There’s one smack-you-in-the-face obvious fact about B2B business compared to B2C: if you want the more profitable business model, B2B comes out on top. It’s simple logic – brands have more money to spend than the average consumer. When analysing just e-commerce, the global B2C e-commerce market is valued at $3.67 trillion, whereas B2B is worth $.5.7 trillion. The question is, where is the most money coming from, loyal customers or new customers? Keep reading to find out more.

Loyal Customers

One customer loyalty state worth pointing out is that 82% of businesses agree retention is easier than acquisition, and 62% of B2B marketers state the way to grow a business is with a focus on customer loyalty. That’s where a loyalty program for B2B customers comes into play. B2B incentive programs aim to reward loyal customers, either per purchase, per referral, or for anything a business wants to reward clients for. 

Interestingly, over 70% of consumers will recommend a brand if there’s a good loyalty program- which is why a personalised B2B customer loyalty programme works so well for increasing profit margins. If you want figures to justify B2B incentive programs, a study carried out by the Harvard Business School concluded if you could increase customer retention rates by 5%, your profits will increase by 25 to 95%. 

Then, there’s the argument that up to half of all B2B suppliers consider the quality and price above anything else. So, would supplier incentives still work? Yes, absolutely. Supplier incentives won’t affect the quality or price; they’re a reward for purchases made. It’s important to remember that B2B sales incentives are only a small piece of the customer loyalty puzzle. You must factor in competitors, quality, price, and marketing to complete the puzzle.

New Customers

The other side of the argument is that loyal customers start as new customers, so there should be an equilibrium between the two – something we will discuss further along. 

A customer’s lifetime value – a term used to describe the predicted value of a customer during their relationship with your business – begins as a new customer. Although the success rate for selling to new customers is between 5 and 20%, discounts and other attractive incentives help retain the customers – and then a channel loyalty programme builds a long-term fruitful relationship. That’s how you increase the customer’s lifetime value. 

Even though statistically discounts are detrimental to a long-term strategic sales plan, they’re initially good for boosting vanity metrics. Customer acquisition campaigns, which include attractive discounts and freebies, result in an almost instant boost in numbers, that includes page visits, daily users, product or service purchases, etc. However, they’re called vanity metrics for a reason. The encouraging increase in figures masks the lack of long-term, actionable insights. 

That’s where we circle back to B2B customer loyalty programmes to cement your long-term strategic sales plans and a sort of equilibrium forms. This delicate dance of acquiring and retaining customers has created an age-old debate: is it better to focus on customer acquisition or retention? The truth is, you can’t have one without the other. Start-ups should be more inclined to focus on acquisition (obviously) and established brands on retention, with both finding a balance between the two that work.