Feature: Business-to-business marketing: Loyal retainers
Keeping customers “loyal” is as much a challenge in the business-to-business sector as it is in consumer-facing retailing. Just as the likes of Nectar and Tesco Clubcard have to work hard to keep their offer fresh and engaging, suppliers have to be constantly on their toes when dealing with trade customers.
“Customer loyalty that derives from an emotional tie between supplier and customer is an unrealistic and unrealisable ambition,” points out Gerry Abram, managing director of NextTime Marketing. “It has never been easier for the customer to simply go somewhere else.
“In most industries, customers choose from a range of suppliers, periodically adding new ones and dismissing others. Our challenge is to use the occasions when we do transact with customers to ensure that, when the time comes for them to buy again, we’ve made it more difficult for them to go to a competitor.”
Mark Sage, director of loyalty at Carlson Marketing, notes that finding the right individual and the right way to communicate with them is an added challenge in B2B in contrast to consumer loyalty where the relationship is with the shopper from the outset. “It is complicated due to the increased number of relationships and decision makers,” he says. “Typically, within a B2B loyalty or channel incentive programme, there needs to be flexibility within the solution to allow rewards and recognition to be provided at many different tiers such as sales person, sales manager and dealer or branch.”
B2B programmes can in fact be a way for suppliers to identify who they should be speaking to by using the incentive to reward them “putting their hand up”, Sage adds. “As with consumer loyalty, once this is done, the key customer segments can be indentified and focused upon. Where we did this for a car rental company, rewarding travel agency staff, we saw a 12 per cent increase in sales within key segments.”
He points out that there are other benefits of a B2B loyalty programme, beyond the way that it helps to maintain useable data about customers. “Communications are still key, and the loyalty programme itself provides additional opportunities to talk to customers with a positive message that they don’t opt out of.”
Abram at NextTime Marketing agrees that it is not just about data. “We believe the answer lies largely in the current interaction and does not depend on collecting historical demographic transaction behaviour,” he says. “Perfecting the basics of service, quality, value and convenience is important because a customer who has been served well today is less likely to go elsewhere tomorrow.
“But what really makes a difference is offering tangible, additional incentives which mean that customers will not only spend more today but will come back sooner than they would otherwise have done. This tactic is more likely to succeed than any offer based on what they may have bought in the past.”
Abram believes that it is better to focus on the current transaction and then look at what incentives to offer, how they can be presented and how they can be used to upsell. “In addition, if we provide an incentive to buy next time, we make it less likely for customers to search for a new deal and give business to our competitors.”
Vouchers and merchandise are regularly used as incentives in B2B loyalty programmes [see case studies]. Adam Maher, director of loyalty at Maximiles, stresses that it is important that the level and type of any personal incentive offered are appropriate. Rather than personal financial incentives, he points to “business-related rewards such as learning and personal development tools and equipment to more effectively perform their role, or rewards that can be shared with colleagues. These can have a more lasting and motivational impact.”
These kinds of programmes help to promote sales in the short and long term. “Rewarding business partners makes sense to increase transaction value and frequency, ensure the partner keeps you front of mind, enhance the business relationship and engender loyalty from your business partners and their key staff on whom the success of the business relationship depends,” Maher explains. “The clients we work with see loyalty and performance rewards as a key element to driving incremental sales revenue and building successful, long-term business partnerships.”
Case study: Parsons Parts
Parsons Parts, a supplier of commercial vehicle parts, has rewarded its customers’ loyalty with vouchers in a scheme that has been running for five years. Designed to attract new business and reward the loyalty of existing customers, it offers buyers Kingfisher vouchers every time they achieve set monthly spending targets.
Sales director John Coote says: “We have a diverse range of customers, ranging across both large and small operators, therefore the scheme is highly individualized so that it does not discriminate in cases where the client may only have a small monthly spend with us.
“Therefore each spending target is decided against criteria which ensure that every customer wins, no matter what their size. The scheme is extremely popular and we have firm evidence that new business comes to us in preference to our competitors because of the incentive on offer. Every month, individual customers are being rewarded with anything between £25 and £150 worth of Kingfisher Gift Vouchers.”
Case study: MK, Osram and Thorn (pictured)
MK, Osram and Thorn, leading suppliers in the commercial electrical sector, joined forces for a programme to target electrical contractors and wholesaler branch staff who are their channel for reaching end customers.
Called Free Football Stuff, it was created by marketing agency Platform with a theme tying in with the World Cup. For every £100 that contractors spent on products, they were awarded one “goal”. Five or more goals entitled them to claim football-related rewards from an online catalogue.
Envelopes for making claims also included a spot the ball competition to win places at a celebrity penalty shoot-out held at Bisham Abbey. The top 25 penalty takers won tickets to a World Cup Final party.The envelopes also included entry forms for monthly prize draws, open to branch staff and van drivers.
Wholesale branches could create their own “team” and register online for a “Premier League”. Their positions in the league tables – The MK Cup, the Thorn League and the Osram Shield – were based on the number of “goals” claimed by their customers. The top four teams in each league received VIP hospitality packages to the 2006 FA Cup Final.
The wholesaler branch sign-up target over-achieved by 66 per cent and it increased sales for the three brands – Osram by 16 per cent, MK by 24 per cent and Thorn by 15 per cent year on year.
Platform managing director Graham Temple said: “We were the catalyst in motivating three independent companies who had the vision to combine sales and marketing resources – a perfect example that the sum of the whole is greater than the parts. We produced an innovative and highly creative campaign that delivered outstanding results.”
Case study: HCL
HCL, the healthcare staffing agency formerly called Healthcare Locums, needed to create a business-to-business programme to help it retain the locum doctors and other medical professionals on its books. VIPpoints was developed by ipoints, now part of Maximiles, built around an online loyalty solution. A welcome pack and membership card was sent to locums once they started working through the company.
People earned points according to the amount of work they took on through HCL. They could earn more points by recommending colleagues. The rewards, structured across four levels, were based on what would incentivise the target audience and included weekend breaks, spa days, adventure days, training and the latest electronic gadgets.
HCL exceeded its targets in terms of the number of locums on its books and decreased the level of churn.
For more case studies, click below
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