Can A Loyalty Program
Help You Drive Demand?

B2B loyalty programs seem, on first consideration, to be a great idea. But they also come with their own pitfalls that don't occur in consumer-based loyalty programs. For example:

• Is it ethical to reward a client's employees to make decisions based on personal gain?
• Who should be rewarded: the business owner, management, employees, the business itself, or all?
• Is the person who gets the benefits always the one who makes the actual purchase decisions?

The list of problems grows or shrinks depending on the industry sector
involved, and on how well the relationship between supplier and client is defined and controlled.

For example, there is little point in a CPG manufacturer rewarding the product buying clerks at a supermarket's head office when the decisions on product range, quantity, and shelf space allocation are taken by others (such as marketing and merchandising managers). This represents a tightly controlled buying environment in which direct rewards for employees are fruitless.

However, in a more flexible (and typically smaller) business environment, buyers often have authority over stock control, product range, quantities, and even merchandising arrangements. In these cases, a B2B loyalty program that rewards the buyer would probably work - even if it stands on unsteady ethical ground.

There is another situation where B2B loyalty schemes work very well: channel sales partner programs. These are where a manufacturer directly rewards the sales staff of companies that resell its products. This kind of selling incentive is very constructive because it benefits both businesses equally, in terms of greater sales and profit.

By generating strong engagement between channel partners' sales people and the products themselves, the resultant increase in product knowledge and familiarity means that a more authoritative line can be taken in the sales process when dealing with end users.
A fine example of this kind of program's success is networking specialist Nortel, which achieved 40% growth in channel sales after one year of running such a program, which is detailed in section 25.1.6 of the 2006-2008 edition of 'The Loyalty Guide' report.

The Loyalty Guide Volume II (The Wise Marketer's 950-page global report on customer loyalty) explains every aspect of B2B loyalty, consumer loyalty, best practices, concepts, models and innovations, including case studies, original research, illustrations, charts, graphs, tables, and detailed presentation material.

Find out how to build true customer loyalty, increase profitability, reduce defection levels (churn), and how to monitor and increase each type of customer's purchase frequency, spend level, and share of wallet. The world's key loyalty programs are detailed, studied, and summarized for you. See where others are succeeding, what works, what doesn't, and why. Full details and downloadable samples are available online at http://www.theloyaltyguide.com/volume2

Sizing up Social Networks and
Their Potential to Build Value
By: Guy R. Powell, President of DemandROMI

OK, so we want to build a social network. Sounds great but is it really going to increase our brand engagement and drive revenue? And even if it does drive engagement, how do we translate that into conversions at the bottom line?

According to Nielsen/NetRatings MySpace had 57 million unique visitors in April 2007 representing 75% of the unique visitors between the top community websites (Myspace, Facebook, Bebo, Gather.com and Friendster). But how are the marketers of these communities turning that into conversion? What we need is a framework to begin to measure the value of a social network.

There are five key components to measuring the level of engagement of a social networking community (to download a whitepaper on the community engagement funnel, go to www.SNSWorkshop.com/Metrics.html):

·External awareness – For anything to happen with a social networking community there needs to be awareness. Early on marketers must spend a significant portion of their time at this level in the engagement funnel if they are to organically drive membership.
·Subscription – The first level goal of building awareness is to drive and increase membership in the community. Whether it’s a paid or unpaid membership marketers want visitors to click on that infamous ‘Join Now’ button.
·Consumption – Once becoming a member, they can begin to consume the offerings provided by the community. They can read blogs and other content, respond to advertising and make purchases.
·Conversation – A higher level of engagement however takes place when the member begins to interact with the other members of the community. They participate in blogs or discussion groups. They post comments and they may even build their own blog or discussion topic within the community.
·Invitation – The highest level of engagement occurs when the member invites other non-members to subscribe to the community. They now have enough trust in and receive enough value from the community to invite their friends. They are convinced that their friends will also gain value from the community.

Marketers must pinpoint their marketing efforts across all levels in the community engagement funnel to drive increasing engagement for members and non-members:

·At the top level marketers drive awareness of the community to deliver visitors to the registration page. If it is a fee-based subscription, the marketer can now rack up dollars as awareness leads to increased membership.
·At the consumption level success occurs when the members consume the offerings found within the community. If there are opportunities to spend more money on the site through the purchase of products or the serving up of advertising, the marketer has a new way to convert engagement with the community into money.
·At the conversation level a marketer can gain through the content of the conversations. Many marketers have found that utilizing consumer generated verbiage in their traditional advertising is one of the best ways to improve the quality of that advertising.
·The last advantage for marketers is for the membership to invite other members to join in. This is when the viral component begins. If the marketer can find clever ways to motivate the membership to send out invitations, the marketer can gain through the multiplier effect from members inviting others to join the community.

Although there are other providers of social media solutions, ThePort Network, one of our software partners, has begun to provide its clients measurements based along this framework. Looking at myajc.com, the online community for the Atlanta Journal-Constitution, the primary newspaper for the metro Atlanta area, we have seen marked increases in traffic and engagement at the primary site (ajc.com shown in blue in the diagram) once the community (myajc.com, shown in red) was actively promoted in October 2006. (See attached chart.) Twenty seven percent 27%) of total engagement with the brand as measured by the total number of minutes spent by unique visitors with the brand was done on the community site. Since both sites provide advertising opportunities and this represents an important revenue source for newspapers, we can extrapolate that online advertising revenues increased by a similar proportion (we are not privy to the exact numbers).


As for our consumption metric we’ve found that on this site in the first 6 months, each of the users posted on average, just over three blog comments. For another site managed by ThePort, we’ve found that users invite on average four of their friends to join the community.

Measuring engagement with the community based on a clear framework allows marketers to understand the level of activity being engaged in by their members. Armed with this information marketers can begin to drive further value by pinpointing their campaigns to make certain that engagement increases in a way that is good for their members and drives value for the marketer.



About the Author:

Guy R. Powell is President of DemandROMI, a marketing consulting firm specializing in driving increased ROI from creative marketing tactics and strategies. Please visit our website at www.demandROMI.com and our blog at www.MarketingTactegy.com.