In one of my earlier posts about using customer reward programs, I showed how a back-end rebate program could be used to improve customer retention in B2B sales. While most of us associate these reward programs with larger consumer focused companies, the right back-end reward program can improve customer retention and dramatically upgrade your B2B sales strategies. More importantly, using customer reward programs will help your business better track market pricing, thereby allowing it to remain one-step ahead of your competitors.
Improving customer retention is essential to securing your company’s long-term future. However, to do that requires the ability to be proactive in the face of competition, one that is more than willing to steal your company’s share of the market. In the end, increasing customer retention is the surest way to keep competitors away.
So, what if there was a way to anticipate a customer’s price request and know for certain whether that request was real or not? What if you knew when a new price hit the market and could rely upon your own customers to be honest in providing that price? After all, it is one thing to have a customer claim there is a lower price out there, but to actually know for sure, is something else entirely. How is this accomplished? In order to answer these questions, consider the back-end rebate program outlined below.
To access the rebate program defined in the table and video above, please access: Sample Back-End Rebate Excel Sheet for Customer Retention
Using the Back-End Rebate Program
Looking at the first month of January, the customer’s price for a single unit is $12.10 provided they take 10 units every month. As part of the rebate program, your company agrees to provide your customer with a $0.25 rebate on every unit purchased. So, for 10 units a month, the customer accrues a $2.50 monthly rebate. At the end of 12 months, their rebate total will be $30.00 for 120 units purchased. However, during April, June and September, your customer calls you to let you know that your competitor has offered them a lower price. They do this because they don’t want to lose the rebate they’ve accrued, and hope that you’re able to match the competitive bid.
Now, what happens when you run multiple reward programs with multiple customers? Isn’t it fair to assume that once one customer claims to have received a lower price, others should make a similar claims around the same time? It most certainly does! In fact, if you have multiple back-end rebate programs with multiple customers, you gain invaluable insight into when a new lower price hits the market. With this information, you can then be proactive and lower pricing for other customers, with similar rebate programs, or at the very least, be prepared with your answers if you refuse to match those competitive bids.
Running a back-end rebate program doesn’t only help to improve customer retention, it also gives you an inside view on how your market is progressing. In essence, it provides you with up-to-date market pricing data in a way that allows you to take decisive action. You can be proactive and reduce customer pricing, or you can decide to hold firm and not lower price.
Bottom line, you’ll be able to anticipate when and how customers will react to what the market is telling them. In addition, you’ll be able to differentiate between sincere customer requests for lower prices and those customers who are merely trying to get you to capitulate to their demands. After all, if only one customer claims to have received a lower price, and that price isn’t substantiated by other customers in other rebate programs, then you can decipher whether the request is sincere or not.
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