Building market share through contractor loyalty
Segmented incentive strategy with points and
group travel has delivered strong ROI for 10+ years
After a market recession, this leading distributor of construction and industrial supplies needed to grow profits across its 569 independent branches in 49 states. Branch leaders wanted a contractor loyalty program, but corporate leadership knew it had to be the right initiative to reach its diverse contractor, service-shop and replacement-part audiences.
Tailoring objectives by audience
Creating value up and down the distribution chain was the ultimate goal, so the distributor started with an assessment to establish each audience’s objectives. Through surveys and research, they found many objectives were shared. They focused on the contractors because they had the highest purchase potential.
Growing market share through personalized contractor goals
Incentivizing incremental growth (instead of rewarding current business) ensured a positive ROI. They needed to convince local branch leaders and sponsors to buy in—literally and figuratively—to a self-funding model.
The solution? Identifying the contractors with potential to increase purchases and assigning them tailored goals. Each contractor’s base goal was based on purchasing a predetermined percentage above their previous year’s purchases. Earnings would only be distributed after they hit the goal, motivating contractors to purchase more while protecting the distributor from massive payouts. Stretch goals also unlocked after the base goal was achieved, keeping up their program engagement after the initial payout.
Extending the benefits to all audiences
Growing contractor loyalty affected the other audience types. The chart below shows how each segment benefited from the program’s technology, data and unique goal structure.
Using program data to maximize impact
Through annual data analysis, ITA Group recommended ideal contractors to invite to the program, associated goals, reward type and projected ROI, ensuring a turnkey program. Local branch leaders also had the freedom to target contractors autonomously.
Configuring the technology by audience
The web platform included on-the-go accessibility, segmented views and a simplified user experience. ITA Group currently manages program administration, lessening the administrative burden for program owners.
Motivating with points-based rewards and incentive travel
The rewards that inspire top contractors are often unattainable for middle performers, causing them to disengage. To solve this, the distributor uses two reward types: points-based rewards for most contractors and group travel rewards for high-volume contractors.
Contractor reward options
1. Points-based rewards
Points accumulate with each purchase, tracked via the program website and printed statements.
Online storefront experience
- Brand-name merchandise and experiential awards
- Thousands of options carefully curated in 10+ categories
- Personalized reward experience according to user interest
- Simple redemption process
2. Group travel rewards
Group travel for high-volume contractors provides fun networking opportunities.
Group Travel Features
- Exclusive experiences, daytime activities and evening events
- Strategic pre-event, on-site and post-event communications
- On-site gifting
- High-touch, concierge-style service
Educating through partner marketing
Local branch leaders gain partner marketing that helps them operate the program without burdening their internal teams. An annual mixed-media campaign supports each local branch, educating leaders on the program while demonstrating how easy it is to target ideal contractors.
Engaging new contractors
Tailored communications feature elements for “deskless” contractors in the field to maximize participation and goal achievement any time, anywhere.
- 1:1 targeted emails for ad hoc promotions and goal tracking
- Statement mailers featuring progress-to-goal status
- Promotional postcards and mailers
- Mobile site for promotion updates and checking earnings
- Reminders to redeem points
- Promotional items for program awareness
Growing year-over-year sales for 10+ years
What started as a need to rebound from a recession developed into a long-term contractor marketing program that continues to drive contractor growth and sales.
For more than a decade, the program has mutually benefited all its audiences through stronger relationships, risk-free incentives, enhanced brand awareness and better data visibility. And it continues to evolve, promising even greater
success in the decade to come.
Results
$82M
annual sales revenue average
$15M
annual average growth margin
447%
average program ROI over life of program
187%
greater purchases by targeted contractors vs. nontargeted
95%
attendee satisfaction (most recent travel incentive operation)
90%
annual catalog award redemption