Rewards Programmes And Why They Are Relevant to B2B Businesses
Enterprise clients and retail consumers have fundamental differences in how they approach purchases. Enterprise clients make purchase decisions after thoroughly analysing the value proposition, the potential for long-term partnership, and operational synergies. The decisions are more complex and evolve with the changing needs of the business. For this reason, retaining customers in the B2B models can often be excruciatingly difficult. Therefore, the relevance and importance of a robust rewards programme cannot be overemphasised.
After all, increasing the customer retention rates by just 5% improves the profits by anywhere between 25% and 95%. Loyalty programmes have proven their utility and here is how they are relevant to B2B businesses.
Unlike their B2C counterparts, B2B companies do not have a large customer pool. This translates into a substantially fiercer and cut-throat competition to acquire new clients. Retaining clients is critical for generating sustainable revenues in the medium to long-term. Hence, it becomes all the more important to have a rewards programme with the objective of retaining existing clients.
It’s a well-known fact that 84% of the B2B customers make their first purchase based on a referral. In an intensely competitive market, 84% is not a number that any company can afford to ignore. While the quality of the product and the promptness of customer service are crucial for business success, a company must ensure that its rewards programme encourages its enterprise clients to refer its business to their network.
The Emotional Connection
It’s a misconception that only B2C brands can establish and tap into the emotional connection with their customers.
Sure, business decisions are made by a group of seasoned professionals sitting in boardrooms, who mine through cold numbers and consider business metrics to arrive at their decisions. However, those professionals are people too, and more often than not, their emotions can overwhelm purely objective thinking. Recent research carried out by CEB’s Marketing Leadership Council and Google found that “B2B customers are significantly more emotionally connected to their vendors and service providers than consumers”. This means that smartly conceived rewards programmes can be highly effective and maybe even more relevant in a B2B setting.
A bulk of the enterprise products do not feature any substantial differences in their offerings. Without any other differentiating factor, B2B businesses are left with only one option – engage in a price war. This can have a damaging effect on the company’s bottom line and turn out to be a non-sustainable strategy for the long term. In such markets, an excellent rewards programme can be a powerful differentiator for businesses.
A good rewards programme can be a compelling reason for the enterprise customers to stick with a business, irrespective of the quotes from the other companies.
So, are rewards programmes relevant for a B2B business?
In fact, they can be even more relevant to a B2B business than to a B2C business, because the stakes are much higher. B2B businesses cannot afford to lose customers to the competition, because the pool of customers is already small to begin with. Further, every customer in the pool is a high-value client with a potential to be a long-term partner.
So, does your B2B business have an effective rewards programme?