The past six months have created incredible challenges for companies big and small across the globe. What otherwise might have been a predictable, steady year has instead required leadership to pivot, innovate and develop new strategies to make up lost dollars due to the impact of COVID-19.
This year’s hardships have made every customer engagement, interaction and experience infinitely more important, and we understand B2B companies need to increase their impact rather than their marketing spend. Instead of sending your sales teams into a customer acquisition frenzy, consider a strategy for leveraging your existing customer relationships and implement a B2B customer loyalty program. A loyalty program can reduce customer defection and can increase customer penetration.
Some might consider loyalty programs to be only a B2C tactic. However, when done correctly, a loyalty program for B2B customers can be an impactful, sales-driving tool that can directly influence the customer experience.
Motivations for building a loyalty program
B2B purchases are high risk and therefore high reward
As many of us know, there are higher stakes for business operators making purchasing decisions than there are for the average consumer deciding which pair of tennis shoes they want for fall. And although there is more at stake, there is also a greater reward.
Creating a meaningful loyalty program for your customers could pay dividends for your business for years to come. 83% of customers agree that a loyalty program encourages them to continue doing business with certain companies, and companies that increase their customer retention rates by 5% can increase their profit margins from 25-95%.
What better way to increase customer retention (and therefore increase your profits) than to reward your existing customers through a loyalty program? A strong loyalty program will not only benefit your customers but also your company, as they reap the rewards of creating an engaged customer base and strong brand advocates.
Selling to an existing customer costs less than acquiring a new customer
With a dense competitive landscape and long sales cycles, B2B new customer acquisition can be tricky. In fact, a new customer’s probability for converting is between 5-20%, while an existing customer’s probability for converting is between 60-70%. According to Invesp., it costs nearly five times more to acquire a new customer than it does to sell to an existing customer — and, on average, current customers spend 67% more than new customers do.
While new customer acquisition is extremely important and will always be necessary, savvy marketers cannot discount the need for converting current customers in a challenging sales landscape. Now is time to be innovative, and a loyalty program improves customer retention and penetration — ultimately impacting profits.
Creating a program your customers want to engage with
Now that you’re considering implementing a loyalty program of your own, it’s time to determine what kind of incentives to offer. Technology Advice surveyed over 3,000 consumers who participate in loyalty programs, and 57% of the group said the top reason they participate in these programs is to save money. The second highest reason users participate, coming in at 37.5%, is to receive rewards. Understanding your customers’ motivation for joining a customer loyalty program is key for B2B companies to find a viable program offering. In order to be successful, you need to build a loyalty program your customers want to engage with and find value in.
The need for variable rewards
By nature, humans are motivated by variable rewards, so a predictable program will grow stale and may not create the true brand loyalty you’re striving for. Instead, B2B brands should consider offering a mix of incentives, such as:
- Access to exclusive content
- Redeemable rewards points
- VIP status
- Referral programs
- A choice of rewards
Participating in your loyalty program must come with a perceived value to your incentives. Mixing hard and soft offers will help keep participants engaged but not expectant, as long as the value is there.
Get started creating your own customer loyalty program
Take steps to implement a loyalty program for your B2B customers now so you can reap the rewards for years to come. Selling to your existing customers will cost less than acquiring new ones, and the opportunity to develop true loyalty with these customers can lead to lasting relationships and eventual brand advocates. Don’t forget to mix up your program occasionally to keep incentives fresh for your customers.
Not sure where to start? Comment below or reach out to us to discuss your B2B marketing needs.