For B2B Companies, Nurturing Customer Loyalty Requires A Different Approach

B2B loyalty programs can be an effective strategy for businesses to build long-term relationships with other businesses, retain loyal clients and partners, and increase the lifetime value of customers. For both businesses and the businesses they serve, B2B loyalty programs can deliver impressive results. According to a recent survey,¹

• B2B companies that prioritize customer loyalty see a 10–20 percent increase in annual revenue.
• B2B companies that have effective loyalty programs have a 13 percent higher customer retention rate.
• B2B companies with successful loyalty programs see a 30 percent increase in cross-selling and upselling opportunities.
• B2B loyalty program members are 70 percent more likely to refer the company to others.

When most people hear "loyalty programs" they think of Starbucks, CVS ExtraCare, Marriott Bonvoy or Delta SkyMiles — B2C programs that consumers participate in on a regular basis. B2C programs like these and B2B loyalty programs do have similar goals: to engage and retain existing customers, create brand loyalty, acquire new customers, increase spending and lifetime value of customers, and encourage referrals. However, addressing notable differences in the design and execution of B2B loyalty programs compared to B2C programs is crucial for ensuring success.

B2B vs. B2C Loyalty Programs

1. Purchase Decision-Making Approach

For businesses, the decision-making process involves more than one person: an employee reviewing product information, an end user of the product, a point of contact or company representative, or a budget approver or purchaser. The decision is also typically at a much higher purchase amount for B2B than a B2C consumer, making approval more complex. Additionally, businesses are much more rational and pragmatic in their decision-making than a typical B2C consumer — the business either needs the product or doesn't.

Key takeaway: The appeal of any loyalty program proposition must speak to all stakeholders and focus on tangible business benefits throughout the purchase funnel. When designing a B2B loyalty program, it is important to communicate and re-communicate the program value proposition and key tangible business benefits to each stakeholder at each purchase decision stage.

2. Transaction Scale and Frequency

Compared to B2C transactions, B2B transactions are often larger and less frequent. B2B loyalty programs may require customers to make more significant purchases to earn rewards, or they may have longer timeframes for earning and redeeming rewards.

Key takeaway: The increased scale and time between purchases creates two challenges for B2B loyalty program providers:

• The decision-making process becomes longer and more complex, so providing clear and comprehensive product information and competitive differentiators is essential.
• B2B loyalty program providers need to reiterate their brand advantages and the value propositions of loyalty program membership.

3. Added Value Propositions

While the typical spend-to-earn approach is common in both B2C and B2B loyalty programs, B2B loyalty programs require additional longer-term relationship-building value propositions to be truly differentiated from competition.

Key takeaway: B2B loyalty program providers must explore value propositions beyond static discounts and rewards structures. Other value propositions to increase the value of the relationship with loyalty program members could include:

• Enhanced customer support
• Early access to new products or features
• VIP events or networking opportunities
• Thought leadership and education
• Partnership opportunities

4. Transactional vs. Relationship Building

Many B2C loyalty programs are solely transaction-focused: earn on purchases, redeem on products. While transactions are a key element of B2B loyalty programs, there is a much greater opportunity to build lasting, longer-term business relationships. In addition to the rewards portion of a program, loyalty programs can be an additional tool to become a trusted partner and advisor to the businesses you serve to encourage retention, repeat business and referrals.

Key takeaway: Relationships matter even more in B2B situations. In addition to standard and additional value propositions noted above, leverage your existing sales team. This team is already focused on relationship-building with existing and new customers. Providing your sales team the tools and training to understand and advocate for your loyalty program with their customer base greatly increases the long-term success of any B2B loyalty program.

Steps to Success in Your B2B Loyalty Program

Whether it's developing a new program or enhancing an existing one, the experts at A&MPLIFY recommend that clients do the following:

1. Focus on the end customers – Understand the more pragmatic mindset of your customer and understand there are multiple decision-makers. Segmenting the businesses you serve by industry, geography, size, etc., will allow you to be much more personalized in your approach and communication.
2. Benchmark competitors – Evaluate the programs of your direct competitors to identify white space opportunities for differentiation. But also look at adjacent or best-in-class loyalty programs for new ideas. Remember, your customer is involved in many different loyalty programs as a business and as a consumer, so they have many varied loyalty experiences to draw on when they evaluate your program.
3. Develop innovative value propositions – Learn from benchmarking evaluation but also regularly talk to your customers to unlock their hidden needs and better understand their mindsets, through focus groups, interviews and surveys. This research can fuel new value proposition workshops and help you stay at the forefront of differentiated offerings as your customers' needs change.
4. Regularly evaluate program – Institute or continue a regular financial evaluation of your loyalty program to understand the value it brings your business. Understand which segments drive the best or worst results to develop retention and nurturing initiatives, and which value propositions have the greatest impact. The dynamic nature of your business, the business you serve, and overall economic conditions require you to always have a clear and current picture of your program's effectiveness.

B2B loyalty programs can be a valuable asset in building strong and longer-term profitable relationships with businesses. However, B2B programs require a different approach than B2C programs. By understanding the business decision-making process, designing for increased scale and reduced frequency, expanding the value proposition to businesses you serve, and focusing on relationship-building beyond transactions, you will be on the right track to creating an effective B2B customer loyalty program.

Footnote

1. Alexander Eser, "B2B Loyalty Program Statistics: Boosting Revenue and Customer Retention; Unlocking the Power of B2B Loyalty: How Customer Retention Can Skyrocket Revenues and Growth, Worldmetrics.org Report, July 23, 2024, https://worldmetrics.org/b2b-loyalty-program-statistics/.

Originally published 17 September 2024

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.