was reflected in increased activity and retention rates, ultimately resulting in a surge in sales.
How Celebrity Cruises incentivized agents
A user-friendly portal was available for agents to claim their booking sales and view their accumulated points.
Agents have the opportunity to earn higher points by upselling to customers.
During the three-month campaign, "Celebrity Moments," agents competed on a booking points leaderboard, with the highest-performing agents being rewarded with £500 worth of points.
IBM VIP Rewards
One of the most famous B2B loyalty programs that exist in today's business arena is 'IBM VIP Rewards.' The rewards program was deployed with two goals in mind:
Express gratitude by acknowledging and rewarding customers for their existing activities
Motivate members to broaden their understanding of IBM's services
How IBM incentivized customers
Customers participated in challenge-based activities to earn points. This often required them to fill in surveys, create blogs and learn more about IBM's products.
Points could be redeemed for gift cards or private sessions with IBM experts.
The program featured a leaderboard to rank customers based on their earned points. This fostered a competitive spirit among participants that maximized engagement among their VIP customers.
With its incentive programs, IBM was able to discover more about its client base through data collection and customer feedback. This allowed them to identify what changes were required to boost customer satisfaction and enhance the overall customer experience.
Using B2B loyalty programs to accelerate business growth
Customer acquisition is expensive and even more so during times of economic hardship. With the prospect of an incoming recession, B2B loyalty programs are becoming even more crucial to strengthening customer relationships and achieving business growth.
Without them, businesses will needlessly burn through capital and time in the pursuit of new clients.