When you think of successful rewards programs, what brands come to mind? Do you think of Starbucks Rewards and their highly coveted Gold Card? Maybe you remember your favorite grocery program and the value it provides you in savings, or possibly any number of the best ecommerce rewards programs. However, while each of these programs are quite strong, examining only B2C giants doesn’t paint a complete picture of today’s rewards landscape.
Looking at each of these extremely successful rewards programs, it would be easy to conclude that rewards only apply to consumer brands and don’t hold much value for a B2B organization. In actuality, nothing could be further from the truth. Due to the makeup of the B2B industry and the typical profile of a business consumer, B2B brands stand to gain the most from leveraging the power of rewards.
While the value of B2C rewards is undeniable, the B2B space is ripe for rewards programs and even has some unique advantages over its consumer counterpart. So check out some of the reasons and methods for building a killer B2B rewards program because when it comes to rewards, we mean business.
B2B Brands Have Fewer Customers
One of the key challenges that B2B brands have to overcome is the fact that they just don’t have as many customers as the average B2C brand. To put this in perspective, the population of the United States is just over 300 million. Each of these 300 million people is a potential consumer. This is in stark contrast with the total number of American businesses, which is only 29.5 million – a number which actually falls to 5.72 million when you remove “micro SMB’s with no employees”.
Keep in mind that 5.72 million is the total market! When a B2B brand segments for businesses that match the size, location, and need profiles of their target market they’re often left with a much smaller customer selection.
This narrow customer segment means that competition for the few customers that do exist is extremely fierce. B2B brands have to be laser focused in their marketing efforts because they don’t have the option to cast a wide net and reel in a subset of a large market. B2B brands frequently spend less on mediums like television advertising, choosing instead to invest in a sales department who can directly engage the exact clients the brand is targeting.
The sparse nature of the B2B customer is exactly what makes a B2B rewards program so effective. When there aren’t many customers to chose from, you have to invest in acquiring new customers while simultaneously retaining the the ones you already have. This combination of acquisition and retention marketing gives rise to the need for rewards.
So how can a rewards program help you make the most of a limited customer segment? Firstly, since B2B marketing tactics often lag a few years behind those used in the B2C space, rewards programs are much more of a novelty in business to business transactions. This means that a rewards program is much more of a differentiator for a B2B brand and can help the business stand out from its competitors within its narrow customer base.
Secondly a B2B rewards program helps brands retain their limited customers. Rewards programs are structured to satisfy and delight a brand’s existing customers whether they are business clients or end consumers. Investing in a rewards program is an industry standard way to combat customer churn. Preventing churn is of huge importance for B2B brands, as a churned customer is much harder to replace in the business to business space.
B2B Customers are High Value Sales
While the number of businesses pales in comparison to the number of consumers, B2B industries have the upper hand when it comes to customer value. To illustrate with an example, the sale of a laptop to an individual customer provides the manufacturer with a significant amount of revenue. On the other hand, a sale to an organization who is purchasing laptops for each of its employees is exponentially more valuable.
B2B brands participate in higher value transactions because their customers have higher value needs. Business clients are more likely to engage in bulk orders, longer term contracts, and ongoing subscriptions than individual customers, and these buying behaviours are what make businesses extremely lucrative customers.
When combined with the fact that there are often very few B2B customers in a given industry, the high value of these customers only adds to the necessity of effective customer acquisition. B2B rewards programs give businesses a way to leverage their existing customers to convert new high value customers.
One of the staple actions in a rewards program is rewarding a customer for referring other customers. Referral rewards represent a unique opportunity for B2B brands because while referrals are valuable in a B2C relationship, a successful referral is priceless in a B2B industry.
Referral rewards allow a B2B brand to mobilize its customers as an extension of its sales team by compensating customers for connecting the brand with sales opportunities. To ensure that it utilises referral rewards to their full potential, a B2B brand should ensure that successful referrals are rewarded attractively. While bearing the cost of these rewards may seem counterintuitive, making smart investments in referral rewards creates more successful conversions of sales with high customer lifetime value which ultimately will have a positive impact on the bottom line.
The added benefit of referral rewards is that your customers are often more equipped to explain the value of your product than you are. They are the ones with the problems your brand is solving and they are more often than not a far more trusted source than a sales team whose job it is to promote your product.
B2B Customers Cost More to Acquire
The last reason for B2B rewards programs is by far the most straightforward. Business clients have extremely high acquisition costs. Most B2B brands have some combination of a sales and marketing team who work tirelessly to move customers towards a purchase decision.
Unlike most B2C transactions, which can take anywhere from seconds to hours, B2B purchase decisions can frequently take months and on many occasions last longer than a year. These complex decisions bounce between multiple decision makers and levels of the organization and cost a brand both time and money to effectively close.
This high acquisition cost is yet another reason retaining a business customer is of paramount importance. If a brand invests a significant amount of resources to get a customer, then losing that customer represents a large financial burden to replace that revenue stream.
Rewarding B2B customers helps to retain them by moving them up the customer satisfaction scale away from churning and towards value driving actions like repeat purchases and brand advocacy. After all, the best customer is a happy customer and an unhappy customer won’t be a customer for long.
A good way to structure B2B rewards programs to achieve customer delight is by providing customers with rewards that matter most to them. For example, earlier we discussed how B2B customers often engage in high value bulk orders. A customer like this would benefit most from rewards that provide a percentage discount as this provides tangible and quantifiable savings for their order.
By understanding the unique profile of business customers, B2B brands can develop rewards programs that keep their customers satisfied for the long term. Whether it’s shipping discounts, free promotional products, or percentages off orders B2B clients have unique needs and the brands who work to meet them will be all the better for it.
B2B Rewards Are Back In Business
Business to business industries have many differences from their consumer counterpart, but that doesn’t make them any less suited to the value of rewards programs. In fact, some of the key differences in the B2B space are the reasons rewards programs work so well in the industry. Business customers are less in number but high in value and can cost quite a bit to acquire. That’s why the best B2B brands are using rewards programs to attract, retain and delight their business customers. In other words, B2B rewards are just good business.