Loyalty programs are often discussed through a B2C lens, but B2B loyalty can have impressive returns. For instance, five percent improvement in customer retention can yield 25 percent to 100 percent increase in profit. Conversely, the cost of losing a client can have a devastating effect. The costs associated with acquiring a new customer are five to six times what it takes to generate an equal amount of new business from an existing customer, writes Bob Murphy, Managing Partner of Moveo Integrated Branding. How can product and service providers retain client loyalty?
Bob Murphy suggests first identifying “hard” and “soft” customers. Then determine what motivates “hard” clients to stay brand loyal. If you have “soft” clients (i.e. not brand loyal), consider qualitative interviews with industry experts to determine key decision drivers. The synthesis of your interviews can help determine your company’s position in the marketplace and re-craft your value proposition. Once you have a clear brand message, you can begin developing loyalty programs:
Key Strategies to Generate Loyalty
Delivering On Promises — Clients are often results-oriented and require you to fulfill your promises so they can meet their goals. If you’re falling short of your agreement, it doesn’t matter how much you wine-and-dine clients, they are going to search for someone that can get the job done efficiently and effectively. After all, business is business.
Host Executive Conferences — The average senior executive gives service providers a C+, according to a study by Ross McManus. Why? The most frequently cited complaint was service providers’ lack of understanding the client’s industry. If your team doesn’t fully understand the client’s industry, how can you facilitate their progress? To demonstrate your industry expertise and thought leadership, consider hosting client-only conferences wherein senior executives can learn about cutting-edge market trends.
Client Feedback Loop — There is always room for improvement. Gain customer feedback at the project close to see where your team and / or technology excels and falls short. Not only does client feedback help you elevate your product or service, it lets the client know you care about their opinion.
Offer Loyalty Incentives — At the end of the day, bootstrapping companies require competitive prices. To tie-in loyalty into prices, consider reducing prices over time. For instance, if your software service costs $10,000 annually, at year two, the price reduces 25 percent to $7,500, then another 25 percent at year three. A price-reduction strategy could help customers see the long-term benefits of brand loyalty.
Enthusiastic Brand Culture and Sales Force — “To truly build a solid core of loyal customers, a company needs the involvement of more than just marketing and sales,” writes Murphy. “It’s no coincidence that companies who have the most loyal customers, also have the best employees.” Indeed, an enthusiastic team suggests passion, drive and dedication to client success.
Outline the Benefits of Loyalty — Price chasers can spend more time searching for the lowest rate or learning the ins and outs of new providers than if they were to stay with your services. “After all, it’s easier to work with a known quantity than it is to hire someone new for every assignment,” writes the Wise Marketer. Sometimes all clients only see dollar signs, so point out the amount of time and energy it takes to switch providers.
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