5 Ways to Drive Incremental Sales Using Your Data and B2B Customer Loyalty Program
One of the most common “misses” we encounter when reviewing how prospective clients have been using their B2B loyalty programs is a lack of proactive use of historical sales data to drive more purchasing by existing customers.
There is a lot of research about how much easier (and more profitable) it is to increase customer retention and sell more to existing customers versus acquiring new ones.
Despite this, many companies lack the resources or experience to make use of their historical sales data and develop insights into purchasing gaps and/or new sales opportunities for their existing customers.
Too often, we see B2B loyalty reward programs that use a one size fits all approach and employ passive reward program offers and rules that do very little to drive changes in customer engagement and associated purchasing. This is unfortunate because customers who opt in and participate in a loyalty program are essentially providing valuable customer feedback that confirms rewards will impact their purchase decision-making – especially if the loyalty program offers are relevant to their particular situation and buying needs.
Here are 5 easy ways to make use of historical customer sales data to boost customer retention, drive incremental sales, optimize share of market and increase your average customer lifetime value using your B2B loyalty program.
1. Lapsed Customer Analysis
Thanks to recent supply chain issues that hit entire industries exceedingly hard, many manufacturers and distributors found themselves without inventory for extended periods of time. This forced many of their customers, even loyal customers, to seek out new vendors who did have available product inventory. Many of these formerly loyal customers have settled into a routine of now buying from these new vendors and it can be exceedingly difficult to encourage them to return to your business.
Lapsed customers are a prefect target audience for special “welcome back” offers in any B2B customer loyalty program. It’s as simple as looking through your data to see which B2B customers have reduced their purchase volume and frequency, with a particular focus on those who have dropped below your average purchase rates. Use this insight to develop targeted offers aimed at these B2B customers only – and use increasingly rich bonus offers to woo back those customers who have dropped off the most.
Consider using limited time offers to create a sense of urgency for that repeat purchase – and another popular tactic is to layer in volume-based thresholds, with extra points/rewards based on the size of the new purchase.
TIP: When coming up with appropriate “welcome back” offer values, consider the impact a lost loyal customer has on your bottom line.
What’s it worth for you to get this customer back?
What sort of total gross margin do they represent in a year?
Develop rewards program offers that are tied to some sort or new purchasing – but be sure to maximize these offer values in order to optimize the conversion rates and get more customers back buying from you – and not the competition.
2. Category Purchase Analysis
Many of the companies we work with offer a wide variety of products or services but all too often we see where many customers “cherry pick” what they buy from different vendors, spreading their purchasing out across multiple vendors. This helps to increase their odds of finding what they need and can also help extend their available credit and buying power.
This purchasing distribution scenario represents some of the lowest hanging “reward fruit” for any company using a B2B
customer loyalty or channel incentive program: selling more to your existing customers or channel partners. It’s not like you’re asking the customer to spend dollars they otherwise wouldn’t be; they are spending these dollars, they just aren’t spending them all with you, so do something about it because the odds are the customer will respond. All you need to do is give them an incentive to increase their engagement with your business.
The probability of selling to an existing customer is up to 14 times higher than the probability of selling to a new customer. Source: Marketing Metrics: The Definitive Guide to Measuring Marketing Performance by Paul W. Farris
Use your historical sales data and preform a simple category purchase analysis. Group your customers according to what they have been buying. Rank these customers according to two metrics:
a) The number of categories they purchase in a year;
b) The dollar volume purchased in each category per year
Use these metrics to rank all your customers and determine what the average customers are doing. Use that benchmark to determine which customers represent the biggest upside for your sales growth and use segmented offers for each group of similar customers. Those customers who you find at the bottom of the list (least number of categories, lowest volume, etc.) may not be viable targets due to the fact they may just be small companies, but customers who spend above average amounts in only one or a few categories are likely high value targets who could be induced to direct more spending to you in exchange for increasingly valuable bonus rewards.
TIP - Use “category maximizer” bonus offers that include rules pertaining to a certain minimum number of categories (and associated spend levels) that need to be purchased within a given period of time (month/quarter) and increase the value of the rewards for customers who respond. Be sure to provide “stretch” goals as some customers will increase order size and stock extra inventory when a reward offer is valuable enough. Just be sure to keep your offer costs in line with the incremental gross profit associated with these offers so that your offer ROI is always at least 400-500%.
3. Affinity Purchasing Analysis
This analysis involves identifying groups of products or services that are routinely purchased together (i.e purchase bundle) and then analyzing your data to identify customer segments who routinely buy one or two of these items – but not the entire bundle of items.
Then it is simply a matter of developing special bundled product offers designed to encourage customers to buy more of the items than they have in the past. The better
their response, the richer the offer. This is a perfect example of using your B2B loyalty program to drive greater customer loyalty.
For Example:
- Buy any 3 of the following 5 products and get 2X rewards on your order
- Buy any 4 and get 5X rewards
Note: You may wish to include some minimum dollar order size in order to ensure the bonus offer cost is easily covered many times over by the incremental gross profit from each order so that your offer ROI is properly optimized each time.
4. Order Size Analysis
This is one of the simplest ways to effectively use your sales data. The idea is to simply encourage customers to load up on their orders a bit by adding a few extra items they routinely buy, carrying them in inventory, etc. This reduces your costs to service the orders a bit and helps you lock up a greater share of their total purchasing in your category.
Look at the average order size for each customer and then group customers into a number of segments according to their average
order value (e.g. $100 - $500, $501- $1,000, $1,001 - $1,500, etc.)
Once you’ve got your customer segments figured out, create some “stretch” goals for each segment with an associated bonus offer value for each bigger order size. The bigger the increase on their average order, the larger the bonus reward amount.
For Example: For customers who routinely place orders in the $501-$1,000 range, dangle bonus offers tied to increasingly larger order values:
- Earn 2X rewards on any order over $1,200
- Earn 5X rewards on any order over $1,500
- Earn 10X rewards on any order over $2,000
5. Order Method Analysis
Over the past 10 years, many B2B companies have invested heavily on their e-commerce offering, hoping to make it easier for customers to place orders and also to acquire new customers from new markets or further away. For almost any B2B company, online orders also cost less to service, improving bottom line performance – but there are still many customers who prefer to place
orders the old way, by phone, fax or in person. Rather
than eliminate older order methods, which risks hurting the customer experience and lowering customer satisfaction, put your B2B loyalty program to use and introduce special bonus reward offers that encourage more customers to set up an e-commerce account and place orders online.
Using your sales data to encourage this digital migration is also quite straightforward and typically employs two different bonus offers:
- Account Set Up Offer – The first offer is usually a one-time, lump sum offer tied to the customer taking the time to set up their online account. As a reward for doing so, the vendor might dangle a reward offer of a fixed number of bonus points but quite often this lump sum offer will have an initial starting order requirement of some minimum size in order to help off-set the bonus reward cost.
- Ongoing Purchase Offer – In order to reinforce this new purchase method, the customer might be offered an ongoing incentive of a bonus offer on all subsequent online orders for a limited time period (e.g. 2X rewards on all online orders until the end of the quarter or year.)
Sales data is a literal goldmine, just waiting to be used properly – and you already own the data so don’t squander the opportunity to benefit from it by boosting customer engagement, customer satisfaction and brand loyalty.
At Lift & Shift we’ll help you use your sales data to identify many different strategic sales opportunities with your existing (and lapsed) B2B customers. We then target each specific opportunity with tailored bonus reward offers for each group of similar B2B customers. Each offer value will reflect the value of each sales opportunity. The greater the sales opportunity, the richer the offer value. Further, the bonus reward offers are performance-based, meaning the rewards are only dispensed if and when the customer responds – so you are locking in your B2B loyalty program ROI the entire time.
Increasing the value of each loyal customer with loyalty program bonus offers that have built-in ROI is an incredibly effective and cost-efficient way to drive incremental sales and profit for any B2B business.
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's affordable and includes Lift & Shift’s turnkey professional program administration. We take care of everything so you can focus on your key initiatives.
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