Explore the Types of Loyalty Programs
Learning Objectives
After completing this unit, you’ll be able to:
- Explain B2B, B2C, and D2C loyalty programs.
- Explain B2B2E and B2B2C loyalty programs.
Loyalty Programs Based on Membership
The focus of a loyalty program depends on the audience the program caters to. Some loyalty programs are meant for other businesses, while others are meant for consumers. Let’s take a look at the different types of loyalty programs.
B2B Loyalty Programs
As a retailer, NTO collaborates with other businesses to run its business. It works with suppliers to source raw materials. It works with vendors to understand and incorporate the latest technology into its products. And it also adds other businesses as partners to its loyalty programs. To maintain and improve its relationships with other businesses that it partners with, NTO runs a loyalty program exclusively for them. Such partner-centric programs are called B2B loyalty programs.
B2B loyalty programs offer incentives to partners for engaging with the business in meaningful ways. For instance, it is in NTO’s best interest if its consulting partners become technically sound in its products and services and become evangelists. So the program might reward members for attending training, taking quizzes, or participating in surveys. Members can also be rewarded for sales performance, compliance with norms, and more.
B2B loyalty programs drive value across the partner ecosystem. They help the business increase revenue and profitability. They boost stakeholder value with improved growth, personalized rewards, brand advocacy, and referrals. The programs increase brand value by offering promotions, seeking customer feedback, and demonstrating transparency in the offers. B2B loyalty programs deliver more than just economic value. NTO makes meaningful connections with partners and corporate customers by participating in social causes they believe in, thereby driving social value.
B2B loyalty programs can include rewards that help both NTO and its partners. For example, NTO could offer market development funds to its partner to grow NTO’s presence in a certain geography. B2B loyalty programs typically have a smaller participant base and are seen across multiple industries, such as manufacturing, hi-tech, retail, consumer goods, and so on.
B2C Loyalty Programs
We’ve seen how NTO Insider, NTO’s loyalty program, works. Because it’s meant for consumers, it’s a B2C loyalty program. B2C loyalty programs deliver unique, personalized experiences that are meaningful to customers and help foster emotional connections with them that lead to lasting customer loyalty. They use tier-based incentives and offer members valuable, customized rewards in each tier.
Experiential benefits can be linked to tiers, or get triggered by specific member behaviors. For instance, the NTO Insider program offers members cappuccino vouchers for posting product reviews. It also issues complimentary spa vouchers for purchases worth over $500 during a sale. Other experiential benefits include access to exclusive events, meet the founder, premier customer support, and so forth.
Remember how NTO partnered with other businesses? In B2C programs, businesses often onboard strategic partners offering a complementary portfolio of products and services, and make them eligible for rewards and redemption. Such partners can be accrual-based, redemption-based, or both. Accrual-based means that the program rewards members with points for doing business with partners. Redemption-based means that members can redeem their points with the partner.
B2C loyalty programs engage members with relevant promotions based on member behavior. Although the promotions are short-term, they are targeted toward a particular segment, tier, occasion, or event. For instance, the promotion can be for a member’s birthday, a particular product, an inactive member, or a holiday season.
B2C loyalty programs are popular in many industries: retail, travel and hospitality, health and wellness, financial services, consumer goods, and more.
D2C Loyalty Programs
If NTO were to manufacture and distribute its own products, it can be considered a direct-to-consumer (D2C) brand. The difference here is that there are no intermediaries. D2C brands independently manufacture and market their products, and sell and ship directly to end-users, eliminating the need for intermediaries. They have first-hand access to customer data, which they can use to analyze customer trends, and create strategic upselling and cross-selling opportunities.
Members of D2C programs seek more than just discounts. Ramon is a loyal NTO Insider program member because he values the customer experience NTO offers just as much as he does its discounts. Like B2C loyalty programs, D2C loyalty programs seek to build the best shopping journeys and personalized experiences for consumers.
Other Loyalty Programs
Although B2B, B2C, and D2C programs are more common, new types of programs are emerging that cater to multiple member bases. B2B2E is one such loyalty program where businesses enroll in the program as members, and the employees of the business become members of the same program. Let’s say NTO was running a B2B2E loyalty program. One of its suppliers, a textile manufacturer, enrolls in the program. In this case, eligible business activities will get employees of the manufacturer points and benefits. The program could also credit points to the manufacturer as its corporate member. Manufacturing and high-tech are examples of industries that use such loyalty programs.
Another type of program is B2B2C. Let’s understand this with the same example as B2B2E. The textile manufacturer enrolls in the program as a member. In this case, the end customers of the manufacturer become members of the same program. B2B2C programs are usually seen in the oil and gas industry.
In Conclusion
Customer expectations are fast-changing and businesses need to keep up. Customers today choose experience over price. They seek an emotional connection with brands and expect personalized, relevant, and engaging rewards.
Loyalty Management is a loyalty solution that businesses can use to create effective loyalty programs. It is a unified and cross-industry loyalty platform that can be adapted for any industry. Whether it’s B2B, B2C, D2C, or any other type of loyalty program, you can depend on Loyalty Management to create the program you need.
