The phrase ‘customer loyalty’ is strictly a marketing term that defines the inclination of a customer to choose a particular business, product or service over other available options. Brand loyalty starts when choices are made by customers and action is taken.

What is a Customer Loyalty Program?

Customer Loyalty Programs are specially structured marketing strategies focused primarily on directing consumer behavior in a target market. The program itself focuses on rewarding and encouraging loyalty among long-standing and relatively new customers of the business.

What are Benefits of Customer Loyalty Programs?

Customer Loyalty Programs are essentially the key to an organization’s long-term success. It benefits the business by aiding it to excel in the following dimensions:

• Innovation in design of products including service products
• Operational and executive excellence
• Conformance to changing market trends
• Adaptability to evolving consumer behavior

What are B2B Customer Loyalty Programs?

Many businesses devise reward programs that are aimed at encouraging customer loyalty. The major challenge that businesses face when devising an effective customer loyalty program is that of researching the key elements that drive customer loyalty. In the B2B World examples of Loyalty programs are Customer Advisory Councils or Boards (CAC) and Executive Sponsor Programs.

This week in Orlando, Kim Hammond (from QTS) and I had the opportunity to present at the Loyalty 360 Engagement Expo.  The audience was highly engaged as we talked about some of the common challenges organizations face Achieving Client Advocacy in the B2B World.  The top five challenges discussed were:

1)       Being focused on the wrong customers

2)       Being focused on the wrong level within accounts

3)       Disproportionate marketing spend

4)       Retention

5)       Profitable growth

As we shared there, building true advocacy comes from engaging your most important accounts at the decision-maker level in a meaningful way.  Market leaders must consider the opportunity of shifting their marketing spend to 60% on retention and 40% on acquisition.  In most organization, the reverse is the case.  In addition, investing 35% at the decision-maker level of the most important accounts will provide marketing leaders the desired retention and profitable growth.

I was energized by Loyalty’s research that came out in 2012 for marketers.  Their research shows the top two objectives for marketers in 2012 are, 1) customer retention, and 2) profitable revenue.  This reinforces what the IBM CEO and Fournaise Marketing Group studies said, which basically came down to marketing leaders need to be focused on the business, not the brand.  They need to focus on building the ROI if they want to earn a true seat at the C-suite table.

Cheers to a sustainable, predictable and profitable 2012 for all marketing leaders!

What is Account Retention?

Customer Retention is the measure that businesses adopt to tackle customer defections. The entire process of customer retention has no defined period as it starts with the business establishing a contact with a customer and continues throughout the span of the relationship. Attracting and retaining new customers does not simply relate to a business’ products and services. A lot depends also on the manner in which it serves its existing clientele and the reputation it has maintained in the market.

Why is Account Retention Important?

When you try to replace an account that you have already lost, you waste crucial time and resources while resolutely eating away your profit margin. It is evident from most examples of trying to rebuild lost accounts that the process costs at least ten times more, as newer clients require a lot more resources and attention. When you build a following of loyal customers you get revenue that you can depend on to keep your company’s cash flow afloat while also maintaining your financial integrity.

The Key to Account Retention

The key to account retention is customer satisfaction. The best way to keep accounts is to make sure that you provide personal attention to your customers, provide quality customer service and take criticism and complains in their stride. Your reaction to a problem presented by a customer is the key to determining whether they will stick around or not. You should have the skills to appropriate the sort of reaction that enables your customers to see that you have their best interests at heart.

Customer satisfaction is established through frequent communication. One of the best strategic tools to establish account retention is through a Customer Advisory Board. You have to keep your client up to speed about any steps that you are taking that directly influences them and inform them of the process that you are making on their problems to maintain account retention. Keeping your clients informed reminds them about the significance of their company and the integral role it plays moving forward which ultimately builds strong account retention. 

I was recently challenged an interesting way to think about B2B customer segmentation to drive profitability and growth.  Many people are familiar with the Growth Market Matrix (Cash Cow, Dogs, Stars and ???) that Bruce Henderson developed at BCG.   I decided to take this thought process a step further and apply the principles to customer segmentation in the B2B world.  It’s worked quite nicely with a few clients to determine where to focus energies that will lead to growth and profitability.

The premise behind the growth matrix is that every business can be placed in to a quadrant to effectively manage a portfolio of businesses.  Similarly, for B2B strategies, B2B customers can be placed in to similar quadrants to determine the level of sales, marketing and development investment with the top accounts to deliver growth and profitability.  Here’s my take at the customer segmentation side.

Invest in the Stars For B2B companies, identifying customers that have huge market growth potentials where you have a dominant share of business with them today are perfect accounts for growth and profitability.  As these companies add resources, make acquisitions and organically grow their businesses, opportunities will abound to grow your revenues with customers like this.  These accounts have more of your products/solutions to purchase, offer other parts of their organization to penetrate, and provide many opportunities to build relationships and prove your value.   What is even better is that the marquee “star” accounts will have incredible growth stories that you can leverage to help you sell the next set of “star” accounts.  These are the places to spend your time, invest in the relationships and over deliver with every opportunity you have to ultimately drive revenue growth and profitability.

Protect the Cash Cow These are the customers that are in mature markets and have revenue growth leveling off and buy most everything you have today.  They’ve been with you for a long-time and are typically highly profitable since you mutually understand value delivered and have created efficiencies working together – but they will be cost conscious and continually expect you to deliver more with each new order or renewal.  The opportunity is to focus on account retention by delivering new ideas that drive efficiencies in the way you work together.  Often marquee customers are included in this group that provide an organization with clout and credibility and are advocates to help an organization acquire more customers.  With the cash cow accounts, focus on the top revenue accounts and make sure you don’t lose them.

Walk the Dogs This is an area I find most companies waste valuable resources and have the biggest challenge in determining what to do.  They are the accounts that are small, have limited capacity to grow, milk you for every dime, complain about everything you do for them, aren’t very profitable, and suck the life out of your resources.  Realizing these customers aren’t going to improve or align with your plans for growth and profitability is the first step in deciding what to do with these accounts.   I encourage companies to think about divesting of these customers, or at a minimum, place them in maintenance mode and consider them to be a “wind-down” business.

Acquire the Sweet Spot Question Marks The questionable accounts are those that don’t know much about your company and/or purchase very little from you today.  Smaller accounts can be a waste of time and resources, but those that are of the right size and in markets where you have a strong value proposition represent the greatest opportunities for acquisition growth.  My recommendation is to use a dual approach to these accounts.  A top down approach with your executive team to connect with the highest level decision maker possible, and a bottoms-up approach with your sales team to increase your growth prospects with these accounts.

Leverage this strategy to drive growth with your top accounts!

As a follow-up to the poll I ran on the LinkedIn group for CAB.org, this blog addresses the 2^nd biggest challenge for Customer Advisory Board (CAB) Program Managers – agenda design. I'd like to share a few best practices we've developed to help bring together an agenda that ensures value for all attendees.

 When designing an agenda, we break down session content into four buckets:

1. Identify what you want to learn from your members. Your Executive team should determine the most important issues/areas to gain member feedback. Frame the discussion around the 2-3 key questions you’d like the members to answer.  This allows for a natural dialog among the group. 
2. Determine what you need to inform members about. Provide a strategy update on your company including areas you are considering pursuing, etc., and allow time for Q&A. These business level discussions give members an opportunity to fulfill their role of “advisor.”
3. Understand what members would like to learn.  Survey members a few months prior to the meeting on topics they would like to see on the agenda. Consider having 3 or 4 members participate on a panel discussion on one of those topics.
4. Make time for peer-to-peer learning/networking. Incorporate time for members to learn from one another, and include a fun team-building activity or experience that everyone can enjoy.

Designing an agenda with a mix of these four areas makes for engaging dialog that will be mutually beneficial to the members and the host team.