Category: Marketing

Challenger ESP

The challenger ESP (CESP) will need to combine five innovations to reset the industry: AMP, Atomic Rewards, AI, Progency and Prime. Two additional unlocks will be needed: a consumer email service (QuizMails) and a clutter-free inbox (Micronbox). All of these ideas have been discussed in previous essays. The key is how to aggregate and integrate them to disrupt the ESP business. Let’s begin by reviewing these ideas.

AMP brings interactivity to emails, thus eliminating the need for clickthroughs to landing pages. Think of AMP as adding the software “spice” into an email making it come alive. This enables the creation of apps inside email, making it the third owned property for marketers (after their website and app). The advantage of AMP emails is that marketers have control on the push – and therefore don’t have to wait for consumers to come to the site or open the app. For more, see AMP’s Magic: Coming Soon to Your Email Inbox.

Atomic Rewards brings gamification to emails in the form of micro-incentives for marketer-desired actions. Think of this as a pan-brand loyalty program which helps with non-transaction behaviour: attention and data in the upstream, and ratings, reviews and referrals in the downstream. While AMP can drive more in-mail actions, Atomic Rewards can ensure more opens. For more, see Atomic Rewards: The Solution to Attention Recession and Loyalty 2.0: How Brands can Tokenise Customer Attention and Data.

AI can help simplify content creation and message delivery, thus easing a big pain point for marketers, helping with the right person, right message, right time. For more, see Email and AI: A Perfect Match.

Progency is a product-led agency. It combines creative and coding skills, to help marketers fast-track projects that they have limited bandwidth for. Creating AMP emails is one such task. Traditional agencies do not have software skills, while internal teams may not have the creative talent. This is where Progency comes in. An additional hallmark is that the Progency can bring in skin in the game by pricing its services based on outcomes linked to KPIs. For more, read Progency for Martech: The Missing Link.

Prime is a B2B loyalty program, which rewards brands for their AMP-related spends with Atomic Rewards (in the form of Mu) which they can use to change consumer behaviour in the inbox. This becomes a double benefit for marketers: AMP spending gets them Mu, which they can use as Atomic Rewards to get more opens. Taken together, AMP and Atomic Rewards with Mu as the common thread can drive 10-50X more actions. For more, read Rethinking B2B Loyalty Programs.

QuizMails is a consumer service to seed interest in AMP and Atomic Rewards. It creates a must-see interactive email (an “Em” consumable in 30 seconds or less). A timer challenges the brain, while mu provides the reward. It also provides a showcase for the Challenger ESP to demonstrate innovative AMP uses cases, as well as a “Mu Shop” for redemption. For more, see Quizzing in Email: An Innovation in the Inbox.

Micronbox is a new clutter-free, spam-free consumer inbox which aggregates all the AMP and Mu mails together. While a virtual Micronbox can be created initially with the Gmail and Yahoo Mail apps (which are two email providers who support AMP), over time a cleaner inbox may be beneficial for consumers. For more, see  Micronbox: A New Inbox.

By combining all these innovations, we can create a gamechanger to reset the ESP industry.

ESPs

B2C Email – businesses sending email to their customers – has been around for a long time. Email Service Providers (ESPs) have been the enablers. From a previous essay: “B2C emailing has become a $7-8 billion annual business. For brands seeking ways to bring customers back to their digital properties (website or app), email offers the best RoI among all channels. The power of push messaging gives control to the brand to initiate a communication, rather than waiting for a consumer pull…The enterprise email service providers (ESPs) have also morphed through the years. The first-gen ESPs were bought a decade or so ago by the marketing cloud providers: SalesForce bought ExactTarget, Adobe bought Neolane, Oracle bought Responsys, IBM bought Silverpop. The large second-gen ESPs were all bought by CPaaS players in the past few years: Sendgrid was bought by Twilio, Sparkpost was bought by Message Bird, and Mailgun (Pathwire) was bought by Sinch. In one of the largest deals in the email space, Intuit (known for its accounting and financial software prowess) bought Mailchimp for $12 billion. There has also been some consolidation: CM group and Cheetah Digital merged.”

But, “there hasn’t been much innovation on the email front in the past 15 or so years – other than plain vanilla text emails becoming HTML-ised. There has been a lot of action around email – in its creation, sending (send time optimisation, triggers), personalisation and segmentation (as opposed to mass broadcast), automation (journeys), and AI-driven utilities like predictive segments, subject-line optimisation, and churn prediction. But the email itself – it has mostly remained the same.”

I then explained the two mistakes of ESPs: “the first mistake ESPs made is that they did not position email as the “profit channel”… The second mistake ESPs made was to not innovate inside the email…These two mistakes have been expensive for the email industry in terms of lost revenues, profits and influence. Email vendors do not have a seat at the table where marketing strategy decisions get made; they are not “in the room where it happens” (to borrow a phrase from a song in the “Hamilton” play). But email’s durability means the game is not yet over.”

In the same series, I discussed five email innovations: AMP, Atomic Rewards, Email Footer, Email Ads, and Micronbox. “Taken together, these five innovations usher in an upgrade to Email. They make email cool (again). The 1-way broadcast channel becomes a 2-way hotline with interactive, dynamic and real-time content. The promise of gamification and asset appreciation will also drive greater engagement, which should lead to better brand-customer relationships. The better the retention, the lesser will be the need for new acquisition to plug the gap – thus reducing AdWaste and helping improve profitability at brands.” A sixth one could be free B2C email, funded by ads.

So, how can the status quo in the ESP business be challenged?

Digital Disruption

Disruption is an idea that has been much discussed. Paramount to disruption is the idea of the “innovator’s dilemma.” There are times when incumbents are able to fight back and retain their dominance, but more often than not, newcomers win and dominate – until they are disrupted. This is the cycle we have seen play out time and again. Until a few months ago, Internet search was a Google monopoly, and now there is talk of what GPT-powered Bing could do.

I asked ChatGPT to list out industries which have seen disruption in recent times, listing winners and losers:

1. Internet and World Wide Web:
   • Incumbents: Traditional media companies, such as newspapers, magazines, and television networks.
   • Winners: Online media companies, such as Google, Facebook, and Netflix.
2. Personal computing:
   • Incumbents: Mainframe computer companies, such as IBM and DEC.
   • Winners: Personal computer companies, such as Apple and Microsoft.
3. Mobile devices:
   • Incumbents: Traditional phone manufacturers, such as Nokia and Motorola.
   • Winners: Smartphone manufacturers, such as Apple and Samsung.

Besides these, the entertainment industry (music and streaming) has also seen a reset. ChatGPT: “The advent of digital music and online streaming “reset the score” by disrupting the traditional model of selling physical albums through record stores. This shift in technology and consumer behavior created new winners, such as online music streaming platforms like Spotify and Apple Music, and caused traditional incumbents, such as record labels, to lose their dominant position in the industry.” Amazon has done the same to traditional retailers. ChatGPT: “The growth of e-commerce and online marketplaces like Amazon has disrupted the traditional retail industry, with brick-and-mortar stores struggling to compete and some major retailers, such as Toys “R” Us and Sears, going bankrupt.”

Bloomberg Businessweek lists 85 of the most disruptive ideas in our history. In the top 5: the jet engine, microchips, green revolution, Wal-mart, TV.

I had discussed recent digital revolutions in an earlier series, and written: “Even as it has been an amazing ride in my 56 years lifetime, tomorrow’s world promises a lot more. As consumers, business owners and managers, researchers and entrepreneurs, we will see many new and exciting technologies in our lives, with the promise of many more revolutions in the years and decades to come.”

**

In 2004, an article in Harvard Business Review had this advice: “You can’t make intelligent investments within your organization unless you understand how your whole industry is changing. If the industry is in the midst of radical change, you’ll eventually have to dismantle old businesses. If the industry is experiencing incremental change, you’ll probably need to reinvest in your core. The need to understand change in your industry may seem obvious, but such knowledge is not always easy to come by. Companies misread clues and arrive at false conclusions all the time…To truly understand where your industry is headed, you have to shut out the noise from the popular business press and the pressure of immediate competitive threats to take a longer-term look at the context in which you do business.”

In the rest of this series, I will look at two related industries: email service providers (ESPs) and digital advertising (adtech, led by Google and Meta). I will argue that new innovations have the potential to reset the score in both industries.

Creative Destruction

What we have termed as the resetting of industries has been around for a long time – this was what created prosperity for billions of people and some nations in the past 250 years, starting with the Industrial Revolution. Joseph Schumpeter coined the term “creative destruction” in 1942. Investopedia explains: “Schumpeter characterized creative destruction as innovations in the manufacturing process that increase productivity, describing it as the “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. Basically, the theory of creative destruction assumes that long-standing arrangements and assumptions must be destroyed to free up resources and energy to be deployed for innovation. To Schumpeter, economic development is the natural result of forces internal to the market and is created by the opportunity to seek profit.”

ChatGPT: “[It] is the process by which new innovations and technologies replace old ones, leading to the destruction of existing industries and business models. It refers to the phenomenon of how new and innovative ideas can disrupt and displace established ways of doing things. The idea behind creative destruction is that economic progress and growth are driven by the continuous cycle of innovation and obsolescence. When new technologies and ideas emerge, they often render existing products, industries, and ways of doing things obsolete. This can lead to the decline and eventual disappearance of established businesses and industries, but also creates opportunities for new businesses and industries to emerge… Creative destruction is a fundamental aspect of capitalism, where competition and innovation are the driving forces of economic growth. While it can be painful for those affected by the destruction of established industries, it is ultimately a necessary process for the economy to continue to grow and evolve.”

Examples abound. From ChatGPT:

• The development of the automobile industry in the early 20th century disrupted traditional modes of transportation such as horse-drawn carriages and trains. This led to the creation of new industries such as car manufacturing, road construction, and gas stations.
• The invention of the telephone in the late 19th century disrupted traditional modes of communication such as telegraph and mail. This led to the creation of new industries such as telephone manufacturing, infrastructure development, and phone book publishing.
• The emergence of mass production techniques in the early 20th century disrupted traditional craft production methods, leading to the decline of artisanal trades such as shoemaking, furniture making, and tailoring. This also created new opportunities in manufacturing and assembly line production.
• The development of radio and television broadcasting in the mid-20th century disrupted traditional forms of entertainment such as live theater and cinema. This led to the creation of new industries such as broadcast media, advertising, and program production.
• The advent of digital photography has disrupted the traditional film photography industry, leading to the decline of companies like Kodak and the rise of digital camera and smartphone manufacturers.

China along with other East Asian countries disrupted manufacturing globally riding on the globalisation wave. Indian IT services companies did the same with their outsourced software development model. The pace of creative destruction and digital disruption has increased in the past few decades, as I wrote in “The Digital Revolutions in My Lifetime”.

When Industries are Reset

In a 2015 post, Benedict Evans wrote: “Sometimes, an entire industry gets reset to zero, and all the entrenched advantages and parameters go away. The iPhone had that effect, and so did HMS Dreadnought… It was launched by the Royal Navy in 1906 and was the first modern battleship, such that all previous battleships are known retrospectively as ‘pre-dreadnought’. Amongst other innovations, it was the first to have turbine engines and the first to have a single large-calibre battery. Rather like the iPhone, it contained few things that were fundamentally new – most of the key features had been around for a while and considered elsewhere – but it was the first to put all of them together in one place in the right way, and, like the iPhone, this changed everything. Every other warship afloat was obsolete… This is rather what the iPhone did, to both the mobile business and the entire consumer technology industry. All the existing parameters and entrenched advantages went away and the whole market was reset to zero.”

I asked ChatGPT for an explanation on what “resetting the score” meant: “”Resetting the score” is a metaphor that is often used in the context of innovation to describe a situation where a new innovation or technological breakthrough disrupts an existing industry, causing a shift in the balance of power between incumbents and newcomers. The metaphor implies that the old “score” or established way of doing things is no longer valid, and that a new score or set of rules is needed to reflect the changed landscape.”

In another post in 2020, Benedict Evans wrote: “When Steve Wozniak created the original Apple I in 1975, IBM dominated the computing industry. It was nicknamed ‘Big Blue’, it was so far ahead of its competitors that people talked about ‘IBM and the seven dwarves’, and it had just come through yet another anti-trust case. IBM’s dominance, of course, was based on the mainframe, which was the central paradigm of the computing industry, and it had sealed its dominance just a decade earlier with the launch of the 360 system. However, over the next decade it became obvious that the flood of PCs that followed the Apple 1 were going to overtake the mainframe. All of the focus of innovation, investment and company creation moved to the PC. Indeed, PCs created the very idea that software could be a separate industry, and not just something that was bundled with your hardware. Microsoft, not IBM, dominated the PC ecosystem, and so Microsoft became the centre of the tech industry – it became the new sun in the solar system.” He added: “The competition [is] something that solves the same underlying user needs in very different ways, or creates new ones that matter more. The web didn’t bridge Microsoft’s moat – it went around, and made it irrelevant. Of course, this isn’t limited to tech – railway and ocean liner companies didn’t make the jump into airlines either. But those companies had a run of a century – IBM and Microsoft each only got 20 years.”

These two posts, the recent developments in search, the changes forced by the pandemic for many industries, and my own thinking about AdWaste (half of the $400 billion being spent on adtech – primarily Google and Meta – is being wasted) made me wonder if the idea of an “industry reset” could be applied to the work I (via Netcore) have been doing. But before I get to that, let’s look deeper into the reset of industries, a process first explained by Joseph Schumpeter.

Search Wars

OpenAI’s launch of ChatGPT, its partnership with Microsoft, and the subsequent integration of GPT into Bing has upended the Search industry, long monopolised by Google. Google has replied with Bard. At stake: $200 billion of ad revenue. As Satya Nadella, CEO of Microsoft, put it (referencing Google) in an interview to The Verge after the Bing announcement, “Today was a day where we brought some more competition to search. Believe me, I’ve been at it for 20 years, and I’ve been waiting for it. But look, at the end of the day, they’re the 800-pound gorilla in this. That is what they are. And I hope that, with our innovation, they will definitely want to come out and show that they can dance.”

Jaspreet Bindra added context:

The First Search Wars started 14 years back, when Steve Ballmer and Microsoft launched the search engine Bing to take on Google. Google had annihilated other search engines like Yahoo, Lycos, and Excite to become a virtual monopoly, through a combination of superior search results and a profit-spinning business model.

Much like the First World War, the Bing-Google search war was a grinding battle fought in the trenches of technology. Google emerged victorious, still controlling more than 90 per cent of the search market, besides overtaking Microsoft in revenues and profitability. Microsoft vowed to soldier on, and Bing still exists, though as a very poor second alternative. Therefore, the undisguised glee in Nadella’s tone when he declared the Second Search Wars.

… Search advertising is extremely profitable for Google, and Microsoft now wants to attack it squarely. Nadella said as much in an interview with Financial Times: “From now on, the [gross margin] of search is going to drop forever…There is such margin in search, which for us is incremental. For Google it’s not, they have to defend it all.” It is this “asymmetric” competition which is enabling Microsoft’s jujutsu move. As Microsoft drives overall search margins down, it hits Google asymmetrically. That potentially impacts Googles investments in other businesses, including cloud, where it is locked in a ferocious battle with Microsoft for the number two position. Google has been subsidising its cloud growth with its search profits, and that tap could dry up. Meanwhile, Microsoft keeps making its money through its software and gaming businesses, offsetting its minuscule search losses. This is the ‘3D chess game’ that Microsoft is playing, a genius move in strategy.

The Economist wrote: “[N]othing lasts for ever, particularly in technology. Just ask IBM, which once ruled business computing, or Nokia, once the leader in mobile phones. Both were dethroned because they fumbled big technological transitions. Now tech firms are salivating over an innovation that might herald a similar shift—and a similar opportunity. Chatbots powered by artificial intelligence (AI) let users gather information via typed conversations. Leading the field is ChatGPT, made by OpenAI, a startup… As in the 1990s, when search engines first appeared, a hugely valuable prize—to become the front door to the internet—may once again be up for grabs.”

What is happening in Search has happened many times in the past – new technologies and innovations have upended incumbents, resetting industries. In this series, I will look back at some other examples and peer into the future and ask if that could happen to email service providers (ESPs) and in the adtech industry.

Design

As a buyer of many B2B solutions, I don’t think Netcore is part of any B2B loyalty program. At the same time, Netcore itself is a seller as a B2B SaaS company to many B2C companies. This was the context I started with in thinking about designing a next-gen loyalty program – one which I would be delighted with as a buyer and seller.

The core of a loyalty program comes down to two elements: earn and burn. How do members receive points? How do they redeem them? [For reference, I had done a similar exercise for Mu tokens in my Loyalty 2.0 essay (part 13).]

Earning

• Points can only be earned by the business, and not by the individuals who are part of the decision-making process.
• Earning can be linked to both monetary and non-monetary actions. For example, points are earned based on spending (and could be linked to the gross margin generated by the product). Points could also be earned for time (events attended, reviews, testimonials, referrals). Points could also be earned for additional data provided by the buyers which can help with RoI calculation. For example, most email service providers do not get transaction data. If that data were available, it would help with a better assessment of revenue per email (RPE). The same could apply to customer journeys in marketing automation solutions. So, think of this as a blend of both Loyalty 1.0 and 2.0 elements that I wrote about earlier.
• The formula for earning points will need to be determined by the quantum of investment made for the program. A reasonable figure is 1% of revenue generated.
• A minimum monthly or annual spending threshold should be there for either membership continuation or redemption.
• Earnings could be linked to products and services from a single company or a consortium. Membership tiers could help drive more loyalty (and spending).

Redeeming

• For redemptions, the key to long-term success will be the CPP:VPP calculation. Cost per point is what the B2B seller is spending, while value per point is what the buyer perceives. A good example of this is that while redeeming airline miles for a free ticket, the buyer perceives the full value of a ticket, while the cost for the airline is just the cost of meals. Similarly, for B2B loyalty programs, it is very important to ensure the value of rewards is far greater than the 1% or so which serves as the basis for earning points.
• In this context, there can be two types of rewards: conventional rewards and Mu (Atomic Rewards). Examples for conventional rewards are discounts against future product purchases, attendance at events, and participation in beta programs for new releases to get a marketplace edge. What can make the redemptions program much more valuable and exciting is the addition of Mu to the points. Mu can benefit the B2C business’ customers. For example, Mu tokens could help a business drive change in end customer behaviour. [I have written on these ideas]
• The Velvet Rope Marketing ideas can also be applied here with rewards being used to provide exclusivity, ease, and access. The creation of a community of buyers is an example of exclusivity.

To summarise: B2B sellers need to start thinking of creating loyalty programs which can help drive retention and growth of their buyers. It can also help with creating better experiences and relationships, and offer newer dimensions on which to win rather than just price discounting. A program which can excite end customers of the buyers can make it even more “rewarding.”

Examples

I have aggregated examples from multiple sources of loyalty programs. As a caveat: most are probably US-centric and Netcore is not part of any of these programs. A few may even be dated. This exercise in listing programs is to provide ideas to get started.

Antavo provides examples of loyalty programs:

• IBM VIP Rewards: IBM’s VIP program is challenge-based, meaning customers have to perform predefined actions to earn points. Points can be redeemed for gift cards or private sessions with IBM experts. The program also features a leaderboard based on the number of points earned with challenges to foster a bit of competition.
• Celebrity Rewards: [Operated by Celebrity Cruises], the program is rather straightforward, utilizing direct cash incentives to motivate agencies. Every cruise sold translates into 500 points for the booking agent. After hitting the 2,500-point milestone, points can be exchanged for cash using a Celebrity Rewards Mastercard. The program works on a per-agent basis, meaning each participating booking agent has their own individual point balance.
• Lenovo: The Leap Program, which stands for ‘Lenovo Expert Achievers Program’, combines the premise of IBM’s and Celebrity Cruises’ loyalty programs. Leap features a dual system dubbed ‘Learn & Earn’ and ‘Sell & Earn’. Partners earn points for selling Lenovo products and participating in education sessions. Points can be exchanged for cash rewards. Points are accumulated on the Leap Account and can be transferred to gift cards or a prepaid Mastercard.

SmartKarrot has more examples:

• American Express: American Express launched its referral-based partnership program ‘American Express Partners Plus.’ Through the program, American Express rewards organizations if they successfully refer their contacts to AE’s Global Corporate Payments program. The simple program played a key role in deepening trusted partner relationships.
• HP: The global tech company came up with the ‘HP Planet Partners Rewards Program,’ where the company rewards businesses for returning used HP print cartridges. The program is also aimed at supporting HP’s recycling initiative. Thus, businesses are able to earn rewards while also contributing to the environment.
• Nufarm: Nufarm Limited is a leading global specialist seeds and crop protection company. The company operates through retailer channels. It has come up with the loyalty program ‘Priority Partnership’ for its partners in New Zealand.  The company rewards partners for purchasing and promoting its products through the program.

From Loyalty Programs: The Complete Guide:

• Schneider Electric: [Schneider] is a multinational company providing energy and automation digital solutions, and Clipsal is a subsidiary brand providing electrical accessories. Club Clipsal is Australia’s largest loyalty club for the electrical industry with over 8,000 members in the rewards program. Operating on a three-tiered membership basis, the program offers members the ability to earn points by purchasing Clipsal products from their selected wholesalers. The program features an earn accelerator, where the higher the tier, the higher the earn rate per dollar spent. Points can then be redeemed via a rewards store for a variety of gift cards and consumer goods.
• Uber: Uber Pro Partner Rewards program was designed to recognise and reward Uber drivers. Like their B2C program, points and status tiers provide drivers with the ability to reach higher tiers and unlock more desirable member benefits. Provided by Uber and partner third-party companies, member benefits include economic rewards such as fuel discounts, free coffees, and discounts for business, support services, as well as more functional and experiential rewards such as providing drivers with the ability to view trip duration and direction before accepting a job, receive priority airport rematches, 24/7 support and accident replacement vehicles.
• Allianz: Allianz is a German multinational financial services company with core businesses insurance and asset management. The Allianz Blue Eagle Program exists to engage and reward their broker network, primarily through networking, educational and celebratory events. The program offers one point of call for all the information brokers require, such as program news, policy and claims information, online training, and product quoting and binding. An important aspect of the program is to build a sense of community between brokers and the brand, and Allianz do so by organising a variety of initiatives to get members involved.

Some additional examples:

• TRW: TRW is one of the leading global brands for steering, suspension, and braking parts in the automobile aftermarket. In 2014, competitors are flooding the market with branded and non-branded products. Also, because of its complex distribution structures, there were no direct means for businesses to communicate with its aftermarket. To counter the issue, TRW relaunched its Automotive Diamonds, a B2B loyalty program to target workshops across Europe. [via Retail CRM Cloud]
• Metrodata Electronics: This technology, information and communication company has a B2B loyalty program called SMILY (SMI Loyalty) for its B2B customers. This loyalty program is integrated between offline and online sellers where customers can collect points which can then be exchanged for rewards. [via Tada]

So, what can a next-gen B2B loyalty program look like? I will answer this from my vantage point of running a B2B SaaS company (like Netcore) selling customer engagement solutions to B2C companies.

ChatGPT

ChatGPT on how B2B and B2C loyalty programs are different: “B2B loyalty programs are designed to reward companies for making frequent purchases, while B2C loyalty programs are designed to reward individual consumers for making purchases. B2B loyalty programs often have a different structure and focus, as they deal with larger transactions and longer buying cycles. They may also offer additional benefits such as special pricing, dedicated account management, and early access to new products. In comparison, B2C loyalty programs tend to have a more straightforward rewards structure, where points or stamps are collected for purchases and redeemed for rewards such as discounts, free products, or exclusive experiences. Overall, the key difference between B2B and B2C loyalty programs lies in the nature of the customer and the business relationship, and the rewards and incentives offered are tailored accordingly.”

ChatGPT’s response on five features of a good B2B loyalty program (lightly edited):

1. Relevance: Offer rewards and incentives that are relevant and valuable to the target business customer, such as exclusive access to new products, special pricing, or dedicated account management.
2. Flexibility: Allow for flexibility in terms of the types of purchases that can be made to earn rewards, and how rewards can be redeemed. This helps to ensure that the program is accessible and appealing to a wide range of businesses.
3. Customization: Allow for customization to meet the unique needs and preferences of different business customers. This may include offering tailored rewards or creating different tiers of membership based on the amount of business a company does with the provider.
4. Simplicity: Should be easy to understand and participate in. The program should have clear, straightforward rules and be user-friendly, so that businesses can quickly start earning and redeeming rewards.
5. Communication: Have effective communication and engagement strategies in place to keep business customers informed and motivated to participate. This may include regular updates on rewards earned, reminders of opportunities to earn more rewards, and promotional campaigns to drive engagement.

And finally, here is ChatGPT’s answer to how can B2B loyalty programs be improved:

1. Personalization: Offering customized rewards and experiences based on a business’s specific needs and preferences can increase engagement and satisfaction with the program.
2. Data Analytics: Using data analytics to better understand customer behavior and preferences can inform more effective program design and decision-making.
3. Streamlined Enrollment and Redemption: Making the enrollment and redemption process simple, fast and user-friendly can increase participation and reduce friction for businesses.
4. Real-Time Feedback: Providing real-time feedback on rewards earned and opportunities to earn more can help keep businesses engaged and motivated to participate.
5. Integration with other business systems: Integrating the loyalty program with other business systems such as procurement, accounting, and customer relationship management, can provide a more seamless experience for businesses and help maximize the value of the program.
6. Flexible Rewards Structure: Offering a flexible rewards structure, such as allowing businesses to choose from a variety of reward options, or allowing rewards to be redeemed in a variety of ways, can increase the appeal of the program and ensure it is valuable to a wider range of businesses.

Next, let us look at some examples of B2B loyalty programs.

Commentary – 3

The Loyalty Leap for B2B by Bryan Pearson writes about the 4 Rs of B2B loyalty:

Relationships: With B2B loyalty plans, our direct communications will not always be with the end user or decision maker. If we are working with a large enterprise, for example, our contact might be a buyer, several function heads, or representatives, but it is unlikely to be the CEO or the chief marketing officer. The information gleaned from talking with one or two of these contacts is likely to be too vague to meet the needs of decision makers. To make up for this, we must implement broad data collection and disciplined customer information use.

Rewards: B2B organizations must differentiate themselves from their competitors with “soft benefits” or experiential perks, such as training events that lead to certifications or introductions to key vendors or partners. Channel marketers, in particular, are receptive to experiential rewards because the contacts are often sales representatives whose compensation is a mix of salary and incentives.

Recognition: Unlike rewards, recognition is not doled out based on the accumulation of points or miles. It is tied to longevity, customer potential, and transactional history. Recognition is the equivalent of sending a handwritten appreciation note or simply doing someone a favor. n fact, recognition is most often delivered on a person-to-person level.

Relevance: Relevance means knowing where the client is at a point in time, because understanding where the client is in the purchasing process and the associated needs both affect how a marketing message resonates. It also means understanding life stages.

Loyalty Programs: The Complete Guide by Philip Shelper and others writes about how the characteristics of B2B programs tend to be different to B2C programs in six fundamental ways:

Member base size: B2B programs generally have smaller member bases than B2C programs… This provides B2B program operators with an advantage; a smaller member base makes personalisation of communications and services much more achievable.

Member base spend: on average B2B programs generally provide greater value to members than B2C programs. This is because B2B customers tend to spend more than B2C customers, allowing the company to return more value to the business customers as rewards.

Purchasing drivers: businesses have different purchasing approaches to consumers, which necessitates variations in program design. businesses buy to enhance profitability, productivity, payback, and operational ease and maintenance, make slow and complex decisions, receive relevant marketing primarily via direct one-to-one presentations and discussions, and are overly sensitive to technological changes.

Relationships: a B2B relationship may be between multiple participants, including owners, initiators, influencers, deciders, users, buyers and gatekeepers.

Fundamental challenges: the design of a B2B program needs to accommodate three fundamental challenges; ethical, communications and employee longevity.

Reward variations: B2B programs…also tend to include the businesses own products, direct discounts, free education courses, access to events and conferences, and other benefits more suited to the needs of particular customers.

The authors add: “B2B programs should strive to build customer commitment to the brand. Gilliland and Bello (2002) identified three important characteristics specific to loyalty commitment within B2B relationships; it makes it difficult to exit the relationship, partially because loyalty sentiments motivate participants to work out problems rather than leave; it suggests a preference for one company over their competitors when making supply decisions; and, it maintains the relationship even if the decision may be economically irrational.”

One aspect of B2B sales process is the involvement of channel partners. Cristina Ziliani wrote in Loyalty Management about an analysis of 420 cases which contained premium and prize promotions, spanning 20 industries and 25 years, from 1990 to 2015.