The dealer’s role in the transactional process of earning points is simple and almost invisible; contractors submit copies of their invoices to Builder’s Circle showing qualified purchases from all of their sources. But Findglass and his manufacturer members hope that contractors enrolled in the program will push product demand through their dealers and other outlets to boost their point totals. “It’s in a dealer’s best interest to get a customer enrolled in this program,” he says, and perhaps consider carrying more of the brand names in the program. Builder’s Circle does not intrude on a dealer’s rewards program, either, he says. “Builders can double-dip if the dealer has a program too.”
DIY Advice While the consortium approach may be the wave of the future for rewards and loyalty programs, most LBM dealers are left to launch their own efforts. With names such as Yard Rewards, Contractor Plus, Supreme Privileges, and Inner Circle, among countless others, dealers hope to grow existing (and ideally their most profitable) accounts, attract new business, inspire on-time payment, and reward loyal customers. “Goals vary from building stronger relationships [to] boosting sales and/or margins, promoting new products, and competitive differentiation,” says May. “All of those are worthy goals. The key is to keep it simple and get it right from the start.”
That was the mantra for the Yard Rewards program launched last year by Holmes Lumber and its parent company, Carter-Jones Lumber. Rewarding two points for every dollar spent (an inaugural-year promotion to kick-start the program), Yard Rewards focuses on the group trip concept that creates opportunities for the dealers’ sales staffs to network with existing, high-volume customers. “A big part of what we do is to understand the needs of our customers, and these trips help us do that outside the context of a jobsite,” says Miller.
A critical element of the program is its end date for earning and redeeming points. From a purely practical aspect, the dealer needed to know how many qualified builders would cash in their points for the various vacation packages offered so it could book airline and hotel reservations; in addition, a deadline motivates pros to purchase materials (and pay on time) to earn points. “You have to identify a life cycle for the program,” says Keith Turtenwald, vice president of Lincoln Contractor’s Supply, a 13-location operation based in Milwaukee that recently exited a five-year rewards program after sales reports indicated a waning value to the dealer. “If it’s going on all the time, it’s not special.”
Maintaining a program’s freshness can be accomplished, say both Hall and May, by continually refining it to suit different circumstances. “Change it seasonally or to promote a new or specific product or category,” says May. “Use those situations as test beds to see if interest spikes or the promotion works,” which, in turn, helps refine the overall program to align rewards with what customers need and expect.
That’s an alignment that Hall often finds missing among dealers and other businesses and industries that offer rewards programs. “The biggest problem is that the executive team thinks they know what their customers want,” she says, a presumption that can be either confirmed, refined, or altered by conducting primary research and inspiring customers to share more information about their buying habits and motivations.
Though group travel appears to be the trendy reward, or at least the one most dealers steer their rewards program participants toward for obvious networking reasons (an average KC-BIG trip includes 50 customers, says Langenhorst, though he’s hosted as many as 350), merchandise and individual travel packages also have an appeal among pros, especially small-volume customers. “Low-point rewards like DVDs, books, and CDs help engage and reward the small and medium-sized players,” says May, who advises dealers to offer merchandise that mirrors retail trends for consumer electronics and other popular perks.
Beyond Rewards While well-run rewards and other incentive programs have proven to be effective for the short-term goals set by those that employ such tactics, there’s much more to be gleaned from them—namely, an embedded, long-term loyalty among pro customers. “It’s easy to give things away,” says Hall. “True customer loyalty is about relationship management, and it takes time and an ongoing dialogue with your most profitable accounts. You can’t put a rewards program in place and say, ‘We’re done with loyalty.’”
She says, however, that an effective rewards program feeds into fostering loyalty. “Rewards give customers a reason to work with you and gets them used to exchanging business information,” she says, which can then be leveraged into personalized or target marketing through e-mail, online accounts, and one-on-one sales conversations about specific products and services, and cross-selling that makes a pro feel even more special (and loyal) than would an iPod or a Caribbean cruise. “Rewards programs are appropriate, but they are just one way to show customers that you know their business.”
And that’s primarily accomplished, says May, by maintaining constant communication. “You can nail the program, but if you don’t have ongoing communication with the customer, you’re not going to reinforce the behavior you’ve inspired,” he says, noting personalized e-mails and direct mail, in-person strategic planning sessions, and soliciting feedback in the field as effective tactics.
Regardless of the specific path dealers take to reward purchases or foster loyalty (or both), a well-run program that gets the business closer to customers has inherent value. “Every supplier needs to have some sort of program to get to know customers outside the sales conversation and off the jobsite,” says Langenhorst. “Once you develop that relationship, it’s easier to solve a lot of problems faster and to everyone’s satisfaction.” —Rich Binsacca is a contributing editor for PROSALES.
