Monday, July 30, 2007

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

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