The loyalty of customers and business partners is critical to the survival and success of every business. For B2C companies, the loyalty of customers is indispensable for their growth and sustenance. For B2B companies, the loyalty of their clients and channel partners can make all the difference between success and failure.
In the B2B space, the potential to leverage loyalty programs is much higher than in the B2C space. Corporate clients and B2B buyers purchase in bulk quantities and spend much more money compared to individual customers. But despite that, many traditional B2B businesses fail to tap the potential of loyalty programs.
This blog post discusses seven reasons why B2B businesses must focus on creating and running effective loyalty programs as much as B2C companies, if not more. Read on to know the seven reasons why B2B companies must have well-designed loyalty programs in place.
Here are seven reasons why B2B businesses can benefit from a loyalty program:
1. Enhance retention
The very purpose of a loyalty program is to make customers and business partners stick with a brand. B2B loyalty programs do just that. Various studies have shown that buyers spend more and make repeat purchases when part of a brand’s loyalty program. B2B buyers and corporate clients are no different.
Another thing that B2B loyalty programs do effectively is that they help in closing the loop on customer feedback. As per recent data, B2B companies that close the loop on all customer feedback enhanced their retention rates by 8.5 percent.
2. Differentiate your loyalty programs
A joint study conducted by Google and CEB found that 86 percent of B2B companies found no considerable difference between competing businesses’ products. When products aren’t differentiated, it can be difficult to communicate a competitive advantage.
As per B2B International, four out of every five B2B buyers don’t prioritize price when making a buying decision. That means when B2B companies position price as their unique selling proposition (USP) and compete with each other on prices then they don’t appeal to most B2B companies.
That’s why B2B companies need to differentiate their loyalty programs and be extremely targeted in their marketing endeavors to attract buyers.
3. Enhance customer engagement
Customer engagement is one of the major objectives of loyalty programs. When B2B companies design effective loyalty programs, they manage to engage clients and win their loyalty.
A study conducted by B2B International found that when B2B companies have well-defined and high-quality loyalty programs in place then a majority of clients are fully engaged.
Right B2B loyalty programs such as tiered incentives enhance customer engagement right from the very beginning and encourage clients and business partners to buy more. After engaging customers, B2B loyalty programs build robust relationships with customers and create a strong sense of belongingness.
4. Enhanced profit margins
As per a study conducted by Forrester Research, a mere two percent increase in customer retention has the same effect on profits as a 10 percent cost cut. According to another study, increasing the retention rate by five percent can enhance profitability by 20 to 125 percent!
As B2B loyalty programs enhance customer retention, they also have a huge impact on a business’s profit margins. Apart from profit margins, B2B rewards programs contribute to a 30 percent growth in market share as well as a 32 percent increase in total revenue.
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5. To collect data and customize rewards
B2B loyalty programs are a goldmine of valuable data. Leveraging data effectively can enable B2B companies to understand their clients better and create more tailored and relevant rewards and experiences for them.
A Dimensional Research survey, in which many B2B marketers participated, revealed that seven out of every ten respondents said that they leverage historical information, big data, and predictive analytics to enhance their marketing effectiveness.
Did you know that recommendations from friends and peers influence over 90 percent of B2B buying decisions? And did you know that nearly 85 percent of B2B buyers start the purchasing process with a referral?
Referrals are extremely crucial for B2B companies. By having a strong B2B loyalty program in place, you can encourage and motivate your channel partners and prospects to engage with your brand.
7. Enhance average customer lifetime value (LTV)
Customer lifetime value is the worth of a customer to a business over a specific period. If you keep a customer for a long time or reduce the customer churn rate and make them buy repeatedly, then the average customer lifetime value increases.
B2B loyalty programs can greatly enhance the lifetime value of channel partners and clients. Increased customer retention, engagement, and referrals lead to increased customer lifetime value.
By and large
Well-designed B2B loyalty programs are extremely valuable for B2B companies. Apart from forging robust relationships between B2B brands and their clients, they can enhance retention, engagement, profitability, and more.
At LoyaltyXpert, we have created well-crafted and high-quality B2B loyalty programs and channel loyalty programs for many B2B brands. We have also helped them retain and engage more B2B buyers and business partners as well as register higher sales and revenue. If you are looking for a reputable and trustworthy B2B loyalty solution provider, contact us today to know how we can help or to book a free demo.