In the digital era, digital loyalty programs are the future for both business to customer (B2C) and business to business (B2B) brands. A report by Fact.MR projects the digital loyalty program market to grow at a compound annual growth rate of 8.2 percent from USD 51.5 billion in 2024 to USD 113.3 billion by 2034.
However, they are extremely important for B2B brands due to several reasons. In this blog post, we will discuss what digital loyalty programs are and what makes them work for B2B brands.
What Are Digital Loyalty Programs?
As the name suggests, digital loyalty programs are loyalty programs that are digitized to work on digital channels such as apps, websites, social media, and more.
Before the advent of digital technology, both B2C and B2B brands relied on traditional loyalty programs to reward their buyers and channel partners. For instance, some paint manufacturers used to place loyalty coins in their paint cans. When painters empty the cans, they can collect the coins and redeem the rewards. Likewise, all other loyalty programs were physical in nature.
However, the popularity and mass adoption of digital technology caused the shift from physical loyalty programs to digital or app‑based loyalty programs. Digital loyalty cards quietly replaced physical loyalty coins.
Gradually, B2B brands realized digital loyalty programs are convenient, cost-effective, and fraud-proof. In addition to that, our increasing reliance on smartphones made digital loyalty programs more relevant.
As per latest data nearly 90 percent of the world’s population, or 7.21 billion people, use smartphones. As per another study three-fourths of respondents said they would engage more with loyalty programs they can access using a smartphone.
Why Do Digital Loyalty Programs Work for B2B Brands?
In today’s time, digital loyalty programs work extremely well for all types of brands, whether they are B2C, direct to customers (D2C), or B2B. However, when it comes to B2B Brands, digital loyalty programs offer the following advantages:
1. Zero- and first-party data
Between traditional loyalty programs and digital loyalty programs, which one do you think is more adept at capturing zero-party and first-party data? The latter, of course. As people enroll in digital reward programs, they voluntarily provide relevant information and data.
The apps and personal devices capture zero- and first-party data well. As per BCG study, businesses that use zero- and first-party data for their loyalty programs and other marketing strategies report 1.5 times to three-fold increase in their revenue.
2. Rich insights into buyers’ behaviour
This is the direct result of collecting zero- and first-party data from buyers and channel partners. Digital loyalty programs record every transaction, spending, redemption, and more.
When B2B brands get rich insights into buyers’ behaviour and preferences, they can tailor experiences, offers, and rewards. Apart from that, the real-time analytics and reporting in digital loyalty programs can help B2B brands understand how their loyalty programs are performing.
3. Encourages increased spending
One of the biggest benefits of digital loyalty programs is the increased spending by buyers. A study conducted by McKinsey found that members of paid digital loyalty programs are 60 percent more likely to spend more.
In the B2B space, buyers don’t usually spend more than intended. But when they do that, it means that they love the brand and its products (or services). With the right app-based loyalty program, B2B brands can drive their buyers to buy more.
4. Works well across channels
Digital loyalty programs are omnichannel. They can be accessed via smartphones, apps, social media, and more. Not only that. Digital loyalty programs can work on mobile devices, personal computers, and tablets.
As per a study brands with robust omnichannel loyalty strategies have an average buyer retention rate of 89 percent. Whereas brands with weak omnichannel loyalty strategies retain on average just 33 percent of buyers.
5. Results in higher lifetime value
Did you know? A mere seven percent improvement in brand loyalty can result in up to 85 percent growth in lifetime value (LTV)! A data published by MoEngage found that. For B2B brands, the lifetime value of buyers is extremely important.
B2B brands invest a lot more time, money, and efforts to acquire buyers. If the lifetime value of buyers isn’t adequate, then it can result in losses in the long run. This is where digital loyalty programs come to the rescue for B2B brands.
6. Cost effective and eco-friendly
In today’s age, sustainability is not just a buzzword. It’s the way of doing business. Not just that. To remain competitive, B2B brands are increasingly feeling the pressure to reduce costs wherever they can and adopt more sustainable practices.
This is where digital loyalty programs can be of immense help. Digital loyalty programs are highly cost effective and eco-friendly. All these make digital loyalty programs highly scalable. When B2B brands run traditional loyalty programs, they would need to create more physical loyalty cards or coins if they intend to scale it up. But they don’t have to spend an extra dime to create hundreds or thousands of additional digital loyalty cards.
7. Eliminating loyalty frauds
Loyalty fraud, or rewards fraud, is a growing problem in the B2B space. The loyalty rewards are in the tune of hundreds, even thousands, of dollars. The high value transactions and massive volume purchases make it more lucrative for fraudsters.
As per a report released by Reuters, loyalty fraud has risen by leaps and bounds over the past ten years and it ranges between USD one billion and three billion every year. However, B2B brands can eliminate loyalty frauds by using digital loyalty programs. The sophisticated features such as dual wallet and KYC verification in digital loyalty programs can be highly valuable in eliminating loyalty fraud.
Final Words
In today’s digital age, digital loyalty programs are non-negotiable for B2B brands. And rightfully so. Relying on traditional loyalty programs is just similar to relying on horsedrawn carriages in the age of electric vehicles.
Compared between B2B and B2C brands, the former needs digital loyalty programs more than the latter. There are many reasons behind it. Eliminating loyalty frauds is one of those.
If you are an India-based B2B brand, then you need to shortlist the most promising loyalty program companies in India. After that, you need to handpick the right loyalty solutions provider that can help you create tailored and effective digital loyalty programs for your brand.
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