Loyalty programmes are an essential part of any good business strategy; they elevate interactions between customers and businesses from simple transactions into meaningful and lasting relationships. But loyalty programmes don’t only apply between businesses and customers but also between businesses themselves, and these two contexts alter the way a loyalty programme operates.
To help you understand how to navigate business-to-customer (B2C) and business-to-business (B2B) loyalty programmes, we are going to explore some of the key differences.
Relationships and Engagement
Relationship: So first, let us begin by describing the differences between B2C and B2B loyalty programmes, where their main difference is a product of the relationships they represent.
B2C: A business-to-customer relationship is any retailer or service that directly sells to an individual consumer, most often the general public.
B2B: A business-to-business relationship involves transactions between two businesses where one sells its products or services to another. This can include wholesale supply, distribution services, or marketing services, among many others.
As we can see, a B2C relationship requires a general focus targeting a wide variety of people, and the loyalty programmes, therefore, must have broad appeal and encourage repeat purchases over time. Whereas a B2B relationship is maintained between professional buyers and clients and requires a more nuanced, targeted, and personalised approach to their loyalty programmes.
When a business works with customers, they are generally meeting the end goal of their business’ aims, whereby the processes behind the scenes are running smoothly and the business’ main concern is getting the product or service to as many people as possible.
Yet, when a business works with another business, it is most commonly to support the operation of their own business or the business they work with to help facilitate that end goal of taking their product or service to as many as possible. Of course, this is not exclusively the case but is the most common reason for a B2B relationship.
Engagement: What are the ways in which these two loyalty programmes differ in terms of their interactions with their respective clients, and how do we encourage engagement in these two scenarios?
As B2C loyalty programmes aim to engage with a large volume of individuals, the channels of communication and engagement will be focused on using mass marketing applications such as email marketing and newsletters, social media visibility, as well as mobile apps. These channels of communication are easy to use, a part of the customer’s everyday world, and so do not require extra effort to encourage users to interact with the business and offer simple and effective ways of ongoing engagement.
A B2B loyalty programme, on the other hand, is a much more personalised affair. It has to be, as the clients you work with are just as busy as you, their business is just as important to them as yours is to you, and the relationship you have between you either spells success or disaster for you both. So ongoing personalised communication is a necessity for B2B loyalty programmes. This can take the form of monthly reviews and networking events, which allow face-to-face contact and help build relationships beyond the services that each business provides for the other.
Reward Schemes and Incentives
Once our relationships have been established and we understand the differences between handling a B2C and a B2B relationship, it is also important to understand what kind of reward schemes entice and incentivise these two different markets.
B2C: As B2C loyalty programmes need a mass appeal, they are typically designed with this larger audience in mind and aim to offer tangible immediate benefits. The importance here is the customer or consumer feeling rewarded, valued, or incentivised to make a purchase, and so the rewards need to either feed a sense of urgency or be presented as a deal that is too good to miss.
MyMcDonalds is a well-known example of this, in which purchasing food using the app allows a customer to accumulate points, and over time, those points can be converted into free food or meals. As an extra bonus, when a customer’s birthday comes around, schemes such as these often give discounts or free products as birthday gifts to help personalise the experience somewhat.
B2B: Many of the above rewards can also apply to B2B, but it is the nature of the reward that differs. A B2B loyalty scheme wants to focus on more sophisticated rewards with a higher value to them. Simple discounts for individuals can become volume-based discounts where the greater the volume purchased, the greater the discount applied; this works well for wholesalers.
Businesses can offer each other insights, training, and support as part of a loyalty scheme. This worked particularly well for Lenovo when they took over IBM’s server division in 2014. To ensure their clients stayed with them and trusted Lenovo to do as good a job as IBM, Lenovo decided to offer their clients points and rewards if they completed training modules on their servers. This not only offered relevant education to their clients but encouraged them to use their service and rewarded them for doing so, which proved to them their dedication to the ongoing relationship and allowed them to experience the quality of their service firsthand. It became a win-win for everyone involved, and Lenovo exceeded their targets by 40% of their original goal, which pleased their partners on all sides.
Data and Personalisation
The story for handling data and personalising rewards follows a similar path of offering similar content but tailored in different ways.
B2C: Data collection for B2C loyalty schemes comes from personalised customer profiles, often gathered through personalised apps or online accounts, as well as looking at the general demographic and target consumer.
The data is then used to personalise the discounts or rewards to each customer or demographic. In terms of using personalised client profiles, it is easy to suggest a discount based on a particular brand a client always purchases. So knowing a customer’s spending habits allows a business to tailor their rewards to that customer’s needs.
B2B: Collecting data for a B2B loyalty programme is less about understanding the personal preferences of any individual or of the business itself but more about understanding how the relationship between the two businesses is benefitting both parties. This makes the process more complex and, due to the nature of sales cycles and contracts, can take a longer time to gather.
Key performance indicators (KPIs) for a B2B loyalty scheme will often include things such as account growth, customer retention rates, and client satisfaction scores. Much of this will be measured and reflected in sales and transactions, but much of it also needs to be gathered from those monthly reviews, weekly phone calls, and social events. By getting direct feedback from the key members of the business, you can get a deeper understanding of how they feel the relationship is going, better anticipate their needs moving forward, and check this against the data as it comes in.
By using the hard facts of sales, retention, and growth matched with client satisfaction, a B2B Programme can excel by then personalising rewards further and adapting them to the needs of the moment. Keeping communication personal and the relationship front and centre, a B2B loyalty scheme can demonstrate your commitment to your working relationship and build a trust that grows and strengthens over the years to come.
Measuring Success
Once we have established these key differences between B2B and B2C loyalty programmes and implemented them appropriately, we can then begin to look at the ways in which we measure whether our efforts were successful or not.
B2C: With the main goal of B2C schemes most likely being repeat purchases and loyal customers, a B2C loyalty programme will measure its success quickly. It will want to look at customer retention rates: how many customers does it hold onto, does it have more this month than the previous months, or have our efforts caused customers to leave?
B2B: As we covered in the previous section, the KPIs for a B2B loyalty scheme differ in that it looks less at individual sales and more at how the business has grown as a whole.
By looking at client retention rates, account growth and direct feedback, you can begin to understand how satisfied your business clients are with the service and the reward schemes and get a further indication of how successful the loyalty scheme has been.
Conclusion
As we can see then, the key difference between B2C and B2B loyalty schemes derives from their function. B2C seeks to engage a wide and general audience and so must target itself through mass marketing channels. Whilst this general approach works well for B2C loyalty schemes, B2B schemes definitely require a personalised touch. They are less about one-time and repeat purchases and more about fostering a strong and long-lasting business relationship.
By understanding these key differences, you can begin to shape your loyalty schemes to their intended audience with greater ease, precision, and much greater results.
If you want to speak to the experts in loyalty programmes, then reach out to Prizeshark today and our dedicated team of professionals will be glad to help you discover a better way to reward your customers for their loyalty.
