Thriving Amidst B2B Marketplaces: Why Distributors Need Customer Loyalty Programs
By: ITA Group
The rise of B2B marketplaces, led by Amazon Business, Bay Supply and Alibaba, has transformed the distribution and wholesale industry. With vast product selections, seamless shopping experiences and competitive pricing, marketplaces pose significant challenges for traditional distributors and wholesalers.
Strong customer loyalty programs overcome challenges by bringing value to the customer experience that not only earns customer loyalty but maintains it. When done well, these programs complement and drive digital adoption of distributors’ own ecommerce platforms, empowering distributors to work smarter when collecting and applying valuable customer data.
In short: customer loyalty programs help distributors stand out when partners increasingly question what value distributors provide the channel.
Understanding the Digital Marketplace Landscape
Digital marketplaces have revolutionized the way customers purchase products, offering convenience, speed and competitive prices. Digital Commerce 360 reports 60% of B2B buyers do more than a quarter of their purchasing on Amazon Business, and 28% do more than half.
Distribution Strategy Group found that manufacturers expect traditional distributor sales to fall 20% over the next five years while digital channels grow by about 80%.
Marketplaces are taking a greater share in B2B profits, and distributors’ customers agree. As a result, traditional distributors must reevaluate their customer loyalty and lean into digital strategies to protect their customer base and market share. Unlike traditional distributors, digital marketplaces are standardized and designed to fulfill basic needs. However, distributors should look beyond digital-only strategies.
Distributors’ value-added services are their most significant advantage over marketplaces, including specialized industry knowledge, personalized support and complex solutions. Distributors can showcase their strengths and establish long-term customer relationships through customer loyalty programs.
Harnessing the Power of Customer Loyalty Programs to Retain & Grow Customers
Customer loyalty programs are instrumental in building strong customer relationships and fostering loyalty. The programs incent customers to consistently choose a specific distributor by offering beyond-transaction value, like awards, exclusive discounts and personalized experiences. By providing tangible and non-cash awards for desired behaviors and loyalty, distributors strengthen their customer base and encourage repeat purchases.
Customer data is a goldmine of insights for driving business growth. Loyalty programs allow distributors to:
- Collect and analyze customer data to gain a deeper understanding of their preferences, behaviors and needs
- Anticipate customer demands by proactively addressing pain points
- Stay ahead of the competition by creating tailored experiences that resonate with their customers
Offering value-added services and solutions, such as technical support, training programs and customized product configurations creates unique, differentiated customer experiences. Exceptional customer service that’s responsive, reliable and personalized builds greater trust and loyalty.
Embracing Distributors’ Unique Position to Gather Customer Data
Distributors already own the customer relationship, giving them access to highly coveted customer data to use in a well-structured loyalty program. This access to data includes:
- Transactional data for every purchase a customer makes
- Location of each transaction
- Date and time the product was delivered
- Each customer contact who influenced the transaction
Distributors’ position between manufacturers, vendors and customers influences how to target the right customers with relevant award offers. It’s an everybody-wins scenario through increased sales.
Driving Digital Adoption Through Loyalty Programs
While some organizations may not be as set up to build customer loyalty during digital purchases or interactions, distributors need to embrace digital platforms and encourage customers to adopt ecommerce. Forrester estimates that by 2027, U.S. B2B e-commerce will reach $3 trillion and account for 24% of total U.S. B2B sales.
By offering program-specific incentives for online purchases, distributors motivate customers to explore and embrace digital channels. Consider offering a SPIFF that rewards sales reps when a customer orders through your website instead of through an agent or gives a higher point value to online purchases. The key is to consistently reinforce desired behaviors. A one-and-done approach won’t foster success.
To maximize the loyalty program’s impact, consider integrating customer data through an application programming interface (API) or file share. Synchronizing customer data and purchase history between the loyalty program and the ecommerce platform allows for a unified customer experience. Offering exclusive benefits, such as early access to promotions or exclusive product releases, further incents loyalty program members to engage with the ecommerce platform.
Embracing Customer Loyalty Programs
Distributors must adapt and implement customer loyalty programs to drive brand loyalty and digital adoption. Embracing customer loyalty programs is not only a strategic move but a transformative one, helping distributors forge enduring relationships, differentiate themselves from the competition and secure a prosperous future in the ever-evolving landscape of B2B commerce.
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