Business markets are very different from consumer markets. In a consumer market, large numbers of buyers have similar wants, transactions are usually small in value, products can be mass-produced, consumers’ perceptions determine products’ value, and companies focus on managing brands. In addition, the selling process is brief, retailing strategies play a vital role, and sales efforts are focused on end users. A business market, by contrast, has fewer customers, and transactions tend to be larger. Customers often need a customized product or price, the usage of the product or service determines its value, and brands mean very little to customers. Moreover, selling is a long and complex process, retailing isn’t a factor, and the target of the sales pitch may not be the product’s end user.
A Typology of Benefits
Companies rarely, if ever, take the trouble to communicate to prospective customers all the economic, technical, service, and social benefits they provide. Most sellers simply assume that buyers grasp the value of products and services. That’s a reasonable assumption, but it’s dead wrong.
It’s useful to think about a product’s value by grouping its benefits into four categories:
Tangible financial benefits
Industrial marketers often highlight tangible financial benefits because prospects grasp their value easily and can verify claims before purchasing products. However, if one vendor can offer such benefits, so can rivals. That kind of competition inevitably leads to price wars.
Nontangible financial benefit
Companies can convince prospects of the value of nontangible financial benefits in several indirect ways. They can use research from independent agencies to overcome prospects’ skepticism. Alternatively, suppliers can conduct pilot projects at potential customers’ facilities. Vendors can also offer customers money-back guarantees or penalty payments if products don’t perform as well as advertised. However, customers demand large sums as compensation, and marketers find it difficult to provide credible guarantees in business markets.
Tangible nonfinancial benefits
For instance, no one was ever fired for buying IBM, as the adage goes, but Big Blue can’t quantify in financial terms what that level of comfort means for customers. Tangible nonfinancial benefits, such as corporate reputations, global scale, and innovation capabilities, take time and money to create, but in commodity markets, they often influence firms’ choices. Buyers reward companies that offer this genre of benefits by paying premium prices for products or by specifying, in requests for quotations, benefits that are offered only by those companies.
Nontangible nonfinancial benefits
Since they must be experienced to be appreciated, such benefits play a more critical role when companies try to retain buyers than during the customer acquisition process. For example, many vendors go beyond the letter of contracts and do such things as deliver supplies on holidays to keep customers’ production lines going.
If suppliers don’t want to lose loyal customers, they must learn to tell them about the nontangible nonfinancial benefits they provide.
To acquire customers, companies must try to be at par with rivals on tangible financial benefits and use tangible nonfinancial benefits to differentiate their products. They can build relationships by shifting customers’ focus from tangible benefits to nonfinancial nontangible benefits.
Linking Benefits to Decision Makers
Marketers find it difficult to communicate benefits to customers because, often, the buying decisions in companies are made not by individuals but by groups of managers. When purchases affect the entire organization and involve large financial outlays, several functions and executives are involved in the process. I have seen six-function, 40-member purchase committees in many corporations. Moreover, the manufacturing plants of a multilocation business may use the same materials or machines, but each will have special requirements. Vendors must first woo the headquarters’ buying group and later focus on factories’ purchase committees. But few marketers are comfortable with multilevel processes and decisions by committee.
The Benefit Stack and the Decision-Maker Stack
The key to success in such situations is keeping in mind that each member of a buying group is usually interested in only one benefit or, at most, a few benefits.
Levels of Loyalty
Retaining customers in business markets isn’t just about keeping them in the fold; companies must also develop relationships with customers and grow their loyalty over time. Unfortunately, more than 80% of companies use satisfaction scores to monitor customer loyalty. That doesn’t work, because there is very little correlation between satisfaction and loyalty in business markets. Besides, customer satisfaction scores measure how well vendors have done in the past but aren’t reliable indicators of future customer behavior.
Turning Switchers into Valuable Customers
In most business markets, customers don’t show up in the shape desired by vendors. Companies can develop profitable relationships by investing time and money to migrate customers from one category to another.
Many companies believe that because they sell solutions rather than products, they have gone beyond offering features. But most suppliers continue to base solutions on preconceived notions of customer wants.
Now, let’s talk about maintaining loyalty in Consumer Business…
As a store owner or a marketer, you continuously aim to make your customers feel special and happy. Henceforth, you consistently work hard to plan ways for the same. But is customer satisfaction enough to achieve your growth targets and loyal customers?
According to Jeffrey Gitomer, “Customer satisfaction is worthless. Customer loyalty is priceless”. Jeffrey doesn’t lay emphasis on ignoring customer satisfaction, rather he emphasizes more on having loyal customers.
But how to build a loyal customer base is still a dilemma for most. This is where the concept of the customer loyalty program moves in.
The Customer Loyalty Program
A Customer Loyalty Program is a connection between a brand and a customer. When the company offers exclusive products, offers, discount coupons, promotions, or pricing; and in return, the customer agrees to “go consistent” with your brand through repeat purchases or engagement.
Customer loyalty is the outcome of a confident customer experience, consumer satisfaction, and the value of the product the customer receives when he transacts.
Since it is just the mutual connection between the customer and merchant/brand, the connection can be achieved via other means too. So what is the whole deal of having and implementing the customer loyalty program?
That is so because the Customer Loyalty Program is a definite and elaborative marketing effort. This program is designed with the aim to provide incentives and rewards to the customers showing loyal buying behavior. Successful loyalty programs are designed in order to motivate the targeted audience to return, shop, and trust the efforts of the marketer. A consumer market loyalty program, therefore, holds importance for the merchants as well as the customers.
Benefits Of Customer Loyalty Program
- Increase in revenue
- Increases sales
- Makes customers feel more valuable
- Gathers user information and valuable data
- A mode of interaction and communication between the business and customers
- Measure customer loyalty through engagement
- Improves customer retention while attracting new customers
- Constant improvements result in constant growth
Steps To Start Building Loyalty Programs
Step 1. Know your Customers
- Decide Target Audience
Your business may have high visibility and you’re getting traffic from all parts of the world. But this traffic is irrelevant for you because they don’t serve the purpose you aim them to. Hence, you must analyze your traffic sources and target only your potential audience. The more segmented audience you’ll have the better the rate of conversions and engagement.
- Analyze your consumer’s behavior
You constantly need to observe your consumer’s behavior. Behavior analysis plays a very important role in understanding the perspective of your consumer and what they want from your business.
- Store your consumer’s data
Saving the personal details of your customers like their birthdays or important occasions and anniversaries will help you in reminding them along with the greetings that you expect their presence soon.
Step 2. Plan your purpose to create a loyalty program
- Set your goals
What is your reason or need to create a loyalty program?
Since you’re mid-way to implementing the loyalty program for your store. It is highly recommended for you to first gauge the outcomes you wish to achieve and the probable duration.
- Decide on the metrics to measure your efforts in loyalty program
When we talk about our customers and measure their behavior in terms of numbers, we often make a common mistake of calculating it as a conversion or revenue. Rather, metrics that provide a fruitful result for the customer analytics are-
- Customer Lifetime Value(CLV)
- Net Promoter Score (NPS)
- Customer Loyalty Index (CLI)
- Set a budget
The most crucial segment for any business. No proper analysis of the budget for any project can drain the business accounts. Therefore, it is equivalent to decide upon the budget too when you’re planning to create a loyalty program.
Step 3. Prepare Your Customer Loyalty Programs
- Choose the type of customer loyalty program
A customer loyalty program is not just one traditional way to reward your customers. Instead, the more creative and unique you go, the better is the outcome.
- Plan how and when to reward your customers
This step takes you towards the execution phase of all your planning efforts. You know your target audience, your goals, the metrics you require to make an analysis, and the most-suited loyalty program type.
Step 4. Make your loyalty program easier to manage
You are open to the number of software that can help you in automating your loyalty program processes for your stores. These loyalty program-based plugins are discussed in detail in the next section to provide a clear understanding of selecting the tool for implementing your type of loyalty program.
Loyalty programs are an enormous help for businesses. They increase customer retention and experience while cutting your expenses. Also, starting a loyalty program and maintaining it for the long run will benefit you in holding your existing customers intact. As long as you go, your customers are along with you.
THE PROBLEM: YOUR BUSINESS ISN’T GROWING AS FAST AS IT SHOULD!
Your sales have stagnated or decreased, and you can’t figure out why. Discover what’s holding you back from achieving predictable sales growth in your business.
If you want to grow your business, you need a proven plan and framework. That’s what you get with the 2X Your Sales Discovery Session.
Want to learn about a formula for Predictable Growth that will put your business on a 90-day path to 2X Your Sales?