How Incentives Make the Difference in Customer Retention

If you’re a B2B distributor, here’s a hard truth you’re probably aware of: you’re going to lose some of your customers over time. It’s a natural—if unfortunate—part of doing business, even if you’re not doing anything wrong. Maybe your competitors just introduced a new product line, or maybe they’ve gotten a head start on their digital transformation. It can often be hard to tell why, especially if you don’t communicate a lot with your channel partners.  

In other words, contractors need a good reason to stay with a particular distributor—and that’s where incentives come in. A 2021 survey of contractor buying behaviors found that 74 percent of contractors would consider switching their business to a distributor with an incentive program, all other factors being held equal. 

If incentives are a reason to move to a new distributor, they’re also a reason to stay with one. Here’s a few ways incentives can be that key reason your contractors stay with you, from standard points programs to luxury president’s clubs. 

Points or Rebate Programs: Fostering Continuous Engagement 

The standard incentive program is usually a “buy-this-get-that” points program or rebate program. Think airline miles or Starbucks rewards in the B2C world. These programs tend to focus on sales growth, incentivizing your mid-performing customers to spend more with you. 

But that extra revenue also comes with another benefits, like: 

• Promoting eCommerce. Since so many contractors are used to the ease and convenience of eCommerce, a lot of distributors use incentive programs to focus more business towards their eCommerce platforms. A points program can build awareness of your eCommerce offerings by rewarding extra points for using your website or app. 

• Continuous engagement. Often, communication between distributors and contractors begins and ends with a sale. But done well, a rewards program helps contractors engage with your business in several ways throughout the year, keeping you top of mind for them. 

• Gathering data. If you’re unsure about the timing, frequency, and variety of purchases your customers make, an incentive program offers a convenient way to answer some of those questions. Understanding your customers’ buying behaviors means that you’re better able to anticipate their needs. 

• Going beyond the sale. Business partnerships are by definition transactional, but incentive programs can foster a more human connection. Rewards like name-brand merchandise or memorable experiences will help your customers connect with your brand, giving them a good reason to keep their business with you. 

Bottom line: points and rebate programs can foster strong, years-long relationships with contractors. And in 2024, they’re often viewed as table stakes for new customers. 

Special Promotions: Keeping Things Fresh 

All that said, one of the challenges of maintaining a points program is that they can sometimes get a little stale. Incentive programs aren’t “set-it-and-forget-it” operations–they need regular tune-ups to make sure they’re working right. If the only communications your participants get are quarterly automated email reminders to redeem their points, engagement is going to drop off. 

This is where special promotions are helpful. Whether you run a short-term promotion with or without a points program, they offer a lot of reasons for customers to keep their business with you: 

• Seasonal engagement. Running regular promotions around summer, the holidays, or sporting events gives customers an extra reason to look forward to doing business with you throughout the year. 

• Grand prize sweepstakes. Promotions like these offer participants a chance to win big through a bit of playful competition. With prizes like luxury merchandise or travel packages, even participants who don’t win will feel a connection to your brand. 

• eLearning and enablement. Some special promotions reward participants for completing certificate programs or training modules. One of the best things about these types of promotions is that they feel mutually beneficial to you and your customers. It’s not just about improving your business, it’s about helping your customers improve theirs. 

VIP Loyalty Programs: Showing Your Gratitude 

It’s a common piece of business wisdom that it’s better to retain a current customer than gain a new one. New customers aren’t as loyal, you don’t know them as well, and they’re probably going to spend less money with you. 

That’s why loyalty programs are such a major part of the customer retention toolkit. Your top-performing customers are giving you the majority of your business, so find a way to thank them for their years of partnership. 

That usually means an incentive travel program. Even if you don’t have the budget for the most luxurious trip ever, several days in an all-inclusive resort at a beautiful destination can do the trick. Most importantly, this isn’t about sales growth– it’s about making sure your top people know how much you value them. 

Conclusion 

The B2B business landscape is pretty crowded right now. It can be hard for distributors to figure out how to keep their customers from taking their business elsewhere. 

But whether you choose a growth-based points program, a short-term enablement promotion, or a VIP loyalty program—or all three—incentive programs create a ton of reasons for your customers to stay with you.