Customer loyalty is crucial for business stability and growth. But it must be earned.
It can be quite difficult for B2B businesses to acquire new clients. Sometimes it can take months and a lot of persuading just to get a client interested in your brand, not to mention that customer acquisition is a rather costly affair. But all that effort comes with great rewards; most B2B customers have excellent lifetime value once onboarded.
Given the challenges of sourcing convertible leads and your clientele's potential value, you certainly wouldn't want to lose any of your valuable customers. Well, the only way to effectively minimize customer churn is by cultivating customer loyalty to encourage repeat business.
As the phrase implies, “repeat business” means existing customers engage or buy from your business repeatedly. Overall, repeat customers help improve your sales volume and bottom line without significantly increasing your marketing budget or conversion spend. Also, repeat business is sufficiently predictable, stabilizing the cash flow and simplifying financial planning.
Here are some industrial stats to give you an idea of the importance of repeat business and customer retention by the numbers:
These are all very compelling reasons to prioritize customer retention and repeat business in your marketing strategies. The only question is how to do it effectively.
For repeat business to happen, you need loyal customers that consistently choose to buy from your brand. Entrepreneurs try various strategies to build customer loyalty. But developing a loyalty program is by far one of the most practical ways to keep your customers coming back. A loyalty program is basically a customer appreciation system that rewards frequent buyers. The complexity and value of the rewards can range from membership tiers and redeemable purchase points to exclusive deals and perks.
Loyalty programs are nothing new in the business world. Top B2B and B2C brands such as Microsoft, Amazon, and Starbucks, just to mention a few, have elaborate loyalty programs to encourage repeat business. In fact, more than 90% of U.S. companies connect with their customers through loyalty programs in one way or another.
But do loyalty programs really work in earning customer loyalty, or are they just another superficial marketing gimmick? Yes, they do; they work wonders. And not only that, loyalty programs build positive customer experiences.
According to the most recent global survey on customer loyalty, 77% of customers said they would likely stick to a brand with a loyalty program. Another 70% said they would recommend a brand with a good loyalty program. Additionally, 63% of customers said they were prepared to modify their buying habits to maximize their loyalty benefits.
This proves it all: loyalty programs not only encourage repeat business but also promote brand awareness through word of mouth and can even positively alter customer behavior.
Targeting repeat business is the way to go if you really want to make the most of your hard-earned customers. To ensure you get it right, here's a simple 5-step guide to building a winning customer loyalty program:
Many entrepreneurs get loyalty programs wrong by regarding them as cheap, one-off, or short-term promotional devices. Most bad ideas about loyalty programs stem from the misguided notion that customers can be bought. But the truth is, customer loyalty is not bought through rewards; it is earned by delivering consistently meaningful value and experiences.
For starters, the reward must be desirable and attainable to get your customers excited but not so over the top that it comes off as desperate. Besides the reward’s allure, the loyalty program should pull customers closer to your brand by making them feel special and appreciated as part of a larger community. So, the ideal loyalty program must be well-balanced and sustainable in the long run.
A loyalty program is not something you can copy directly from your competitors. It should be specific to your customers and brand. To achieve this, you must have a good understanding of your clientele and the market in general. Study your customers’ purchasing patterns, spending power, and challenges. This knowledge will help you design a program that perfectly aligns with your customer's preferences and perceived brand value.
For instance, customer insight is vital in selecting the ideal type of loyalty program. There are many different ways to structure a loyalty program; popular setups include the following:
Another reason you shouldn’t go overboard with the reward system is to preserve the purchase value. As a rule of thumb, the value your loyalty program creates must exceed the cost of value delivered. In other words, never give away more than you get back. Remember this as you create your rewards catalog. Strike a balance between generosity and viability.
However, don’t fixate on the monetary value of the rewards, instead focus on the whole program’s ROI in terms of the sales and marketing opportunities generated due to repeat business.
You obviously want all your existing and prospective customers to know about the loyalty program. After all, it should be a bold selling point. So, incorporate it in your branding, marketing campaigns, and customer outreach programs to spread the word and encourage participation. Plaster it in customer emails, newsletters, webpages, and all promotional and customer engagement mediums — just like you would promote any unique selling proposition (USP) or special offer.
More importantly, explain the terms of the program clearly so that customers know exactly how they'll benefit and what to expect.
Revise and improve your loyalty program as you continue to measure its ROI. Here are some of the performance factors you should track closely:
Keeping an eye on these metrics gives you essential data points for calculating ROI and fine-tuning the loyalty program to be more inclusive, rewarding, or engaging.
While loyalty programs are a great way to motivate repeat business, there are many other additional techniques you can use to earn customer loyalty. One technique that works particularly well for B2B businesses is offering lending services to customers — embedded financing. Non-financial organizations lending money to their customers is the hottest new trend in alternative SMB funding. And you don’t need much to get started either.
Loanspark can help you build meaningful long-term relationships with your customers via B2B lending. Through our co-branded solutions, you can design funding products that address your client's most pressing financial problems, enabling you to project additional brand value and encourage more repeatable customer engagements.
The best thing about partnering with Loanspark is that you won't have to spend a single penny on setting up the lending infrastructure or hiring financial experts; we have all that taken care of and ready to go. It’s a quick, low-cost, and efficient way to cultivate customer loyalty while earning some extra cash in the process. Plus, your customers get the financial support they need to grow their ventures. It’s a win-win scenario for everyone.