Competing Against E-commerce Giants: The Power of Customer Reward Programs

In today's rapidly evolving business landscape, distributors face a formidable challenge from e-commerce giants like Amazon, eBay, and Walmart. These e-comm behemoths offer a vast array of products with rapid delivery and aggressive pricing, posing a significant challenge to traditional distributors. They have also mastered the art of leveraging customer data to offer personalized product selections, reshaping customer expectations and demands. The key to thriving in this new environment is recognizing the urgency to adapt, especially as customers increasingly turn to online resources.

Distributors can effectively compete in this marketplace by creating a customer rewards program, which, like the e-comm giants, should utilize historical purchase data to direct customer purchasing goals and marry those goals with personalized reward offers to drive customer purchase behavior.

The rising challenge in the e-commerce era

E-commerce giants have steadily expanded their influence into the B2B sector, capitalizing on their ability to mine customer data for insights. This enables them to offer products that precisely meet customer needs. We have seen these companies showcasing their prowess in utilizing customer data at trade shows. The question for distributors is clear: Are you harnessing your customer data similarly? A customer rewards program can increase sales and profit margins by incentivizing customers to direct more category spending with you. You reward them only as they become more valuable to your business.

How a customer rewards program can help you

A well-structured customer rewards program can transform your relationship with your customers from a transactional one to a more meaningful partnership. By incentivizing their loyalty, such programs will not only boost your revenues but also influence customer purchasing behavior.

Here are seven ways a customer rewards program can help you:

1. Cost-effective and profitable:

A customer rewards program incurs costs only when customers engage with your offers, making it a financially prudent strategy. Moreover, such programs will drive incremental sales and associated gross profits. They will become a valuable profit center for your company, with the incremental profit derived from increased customer purchasing paying for the program many times over.

2. Facilitate data-driven customer segmentation and offer customization:

Follow the lead of the e-commerce giants by utilizing your customer's historical purchase data to tailor your messages and reward offers. Analyzing historical purchase data allows you to segment customers by their purchase history, enabling you to customize your communication and rewards, making them more relevant and appealing to each customer. This approach transforms your customer data into a valuable asset in developing a tailored customer experience.

3. Help to promote unique offerings or private label brands:

Your reward program can easily be used if you offer unique products or have a private label or in-house brand. The program can elevate the visibility of these goods with your customers, incentivizing them for first-time orders, re-orders or increased order size.

4. Let the rewards connect with all customers:

You probably have a wide variety of customer types – all of whom will have different tastes and preferences concerning how they wish to be rewarded for their loyalty and value to your organization. A good customer loyalty program will offer a wide selection of rewards, including gift and credit/debit cards, name-brand merchandise, event tickets, experiential and travel rewards, in-house offerings like account credits and free shipping, as well as converting reward points into charitable donations. This variety caters to the diverse preferences of your customers, ensuring there's something for everyone.

5. Leverage personalized relationships:

Your competitive edge lies in the strong, personalized relationships you have nurtured with your customers. Your customer loyalty program can help emphasize the strength of these individual customer relationships by employing personalized program offers derived from the analysis of program sales data. This powerful combination of a close customer relationship and data-driven customer insight is something the e-comm giants can't match.

6. Promote educational and relationship-building opportunities:

Offering rewards for product training, product workshops, and "Lunch & Learn" sessions, both online and onsite, can strengthen your customer relationships and showcase your commitment to their success.

7. Enhanced customer loyalty:

A well-designed customer reward program does more than incentivize purchases; it fosters deeper loyalty when used to promote and reward relevant purchases. By using program data to better understand customer needs, target customers with relevant offers, and reward their loyalty, your company becomes more than just a supplier; it becomes a valued partner. This can shift customer purchasing behavior, resulting in significant ROI for each dollar invested.

Stop your dependence on discounts

It's time to move away from your reliance on dealer days, discounts and rebates. While they might seem attractive in the short term, they are incredibly costly (5-15%) and often lead to a cycle of expectations and diminished returns. On the other hand, a well-designed B2B reward program will typically cost less than 2% of eligible sales and can support a broad range of sales and marketing objectives, such as promoting new products, encouraging year-over-year growth, increasing category purchases, cross-selling, upselling, clearing overstock, or boosting online orders.

Don’t get left behind

The competitive landscape is shifting rapidly, and the time for distributors to act is now. Ignoring the potential of a customer rewards program means risking being left behind in a market where personalization, customer experience, and loyalty are paramount. By offering diverse rewards, leveraging personal relationships, using data-driven strategies, providing unique offerings, and focusing on profitability and customer loyalty, you can not only compete but also thrive against e-commerce giants. The key is to act swiftly and decisively, embracing these strategies to ensure relevance and success in the evolving marketplace. Wondering what your next steps should be? We can help. Our team can show you how to leverage your customer relationships with a data-driven, performance-based customer rewards program that will help to maintain and grow market share and drive your key sales goals.

Lift & Shift is a leading B2B reward and incentive program technology developer who utilizes proprietary B2B reward software to set up and fully manage highly customized reward and incentive programs for its clients. The company works with manufacturers, distributors, and service providers to analyze sales data, improve efficiencies, accuracy, service levels, and other valuable targeting opportunities.