It takes a lot to gain a customer’s loyalty and even more to keep it. Customer loyalty in B2B is more challenging as businesses are not selling to individuals as consumers but to other businesses.
Tech giants have created rabid fans who will do anything to continue using their products and services. For your business to emulate this level of success, you need to start by identifying your customers’ ‘unmet needs.’
Once you know what they want, you can create customer loyalty programs and strategies to keep them returning for more.
Here’s to getting this show started.
What is Customer Loyalty?
In a business-to-business (B2B) setting, customer loyalty means “a strongly held commitment to re-buy the same product or service regardless of changing circumstances and changes in attractive alternatives.” This definition captures two crucial dimensions of customer loyalty: behavioral commitment and attitudinal commitment.
Behavioral commitment refers to customers’ future purchase intentions or past purchasing behaviors. Attitudinal commitment, on the other hand, captures customers’ affective attachment to a brand, often leading to positive word-of-mouth (WOM) and referrals.
7 Reasons Why Customer Loyalty is Important in B2B Businesses
There are several reasons why customer loyalty is important in B2B businesses:
Having loyal customers means they will buy from you again and again. Studies have shown that loyal customers are worth up to 10 times as much as their first purchase.
There is a five-fold difference between the costs of gaining a new customer and keeping an existing one. By fostering customer loyalty, you can dramatically reduce your acquisition costs.
Increased market share
Customer loyalty leads to increased market share. Studies have shown that a 5% increase in customer retention can lead to a 95% increase in profits.
Better customer retention rates
There is a 60-70% chance of selling to an existing customer while selling to a new prospect is just 5-20%.
Improved word-of-mouth marketing
Loyal customers are your best brand ambassadors. They’re more likely to recommend your products or services to others, which can help with customer acquisition.
Increased customer lifetime value
The average customer spends 67% more with a company after becoming a loyalty member.
Improved employee morale
Engagement and productivity are higher when employees work for a company with happy, loyal customers.
B2B Loyalty Programs and Strategies
So what strategies and programs can companies use to create and maintain customer loyalty in B2B settings?
Here are ten loyalty programs and strategies that have proven to be effective:
VIP and points-based loyalty programs
Points-based loyalty programs are one of the most popular loyalty programs. In a points-based loyalty program, customers earn points for every purchase or action they take. In exchange for these points, they can receive discounts, free products, or exclusive access to products or services for their current or future purchase.
VIP programs are a form of loyalty program membership where customers must reach a certain threshold (usually spending a certain amount of money or taking a certain number of actions) to become VIPs. VIP members often receive exclusive rewards, such as early access to new products or services, free shipping, or concierge service.
Relationship marketing is a customer retention strategy focusing on developing long-term customer relationships. It loyalty and advocacy rather than simply encouraging one-time purchases.
There are several key components to effective relationship marketing, including:
- Personalized communications: Customers should feel like they are receiving personalized communications rather than generic marketing messages.
- A focus on the customer experience: The customer experience should be positive and consistent at every touchpoint.
- Two-way communication: There should be a two-way flow of communication, with customers feeling like they can give feedback and that their input is valued.
- Building trust: Companies must build trust with their customers by delivering on their promises and meeting (or exceeding) customer expectations.
Customer service is a vital part of any customer retention strategy. So everyone must be focused on providing a positive customer experience at every touchpoint. However, delivering excellent customer service isn’t always easy. Everyone must be committed to it, from the front-line staff to the executive team.
But as you know, happy customers are more likely to stay with a company, spend more, and recommend the business to others. So you want to keep them that way.
When dealing with customers, be attentive to showcase the following:
- Customer focus: The customer should always be the top priority.
- Empathy: Customer service representatives should be able to empathize with the customer and understand their problems.
- A positive attitude: Customer service representatives should have a positive attitude and be friendly and helpful.
- Patience: Customer service representatives should be patient, even if the customer is angry or frustrated.
- Clear and concise communication: Customer service representatives should communicate clearly and concisely, using language the customer will understand.
- The ability to resolve problems: Customer service representatives should be able to resolve the customer’s issue quickly and efficiently.
You can encourage customers to promote your business to their friends and family through a referral program. In a referral program, customers earn rewards (such as discounts or free products) for referring new customers to the company.
To be effective, referral programs should be easy to use and offer attractive rewards that motivate customers to participate. The program should also be well-publicized so that customers are aware of it and can easily take advantage of it.
Social media engagement
Social media engagement serves as a customer loyalty strategy in three ways:
- Social media creates a sense of connection between the customer and the brand. When customers feel like they are part of a community, they are more likely to remain loyal to the brand.
- It allows businesses get feedback from their customers in real-time. You can use this feedback to improve the customer experience and ensure that customers are happy with their products and services.
- It empowers businesses to show their human side. Customers appreciate it when companies take the time to respond to their comments and concerns. This human interaction helps to build trust and creates a stronger relationship between the customer and the brand.
Engagement in social media is essential for any business that wants to build customer loyalty. But it takes more than just setting up a social media account and posting occasional updates. Businesses must be active and engaging on social media, promptly responding to comments and concerns. They must analyze all valuable customer data to know how to serve them best. This way, they can create customer relationships that lead to loyalty and advocacy.
Discounts and coupons
Promoting discounts and coupons will encourage customers to buy products or services from your business. A discount is a reduction in the price of a product or service. A coupon is a voucher that entitles the holder to a specific product or service discount.
But discounts and coupons should be used carefully, as they can erode profits if not managed properly.
When using discounts and coupons, businesses should consider the following:
- The type of discount: There are two main types of discounts: percentage-based discounts and fixed-amount discounts. Percentage-based discounts are typically more effective at boosting sales performance, but they can also be more expensive for businesses.
- The size of the discount: The discount should be large enough to motivate customers to take action but small enough so that it doesn’t waste too much profits.
- The frequency of the discount: Discounts should be offered frequently enough to keep customers interested, but not so often that they become expected or taken for granted.
- The discount’s expiration date: Discounts should have an expiration date to create a sense of urgency and encourage customers to take action quickly.
Transparency and communication
Customers want to feel confident about a company. They will be comfortable if it is communicative and transparent about its products and services.
Keeping customers informed about product changes, new offerings, and any disruptions to your service shows that you take their business seriously and are dedicated to providing the best possible service. When issues do arise, take responsibility and own up to your mistakes. Customers appreciate honest businesses that are willing to admit when they’ve made a mistake.
Co-creation is where businesses and customers work together to create value. Many forms of it exist, but common ones include:
- Co-designing products or services.
- Co-developing new features or functionality.
- Co-creating content such as user-generated reviews or social media posts.
This strategy can build customer loyalty by giving customers a sense of ownership over the product or service.
When customers feel they have contributed to developing a product or service, they are more likely to be loyal to the company. Co-creation also allows businesses to get customer feedback and ideas that can be used to improve the product or service.
You can involve your existing customers in the co-creation process through:
- Crowdsourcing: soliciting ideas or services from a large group of people, typically via the internet.
- Beta testing: releasing a new product or service to a small group of customers before making it available to the general public.
- Focus groups: a type of qualitative research in which a group of people is asked about their opinions and feelings on a particular topic.
Measuring the Success of a Customer Loyalty Program
There are a few key metrics that you can use to measure the success of your rewards program, including:
Customer lifetime value
- measures the total value a customer will generate for your business throughout their relationship with you.
Customer retention rate
- measures the percentage of customers who stay with your business over a period of time.
- measures the percentage of customers who refer new customers to your business.
Net promoter score
- measures customer satisfaction and loyalty and is calculated by asking customers how likely they are to refer your business to a friend or family member.
Customer engagement rate
- measures the percentage of customers actively engaged with your brand, such as by visiting your website, reading your emails, or following you on social media.
- measures the percentage of customers who take the desired action, such as making a purchase or signing up for a subscription.
The average order value
- measures the average amount spent per order.
Revenue per customer
- measures the average amount of revenue generated per customer.
Customer satisfaction score
- measures how satisfied customers are with your products or services.
Customer churn rate
- measures the percentage of customers who stop doing business with you over some time.
The bottom line of customer loyalty is customer success. Customers are more likely to be loyal to your brand if they are happy. There are many different ways to create a customer loyalty program, and you must carefully choose the right one for your business.
Here are other frequently asked questions about customer loyalty in B2B that we have not discussed in the article.
You can build B2B customer loyalty through a combination of great customer service, product quality, and marketing efforts.
Customer service is key to retaining customers. Satisfied customers will continue doing business with you if they feel they are getting good value for their money and are being treated well. Ensure your employees are knowledgeable about your products and equipped to handle customer inquiries and complaints professionally.
Product quality is also important. Customers will more likely remain loyal to your company if they are happy with your products. Always strive to produce high-quality products that meet or exceed customer expectations.
Marketing plays a role in building customer loyalty as well. Promote your brand in a positive light and make sure customers are aware of your company’s values. Position your brand as a trusted source of information and an expert in your industry.
Customers’ loyalty to a business is the willingness of customers to continue doing business with the company. Factors influencing customers’ loyalty include the quality of products, level of customer service, and overall brand image.
1. Awareness: The customer is aware of your brand but has no interaction with it.
2. Interest: The customer is interested in your brand and may have interacted with it.
3. Consideration: The customer is considering doing business with your company.
4. Loyalty: The customer is loyal to your brand and is a repeat customer.
5. Advocacy: The customer is an advocate for your brand and promotes it to others.
1. Recognition: Customers should feel recognized and valued by your company.
2. Reward: Customers should be rewarded for their loyalty to your brand.
3. Retention: Customers should be retained through great customer service and product quality.