B2B loyalty – the essential guide

Incentive Solutions

B2B loyalty – the essential guide

Finding the consumer inside

Customer loyalty is arguably more important in business-to-business (B2B) industries than it is in consumer industries. That’s because, in B2B firms, the 80-20 rule is sometimes the 90-10 rule: the top 10 percent of your customers can account for 90 percent of your profits.

The good news: by identifying the key purchasers and influencers in your client organisations and then building relationships with them that mimic relationships in the consumer world, you can increase the retention, yield, and lifetime value of your best customers.

The five types of B2B customers

For the most part, business-to-consumer relationships are simple and direct: the business advertises its products and services, the consumer makes a purchase, and the business can then enter into a direct relationship with that consumer. In the B2B world, actual buyers are often hard to identify, and relationships can be both direct and indirect.

B2B marketers must therefore engage in detective work to uncover the buyers and influencers within their client accounts. Here’s a primer to the five basic types of B2B customers and the keys to building relationships with them.

End-users

If you sell direct to small business owners, then identifying your best customers and rewarding them is relatively straightforward. If you sell primarily through partners and distributors, or primarily to larger companies, then identifying your actual buyers can be difficult. A B2B loyalty programme can encourage your buyers to raise their hands and ask to be identified.

Purchasers

If you sell into larger organisations with procurement departments and purchasing managers, then you’ll need to know who they are. These purchasing managers may have leeway to choose you, or they may be bound by contractual purchase agreements. Identify these purchasers and then reward and recognise those who demonstrate loyalty to you.

Influencers

Influencers are your ‘hidden’ customers – they’re IT directors, senior corporate managers, and other mid-level corporate executives who exert a profound influence on the purchasing decisions of your clients. A value proposition based on content marketing can help you reach this group – just make sure you encourage identification, so you can market to them on a one-to-one basis.

Distributors

Many B2B companies sell their products indirectly through wholesalers and distributors. These distributors often have a choice between stocking your products and your competitor’s products. A loyalty programme designed to reward and recognise your key distribution clients can provide an effective way of building relationships with them – and shifting their spend to you.

Partners

Larger B2B companies often align with strategic channel partners that help them enter new markets or geographies. While many channel partnerships are negotiated at the C-level, you can often work with your channel partners to extend your loyalty programme into their markets. Make them an explicit partner in your customer loyalty efforts, and your partners too will reward you with their loyalty.

End-users

If you sell direct to small business owners, then identifying your best customers and rewarding them is relatively straightforward. If you sell primarily through partners and distributors, or primarily to larger companies, then identifying your actual buyers can be difficult. A B2B loyalty program can encourage your buyers to raise their hands and ask to be identified.

Purchasers

If you sell into larger organizations with procurement departments and purchasing managers, then you’ll need to know who they are. These purchasing managers may have leeway to choose you, or they may be bound by contractual purchase agreements. Identify these purchasers and then reward and recognize those who demonstrate loyalty to you.

Influencers

Influencers are your “hidden” customers –they’re IT directors, senior corporate managers, and other mid-level corporate executives who exert a profound influence on the purchasing decisions of your clients. A value proposition based on content marketing can help you reach this group –just make sure you encourage identification, so you can market to them on a one-to-one basis.

Distributors

Many B2B companies sell their products indirectly through wholesalers and distributors. These distributors often have a choice between stocking your products and your competitor’s products. A loyalty program designed to reward and recognize your key distribution clients can provide an effective way of building relationships with them –and shifting their spend to you.

Partners

Larger B2B companies often align with strategic channel partners that help them enter new markets or geographies. While many channel partnerships are negotiated at the C-level, you can often work with your channel partners to extend your loyalty programme into their markets. Make them an explicit partner in your customer loyalty efforts, and your partners too will reward you with their loyalty.

Loyalty as an outcome of relationships

Customer loyalty is an outcome of customer relationships. All relationships, whether personal or between customers and businesses, share similar characteristics, and customers give loyalty to those businesses with whom they have developed strong relationships.

Your job as a marketer is not to “trick” customers into becoming more loyal, but rather to reward and recognise them for behaviour that strengthens your bottom line. For B2B marketers, this job requires you to understand the psychological factors that drive customer loyalty.

The fundamental drivers of customer loyalty

In the 1950s, McDonald’s founder Ray Kroc articulated the fundamental drivers of customer loyalty. In order to build customer loyalty, Kroc argued, you must execute on these four fundamentals better than your competitors do. Fall down on any one of these drivers, and you’ll lose market share to the competition.

Your products and services must be of superior make to the competition’s products and services.
You must provide superior customer service to the competition. In B2B, this includes partners and distributors.
The customer experience, whether in your showroom or through your digital channels, must deliver flawlessly.
Your prices must be better than your competitors’ prices. Pricing is more complex in B2B than in consumer goods.

The power of relationships

Once you have executed on Ray Kroc’s fundamental drivers of loyalty, you can begin to focus on building strong customer relationships.

Both business and personal relationships share similar characteristics.

Relationships:
Are long-term
Are interactive
Are reciprocal
Build equity

Require dialogue

Must evolve

Reward and recognition

We’ve seen how building loyalty with B2B customers requires a focus first on delivering on the fundamental drivers of loyalty as outlined by Ray Kroc, and then on building relationships with the purchasers and influencers within your B2B accounts.

The third step to building loyalty with the “consumer inside” is to place a value proposition on the table constructed around reward and recognition. The combination of reward and recognition works because it appeals to both halves of the customer’s brain: the analytical side, and the emotional side.

If you’re thinking of how to start growing your loyalty in the B2B sector, schedule your FREE and no-obligation consultation with our New Business Director, Glenn Shaw.

Glenn has worked in Loyalty Marketing across New Zealand, Asia, and Australia for the last 10 years, and is passionate about creating and delivering programmes which maximise engagement and impact for clients.