Once the tool of Retail Marketers, loyalty programmes are cropping up all over the business-to-business arena. And for good reason: the 80-20 rule is even more pronounced in B2B channels, making the identification of best customers all the more important. Because B2B marketers generally deal with smaller customer bases and higher transaction and lifetime customer values, it only makes sense to develop a systemised approach to improve share of customer.
MJA Associates have taken a look at some of the biggest mistakes that can be made in a B2B Loyalty Programme:
- Over-reliance on discounts. The problem with discounting is that it almost always erodes the marketers pricing integrity. Any equity-style loyalty programme, which involves a promotional currency that converts to a genuine hard benefit, allows the marketer to avoid traditional discounting. An over-reliance on discounts wastes the opportunity to recognise and reward high-value customers while reinforcing standard pricing.
- Ineffective use of incentives. Interestingly, some B2B marketers perceive as loyalty programmes what have traditionally been incentive programmes. Whilst the two are not the same, many incentive programmes are logical opportunities for a loyalty transfusion. Traditional incentive programmes are usually reward driven and characterised by one-way communication. True B2B loyalty programmes are data-driven and characterised by sophisticated two-way communications, which isn’t to say that rewards are absent from these schemes. Instead, the relationship is the key, and rewards and benefits are configured as evidence of the value of the relationship. The dialogue between customer and marketer takes on a more prominent importance.
Managing the customer relationship is an even greater challenge in B2B programmes because the relationship is more complex, involving both an individual and a business. This complex relationship requires the right blend of hard and soft benefits. Hard benefits are tricky in a B2B programme, because they absolutely must be business related to avoid any possibility of motivating inappropriate employee purchase preference. So, creative soft benefits are all the more essential in the form of special information, special service and special access. Information is a benefit when it enhances the customers’ ability to improve their business performance. Extra dimensions of customer service are perceived as evidence that the marketer is acknowledging the customers’ special status.
All benefits in B2B programmes must directly accrue as a corporate benefit, even when they are bestowed upon individual employees. Examples would be professional training or education.
On the other hand, when a loyalty programme’s membership is primarily business owners, mixing in business-related rewards that might also be used by the owner personally is fair, acceptable and very effective.
- Inadequate database development. Two-way communication – particularly communication aimed at developing the customer database – is another often-overlooked aspect of B2B programmes. Although most companies know what customers buy, the billing database seldom has the information needed to customise relationship-building communications with customers, such as size of the customer’s business, his use for the product or service purchased and special situations based on his industry, geography or business life-cycle. Even basic address and key contact data can be sometimes missing.
Thus, benefits early in the programme need to stimulate dialogue aimed at identifying the key decision makers/influencers and knowing how to reach them in the future. Subsequent communications should expand the customer record further. Mailings should include short surveys/questionnaires. Customer service calls should include two or three extra questions designed at filling data gaps. Even personal sales calls should involve collecting specific information for the database.
As important as collecting the information, however, is using it. Communications should reflect individualised knowledge of the customer, adding relevance to the content and reflecting respect for the customer’s involvement in the programme.
