The objectives of B2C and B2B relationship marketing are the same: to retain the best customers and increase their share-of-wallet. However, there are a number of differences that influence how you develop a loyalty program.
Investment and implementation
The development of a relationship strategy is similar in both industries. When our team develops a relationship or loyalty program, it goes through the same stages, whether the company is B2C or B2B.
Processes differ, however, when it comes to the investment required. A new relationship program involves a number of changes. B2C companies generally have to change their POS systems and integrate complex bonus management software. The whole process has to be carried out at around 100 points of sale.
In B2B, transactions take place over the Internet or by telephone (through representatives). So there’s no need to change systems. What’s more, the production and tracking of membership cards is not necessary in B2B. The company already has access to its customers’ transactional data, thanks to account-based billing. This saves the industry some implementation costs.
Interested in B2B loyalty? Discover the success factors in our article published with Adviso.
Database
Customer data is at the heart of relationship marketing, in both B2C and B2B. The difference here is that B2B companies generally have a head start.
In the B2B manufacturing or service sector, the data already exists thanks to invoicing. The starting point is a detailed transactional database: name, address, e-mail, telephone number and purchase amount. The work to be done is structural. We need to evolve the financial (invoicing) database into a relational or CRM approach that enables us to:
- use customer data
- segment customers
- create loyalty initiatives to increase customers’ annual purchase volume
In B2C, if the company has not taken the initiative to accumulate data on its customers, the work will have to be done. The use of a membership card and changes to POS systems are often necessary and costly.
Engagement and bonding
It used to be said that a loyal customer was a customer who bought. Today, we think more in terms of engagement.
This is a major challenge in B2B, where volume rebate programs sometimes predominate. B2B managers know that they need to move away from this type of bonus, but are struggling to find a way out. Lower customer numbers and higher customer acquisition costs than in B2C make this task more difficult. A well-thought-out relationship program can make it possible to leverage different types of benefits rather than relying mainly on rebates.
Engagement bonuses are increasingly seen in B2B:
- viewing a training video
- attendance at a meeting
- use of social media
B2C companies are fortunate to have a stronger “love brand” presence.
39.5% of consumers define brand loyalty as having love for a brand. Loyal customers often become a brand’s biggest advocates, who will organically share about your company to their friends and network. They also have the tendency to be less sensitive to paying premium prices because they already understand the value that comes with your brand offerings.1
Some even manage to create communities. These increase engagement and develop an emotional bond between the brand and the community. For the member, it’s a value-added experience. Sephora and Air France Running are two examples to follow.
SOW data
In B2C and B2B relationship marketing, estimating purchasing potential is essential.
It’s easier in B2B to estimate share of wallet (SOW), as the sales department and its representatives can easily ask customers questions. Many B2B companies already have this estimate in their CRM or other systems. This is often a task for the sales rep. They can try to estimate a customer’s buying potential from their conversations with them, or from their number of annual projects or employees.
B2B customers are more comfortable sharing their annual purchase volume, unlike B2C customers. Indeed, in surveys or forms aimed at B2B customers, it’s not uncommon to see questions such as:
- How much does your company spend annually on purchasing products in field X?
- In which category do you place your sales? (choice of answers)
- How many full-time employees work for your organization? How many are there in your stores and on the road?
By combining potential data with transactional data, it is then possible to develop a customer segmentation based on the potential for new revenues (or share-of-wallet) to be won. This data is used to establish the best B2B relationship marketing strategy, which must also be adopted by management, in order to capture the maximum potential volume of the company’s customers.
If you don’t have information on the potential of your customer accounts, R3 Marketing can help you conduct a customer survey. Contact us for more information.
The following table presents a fictitious analysis of a B2B segmentation based on customer account potential. This approach helps determine the type of strategy and program to adopt.
Table legend
LowV = low annual purchase volume from customers in this segment at the B2B company studied
LowP = low annual purchasing potential on the part of customers in this segment
HighV = high annual purchase volume from customers in this segment at the B2B company studied
HighP = high annual purchasing potential on the part of customers in this segment
The first step is therefore to carry out this analysis (using billing or CRM data) in order to segment customers according to two variables:
- Annual purchase volume from the company
- Annual purchase potential of customers
This analysis is very revealing. It measures the impact of an increase in customer sales volume (share-of-wallet increase) in four different segments, on an annual basis, following the creation of a relationship or loyalty strategy (see “scenario” section of the table).
Whether you’re in B2B or B2C, R3 Marketing can help you identify the best loyalty strategy for your business.
Development of a new program
Improvement of an existing program
Best practices analysis
Marketing strategy and data