B2B Marketers: Borrow From B2C Loyalty Tactics To Deepen Business Relationships

After almost every loyalty-related speech I give, I get some variation of the following question: "How does this apply to B2B?" Sure, customer loyalty programs are most frequently associated with consumer-facing rewards schemes, but earning customer loyalty is very important for B2B companies too. After all, loyal and satisfied B2B customers provide testimonials, case studies, and referrals that result in a fuller and more qualified pipeline of new business. It can be easy for B2B marketers to dismiss consumer loyalty models as inapplicable to their complex business relationships, but there's a lot more to consumer loyalty than points and discounts.

In my latest report, "B2B Loyalty, The B2C Way," I explore how B2B companies can use consumer loyalty principles to deepen their business relationships. Looking past rewards, they specifically stand to benefit from three core tenets of loyalty embraced by successful B2C loyalty marketers:

  1. A deep understanding of customer needs and motivations. B2B companies are not immune to the age of the customer, and in order to increase their customer obsession, they must continue to grow their knowledge about the customer. Building this knowledge-base from sources like satisfaction surveys, digital interactions, and customer success management systems is especially important given the complexity of B2B purchase decisions. 
  2. Consistent customer interactions across organizational silos. Business customers interact with many parts of the organization including marketing, sales, service, and support. Reaching across the aisle to teams that interface most frequently with customers, resellers, and end users leads to more productive customer outcomes.
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The Time For A US Coalition Loyalty Attempt Is Now

Coalition loyalty programs that let consumers earn and redeem a single currency across multiple partners have historically failed to gain traction in the US. Why? The fragmented footprint of potential partners, proliferation of single-brand loyalty programs, and reluctance of brands to share customer data hampered hopeful coalition operators' efforts.

We analyzed the market opportunity for these types of programs in 2013, predicting that: "Given the time it takes to amass partners and consumer scale, we expect it to be at least another two years before a large-scale coalition is established in the US market." Well, it looks like we were spot on. Today, American Express announced that they will be launching a US coalition program later this Spring. The program, called Plenti, will debut with seven partners including Macy's, AT&T, Exxon Mobil, and Rite Aid.

American Express is well positioned for success as it has experience managing both proprietary and coalition loyalty through its own Membership Rewards program and the Payback coalition program (in Germany, Poland, and India). And while it's not clear yet how member data will be managed, the program launch creates an opportunity for participating partners to embrace adaptive intelligence and deepen their customer understanding and business growth. But, announcing and actually executing coalition loyalty at scale are two separate things. The true test for Plenti begins in May when consumers begin to enroll and use the program.

Are you a loyalty company?

A version of this post originally appeared on AdAge.

It's harder than ever to earn your customers' loyalty. They are "always on," have instant access to myriad choices, and can easily find the cheapest prices from any supplier. Many companies think they've solved this with a loyalty program, but the competition is stiff there, too. On average, consumers belong to eight loyalty programs -- the majority of which are ruled by points, discounts and financial rewards. And let's face it: These transactional benefits are more about increasing frequency and spend than influencing emotional loyalty and devotion to a company.

The bad news? Traditional approaches to loyalty don't cut it anymore.

The good news? I'm not going to tell you to scrap your loyalty program. But, in my new report on customer loyalty, I am going to tell you to reframe how you think about your program. It should be treated as one of several tools -- alongside customer experience, brand and customer service -- that helps foster customer loyalty wherever customers interact.

Be A Loyalty Company, Not Just A Company With A Loyalty Program

Truly great loyalty strategies create a meaningful exchange of value between the company and the customer. This exchange encourages customers to share all kinds of profile, preference and behavioral data. And the insights derived from that customer knowledge have broad applications for all customer-facing strategies, and should radiate out across the enterprise to do the following:

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Turn your customer loyalty strategic plan into an action plan

Blogged in collaboration with Samantha Ngo, Senior Research Associate, serving Customer Insights professionals.

Even if you have a clear idea of where you want to end up, the route you take to customer loyalty isn't always straightforward. Outlining a strategic plan helps you understand what you need to do, but a roadmap identifies howwhen and with what resources you should tackle each step. Forrester believes there are six components to designing an effective loyalty roadmap:

  1. Time frame: The expected completion of tasks and delivery of results.
  2. Desired outcomes: Key performance indicators (KPIs)that help you benchmark the performance of your advancing strategy based on your maturity.
  3. Strategic themes: A summary of the objectives an organization needs to advance its strategy.
  4. Key steps: The specific tasks — pulled straight from the strategic plan — which an organization must complete to graduate to the next maturity level.
  5. Dependencies: The people, process, and technology required to execute the key steps. Changes to the current approach may require acquiring new team members, implementing formal processes, or buying loyalty technology.
  6. Investment level: Where and when the allocated loyalty budget will be spent.
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It's time to fall back on the loyalty basics

Blogged in collaboration with Samantha Ngo, Senior Research Associate, serving Customer Insights professionals.

As a kid, I loved going back to school. The beginning of September always meant new classes, new classmates, and of course new notebooks, pens, and pencils. And even though I’m not in school anymore, I still see September as an opportunity to turn over a new leaf, and approach things — both personally and professionally — with a fresh perspective. So, in honor of the first few weeks of Fall, let’s all take some time to study the loyalty basics. Process, while not the most exciting aspect of loyalty marketing, is necessary for building a sound foundation. Without processes, your ability to execute on your loyalty strategy is shaky at best and sudden changes to the market or unforeseen obstacles may leave you in disarray.

To avoid loyalty strategy failure, you must streamline processes around these three objectives:

  1. Building a deep understanding of customer needs and motivations. Loyalty starts with knowing your best customers and asking for their input. But, if gathering data from your customers, make sure you use it. They will expect it.
  2. Preparing for relentless adjustment. Digital business is booming, and loyalty can’t miss out on opportunities to innovate. Test and learn new customer engagement tactics on a small scale. Don’t be complacent with your strategy, but don’t over spend on improvements that won’t last.
  3. Establishing enterprise wide alignment. Do you know who your key internal stakeholders are? Identify them then build teams and processes to help create seamless customer experience.
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You just found out you’re a loyalty laggard. Now what?

Blogged in collaboration with Samantha Ngo, Senior Research Associate, serving Customer Insights professionals.

After taking the customer loyalty assessment, you know whether you’re a laggard, learner, leader, or legend:

Great, but you’re probably thinking "Where do we go from here?" You need a game plan that clearly identifies where and how improvements should be made. To do so, take the gaps in your current approach and prioritize your tasks based on whether each one is a:

  • Need to have. These are non-negotiable tasks that will make or break your graduation to the next maturity level.
  • Want to have. These are important, but not critical tasks for taking your maturity to the next level.
  • Nice to have. These tasks come in handy for differentiating your loyalty approach, but have little bearing on your maturity level.

Priorities will differ for each stage of loyalty maturity and I lay out examples of these needs, wants, and nice to haves in my recent report, Craft A Customer Loyalty Strategy That Raises Your Maturity. Do you have a plan?

Taking Loyalty Beyond The Program

I really enjoyed sharing insights about loyalty in the Age of the Customer at Forrester's Customer Experience Forum East back in June. I got some great questions from the audience about how to start planning and advancing their loyalty strategy. Next up, I'll be continuing the conversations at Forrester's Customer Experience Forum West in Anaheim, CA, November 6-7. And, a few weeks later I'll also be at our EMEA Customer Experience Forum, November 17-18 in London. Here's a sneak peek of the content I'll be sharing at my track session. I hope to see you there!

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How do you measure customer loyalty? Let me count the ways.

mixed up measure

I recently interviewed a number of companies about their approach to customer loyalty. In each conversation I asked a variation of the question "How do you define and measure customer loyalty?" And what struck me is that while many companies define loyalty using various terms like share of wallet, length of relationship, engagement, and customer value, they often measure it using only transactional metrics. Now, there are various reasons for this. Some don't have access they to the data they need to gage emotional loyalty. Others don't have the analytics capabilities or resources they need to pull the pieces together. But loyalty if multi-faceted, complex, and has emotional and rational aspects that aren't mutually exclusive, and certainly can't be reduced to a single metric.

So what should you do? First, heed my rallying cry: It's time to push past purchase as a proxy for loyalty. Second, Forrester can help. Loyalty may be difficult to measure, but it's not impossible. My latest research report provides a framework that buckets loyalty measurement into four, cooperative levels:

  • Programmatic measurement assesses loyalty program health. These metrics explain how the loyalty program grows in size, scope, and activity level over time. Sample metrics include enrollment rates, offer response rates, and program usage.
  • Purchase measurement quantifies the customer relationship. These metrics explain how the loyalty strategy improves customer profitability. Sample metrics include average order value, frequency, and basket assortment.
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The Landscape Of Loyalty Providers: Everything But The Kitchen Sink?

I field a lot of inquires from clients in various stages of loyalty vendor selection projects. Some come with a tightly defined short list, but more often than not, they aren't even sure where to start. Customer loyalty initiatives take several forms including highly structured programs and loosely tied customer service, marketing, and product development tactics spread throughout the organization. As such, vendors of all types -- from loyalty-specific service providers and platforms to customer engagement agencies and analytics service providers -- bring loyalty strategy, management, and marketing chops to the table: 

Loyalty provider categories

With so many different providers knocking on their door, it's no surprise that marketers feel overwhelmed by the selection process. My most recent report cuts through the clutter by organizing loyalty providers into categories based on their core offerings and delivery models. But, before you start dropping vendor names into a shortlist, you first must answer these three questions:

  • How does your company approach loyalty? Take stock of your existing retention tactics and how customers currently interact with your products, services, and brand. Outlining your organization’s approach will help you select new partners but also potentially enrich relationships with existing partners.
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Do you have what it takes to be a loyalty legend?

There are more than a few loyalty-esque proverbs that float around marketing departments and boardrooms everywhere: "repeat customers spend more," "it costs five times more to acquire a customer than to retain a customer,"  "80% of your revenue is driven by 20% of your customer base." If you are reading this blog post, chances are that you have uttered at least one of these phrases at some point in your career. But, if you've ever tried to put your money where your mouth is, you also know that achieving true customer loyalty requires strategic alignment, deliberate planning, and financial and cultural commitments. Loyalty is both behavioral and emotional, and companies that really want to compete for their customers’ loyalty need an evolved approach that extends beyond the program.

To help you understand where your loyalty strategy stacks up, Forrester has developed new self-assessments that examine loyalty from two points of view: the business' and the member's:

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