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Loyalty programmes for B2B companies

Loyalty Programmes typically are marketing interventions aimed at creating greater engagement and brand affinity amongst the buyer and the seller and in the B2B context seem to be apt for organisations which have the following characteristics:
Drive sales through a channel driven distribution set-up;
Sell products which are relatively commoditised, however, aspiring to go up the ‘branding’ chain;
Sell products which are not of conspicuous consumption –consumer’s knowledge and involvement in the buying process is minimal;

The Channel through which the organisation sells has a key role in influencing the choice of the consumer ;
There is always an intermediary between the consumer and the channel – presence of an ‘influencer’ fraternity;
The channels of sale are multi-branded and primarily margin driven.

For example, a typical product which meets the criteria, as above, is cement – which is sold through a distribution channel , is a product which is commoditised and one that aspires to be a ‘brand’. The consumer has little knowledge with respect to the composition of the product and is largely dependent on the recommendation of the retailer or the mason (the influencer) regarding his brand buy. Moreover, a cement retail outlet is normally a multi-brand set up and is primarily margin driven – a perfect fit for a Loyalty Programme.
Similar could be the case with tubes, rebars and pumps – to name a few categories, which typically seem to satisfy the above criteria.

The FMCG and telecom sectors also have their share of loyalty programmes but the difference here is that the consumer involvement is relatively high (higher brand awareness) and marked absence of intermediary influencers in the process.

The success of any loyalty programme is a case of ‘design’ and needs to be framed in such a manner that certain underlying KPIs to be achieved determine the steps undertaken. Let us take an example. In a Mason’s Loyalty programme the initial objective is to get as many masons as possible on-boarded onto the programme within a specified time period. The ‘design’ for the programme – the key performance indicator (KPI) in such a case would be “the number of masons on-boarded” within the given time frame and it makes sense to create a competition amongst the dealers as to who onboards the maximum number of masons within the given time period and reward them for the same.

Once the above objective is achieved, the next KPI “design” shifts to maximising “sales per mason.” In such a case the ‘design’ moves over to creating a competition amongst the masons such that the mason who gives the maximum sales within the specified time period is rewarded. Thus it is important to design the programme keeping the objectives in mind and thereby ‘designing’ KPIs fulfilling which leads to the attainment of the organisation’s goal.

All of this brings us to the principles of gamification which are used in loyalty programme designs and involves individuals who compete directly against one or more individuals or participate individually in an interactive experience which drives desired behaviours.

Bringing gamification to life involves bringing into play certain important levers and an effort is made to broadly explain what it means in loyalty ‘design’ contexts.

Fast Feedback: Feedback has to be fast enough in a loyalty contest situation to reinforce positive behaviour
Transparency: The methodology adopted in a loyalty contest should be known to everyone clearly and transparently
Goals/Badges: Laurels for attaining certain KPIs in loyalty contests – egging on people to achieve goals
Levelling up: Segmenting amongst the performers
Competition: To bring the best out of the individual / team
Collaboration: Reinforcing competition amongst teams (intra team collaboration)
Community: Praises / Rewards made known to the community to instil pride
Thus loyalty programmes actually are interesting and intelligent ‘design’ initiatives and implemented effectively could bring about an important decision in the marketplace.

Authored by

Shiladitya Saha

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