For a company that’s all about connecting people, telecom provider XO Communications was having a tough time connecting with its own business customers. But that all changed in May 2009 when the telco launched a B2B loyalty campaign.
Today the company sends 100,000 emails a month to its business customers, with content ranging from contest promotions to free white papers. By reaching out to its business customers with “feel-good messages” rather than product pitches, the company’s B2B loyalty program boasts an email open rate of nearly 20 percent and has contributed significantly to a reduction in customer churn, says Toni DeWitt, XO’s loyalty and retention marketing senior manager.
Too few B2B companies currently employ loyalty programs like XO’s. The B2C landscape, however, is awash in customer loyalty initiatives. And for good reason: The right programs can bring about impressive results, ranging from increased revenue and market share growth to upselling opportunities and enhanced customer spend. These benefits have caught the attention of an increasing number of B2B marketers, who recognize the potential value of B2B loyalty programs. “Employee loyalty, channel loyalty, and B2B-type loyalty programs are growing significantly,” says Mark Johnson, CEO of Loyalty 360.
Another reason for that growth: Today’s tough economy, off-patent products, and Web-based comparison shopping are forcing B2B organizations to rethink their retention and growth strategies. “If you want to retain and grow a customer, you’re going to have to do more than just sell them the product,” says Dan Carrothers, chief operating officer at Datacore Marketing.
From trinkets to tactics
However, that’s not to suggest that companies can simply repackage B2C strategies for the B2B playing field. “One of the principles of designing a B2B loyalty program is to avoid thinking of the classic, legacy consumer program where you earn points and receive gifts,” warns Howard Schneider, a partner with Metzner Schneider Associates. “You have to avoid the possible appearance of bribery or of unfairness in a business setting.”
That’s why, unlike B2C’s quid pro quo tactic of rewarding customer allegiance with “trinkets and trash,” Loyalty 360’s Johnson says, there’s a more strategic element to B2B loyalty that involves delving into consumer buying patterns and preferences. “Now, we’re seeing this big push towards understanding customer behavior,” he explains.
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