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Wholesalers can gain a competitive edge with loyalty schemes

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Wholesalers can gain a competitive edge with loyalty schemes

Consumers often see businesses and brands as single entities but behind them is a whole eco-system of companies that depend on each other.

Supply chains are a critical part of the UK economy, even down to local business level. The B2B sector is huge and much of it is driven by small and medium-sized enterprises (SMEs) – those who employ 250 people or fewer.

SMEs, which includes independent local businesses, make up more than 99% of the 5.5m private businesses in the UK and provide 61% of jobs in the economy. All the biggest companies and brands depend on SMEs for their parts, raw materials and services, while many communities count on the goods and services provided by independent businesses.

For example, major manufacturers in the £67bn UK automotive sector, such as Jaguar Land Rover, Toyota, Nissan and Stellantis, would quickly grind to a halt if their network of SME suppliers disappeared overnight.

SMEs are under pressure

These are tough times for SMEs. Rising interest rates and inflation compounded by soaring energy costs are squeezing revenues and margins in a way not seen for a generation.

Added to that they are facing increased competition from offshore suppliers and ecommerce giants such as Amazon, with their ultra-efficient fulfilment processes and use of digital technology.

This means SME wholesalers and distributors need to raise their game when it comes to both winning new customers and retaining those they already have.

Research from Bain & Company and Harvard Business School reports that increasing customer retention rates by just 5% can boost margins by between 25% and 95%.

This is backed up by academics Paul W Farris, Neil Bendle, Phillip Pfeifer, David Reibstein in their best-selling marketing guide, Marketing Metrics. They report the probability of selling to an existing customer is up to 14 times higher than the probability of selling to a new one.

The benefit of rewarding loyalty

Customer loyalty and reward programmes can be a powerful ally when it comes to customer retention and increased sales.

For example, suppliers in the automotive parts industry incentivise small independent garages for tyre sales, brakes and other parts. Food and retail wholesalers typically reward loyalty through enhanced member discounts and benefits.

Johan Lundgren, the chief executive of low-cost airline easyJet, recently made summed it up very succinctly: “People gravitate towards value.”

It’s a simple message – and it’s true. Businesses can demonstrate value in a number of ways. Wholesalers and distributors need to get the basics right – logistics and fulfilment. Swift turnaround from order to delivery is now critical.

Once you have those processes in place however, how do you add extra value to enhance your relationships with your customers?

Don’t take customers for granted

Love2shop (ABS) is home to a team of customer loyalty and rewards experts. It has helped more than 150,000 businesses, across multiple sectors deliver cost-effective loyalty and reward programmes for both staff and customers.

Recently ABS worked with a major UK builder’s merchant and achieved remarkable results by utilising its Love2shop Engagement Platform to build loyalty among its existing customer base.

Customers – mostly sole tradespeople and SMEs – registered for the rewards programme increased their annual spend by more than 45%. During a 12-month period, there was an unprecedented increase in sales by dormant customers with a rise of 91.4%. Analysis of previously dormant customers revealed an impressive 23% had reactivated their accounts.

Where a distributor is working with a single brand, loyalty programmes can support the sale of that brand into the local market. The manufacturer may even offer to help with, or meet, the cost of the loyalty programme if they can be persuaded of the value.

If you are a wholesaler or distributor operating in a specific locality, that ‘local knowledge’ alongside a well-designed loyalty programme is a powerful combination. It could offer the vital edge over your competitors in serving SME’s and independent local businesses.

Implementing a digital customer loyalty strategy creates an opportunity to use rewards to improve the quality of the customer data you capture to support channel partners in their sales activity.

Make loyalty matter

So which rewards have been shown to work best?

In a major survey carried out by Love2shop, 13,000 people were asked about what they thought were the most desirable rewards. The results were no surprise. They revealed people love the choice that gift cards offer.

It ran two polls across two months asking people to pick their ideal loyalty prize, and their ideal sign-up gift from a selection of popular rewards. Both showed a significant preference for multi-retailer gift cards and discounts, with the former by far the most popular.

Love2shop is one of the leading gifting and reward brands in the UK. Available as a physical voucher, gift card, email or smartphone voucher, its products are accepted by over 140 retailers across the country.

These include well-known brands such as Marks & Spencer, Wilko, Iceland, Matalan, Argos, Costa, Foot Locker and many, many more.

Through ABS, Love2shop can be used as an attractive incentive to new customers, to reward existing customers for their loyalty and as an incentive for referrals that are converted into new customers.

From an initial inquiry, our team of experts can work with your business to have a bespoke, easy to administer, data driven customer loyalty and rewards programme up and running in weeks via the Love2shop Engagement Platform.

A survey by international market intelligence specialist Aberdeen Group, found 80% of wholesale distributors were concerned about the impact of giants such as Amazon muscling in on their sector.

And 87% admitted they were “facing more challenging and complex fulfilment processes”.

Putting robust and efficient processes in place is obviously critical to a successful business model. Adding on an effective loyalty and rewards programme could be the key ingredient that keeps your business ahead of the game.

Get in touch with our team to see how you can implement a successful loyalty strategy.

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