Successful B2B Loyalty Programs are Driven by Customer Data Analytics

Companies collect large amounts of data about their customers and their buying habits, but are they putting it to good use?

At the most basic level, most companies have the ability to use personalization to communicate with their customers, for example by sending personalized email newsletters or birthday messages. While very effective in nurturing customers, there are many other ways that behavioural customer data can be used to take a business to the next level.

Unfortunately, many companies do not use that customer data effectively and as a result, they leave money on the table!

Using Customer Data to Improve the Bottom Line

According to McKinsey & Company, “organizations that leverage customer behavioral insights outperform peers by 85 percent in sales growth and more than 25 percent in gross margin”

For any customer, there is nothing worse than getting the impression the company they regularly patronize does not know who they are, what they have purchased, or what they might need. It suggests the company they are supporting does not care enough about their business to make an effort.

If the average company didn’t have the means to find out more about its customers, that would be one thing, but in this day and age invaluable customer data is readily available to any company with a relatively modern POS or ERP system. It is simply a matter of analyzing the data on hand to understand trends and using it to talk and sell intelligently to its customers.

Not only will the customers appreciate the gesture, it makes economic sense to know more about each customer. The more you know, the greater your likelihood to retain that customer and grow your share of their category spending. This will obviously lead to greater revenues and an improved bottom line.

Some businesses may feel intimidated by the notion of “big data” and “customer data analysis” but they need not feel that way as most analysis is quite simple. Basic analytics can be done in-house and there are many consulting firms who offer analytics as a service. Bottom line: the more effort you take to understand your customers and their experience, the more focused your marketing campaigns can be – and the more your average customer will buy, increasing their average lifetime value.

How B2B Loyalty Programs use Customer Data Analytics

Customer analytics is simply the practice of making good use of your customer’s purchasing history to determine how they have behaved in the past, so you can determine how they are likely to behave in the future. Once you know this, you can reinforce the same sort of behavior or try to change it in one way or another.

Your historical customer transaction data is literally a goldmine waiting to be tapped! It allows you to understand what sort of customers you have and what each type of customer does or buys from you. Once you know what your customers are currently doing, you can then plot a path for what you want them to do going forward.

Depending on how many customers and how much data you have, your analytics tool might be something as simple as a spreadsheet that contains details on what products each customer buys. More advanced analytics will often employ mathematic algorithms, created to search through vast amounts of data to identify certain customer trends or habits.

No matter how you obtain the insights, the next step is to use the learning and target customers with desired purchase outcomes. You may want them to continue purchasing exactly as they have been (a maintenance strategy) or look for customers who never buy a particular item or service and target them to make an initial order (a conversion or conquest strategy).

More advanced analysis and communications will involve some sort of customer journey, whereby you engage the customer in an ongoing dialogue, tied to various purchase outcomes you want to see happen as often as possible – or at certain points in time.

Historical purchase data allows you to tailor each customer’s messaging and achieve several objectives, which all lead to increased sales and profit.

Customize for Customer Segments

A key use of data analysis is to help identify groups of customers who are similar to one another. This enables you to target them with relevant messages or offers. The more compelling it is, the greater the response rate and up-take you will see.

Segmentation can be based on many criteria including:

> Products/categories purchased or not purchased in the past

> Total volume of purchasing

> Purchase frequency/recency

> Purchase geography

> Purchases made by similar customers

How specific the segmentation criteria are will determine the size of the segments. You can elect to have highly targeted segments (customers who bought a specific item within the last 7 days) or broader segments (customers who spent more than $1,000 in the past year).

Ideally, you want to tightly define each segment and customize the offer or message for each one. The better you target, the greater the impact. How specific your segments are will determine how much work you must do to develop the relevant communications. It all boils down to being able to spend adequate time coming up with relevant offers for each segment. Having 5-10 segments is usually quite manageable. Having 200 segments obviously will require greater preparation. And some of the segments may be too small to make the effort worthwhile.

Better Customer Service & Improved Customer Loyalty

Understanding your customers will also lead to better customer service levels as you identify what a customer may want or need based on their purchase history. Simultaneously, you can identify things they probably need, based on what other customers like them are buying.

With these insights in hand, your business can create highly relevant and targeted bonus reward offers tied to the transactions that the customer should be undertaking.

> Reward offers to repeat certain purchases or repeat purchases

> Reward offers to increase purchase volume or frequency of a certain item or service

> Reward offers tied to lapses in purchase activity, e.g. 10, 30, 45 days inactive

> Reward offers tied to specific product or service bundles

> Reward offers tied to order method, e.g. online account set-up and use

When presented with logical offers, the customer is far more likely to feel understood and appreciated, driving loyalty levels higher.

Customer Acquisition

Many people assume a reward program is only about rewarding existing customers, but in reality, a reward program can help secure new and lapsed customers too. Your business can use the historical sales data to identify your best and most profitable customer segments and then use that insight to pursue new customers that look like these profitable accounts.

Using a B2B reward program to acquire customers can take two forms:

1.      Reach out to net new customers and leverage a reward offer to encourage them to set up a new account, place an initial order (usually tied to some minimum dollar amount) or place their first order online, etc.

2.      Reach back out to lapsed customers and attempt to reinvigorate your relationship. There may be no reason they are lapsed other than the fact they routinely bought from multiple vendors and gradually began spending more of their category budget with competitors. Or perhaps a key salesperson left, and the account was not as well looked after. There are always opportunities to re-acquire old and inactive accounts. No matter which scenario it may be, when using rewards as the incentive to attract new business, you should establish the reward amounts on the estimated value of a typical account to your company; the greater the opportunity, the larger the bonus reward value for the new account. But always tie the reward to a measurable activity. Opening a new account is great but sales need to flow through it, so tie the rewards to the sale, the greater the amount, the bigger the reward, etc. Also, when attempting to re-acquire lapsed or dormant accounts, consider how long it’s been since the last order, the longer the lapse, the greater the reward value for that initial new order, etc.

At Lift & Shift we specialize in driving profitable sales with customized reward programs. We help you unlock the hidden value in your customer data and use it to drive customer purchase behavior with personalized reward offers. What to know more? Contact us.

Lift & Shift offers a powerful B2B reward platform that can help your company leverage its sales data to drive incremental purchases with customers and channel partners or motivate sales staff. We work with manufacturers, distributors, and service providers to analyze sales data, identifying purchasing gaps and other valuable targeting opportunities.

We create and deliver highly relevant offers to customers, in-house sales staff or sales associates, motivating your target audience to respond, using a wide array of appealing reward options as influencers. Our performance-based reward structures deliver an unparalleled return on investment, with absolutely no wasted budget.

Our customizable reward platform enables clients to easily benefit from a robust loyalty reward program. It is affordable and includes Lift & Shift’s turnkey professional program administration. We take care of everything so you can focus on your key initiatives.

We look forward to talking with you about how a B2B Loyalty Program can help you increase your Brand, Sales and Profits.