Best Practices in Contractor Loyalty Programs 2015
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1 BUSINESS ASSESSMENT AND OUTLOOK FROM PRINCIPIA Best Practices in Contractor Loyalty Programs 2015 Exterior Building Products The gold standard for information and insights in the building products industry
2 Best Practices in Contractor Loyalty Programs 2015 Exterior and Interior Building Products Win the Contractors, Win the Market Contractors exert a powerful influence on product choice with homeowners across nearly all building products segments, and are successful at convincing their customers to switch materials or brands. Manufacturers recognize this influence and structure loyalty programs to reward contractors for repeatedly buying their products. Rewarding contractors in a meaningful way is critical in driving increased revenue. A well-managed contractor loyalty program serves two purposes: Support in marketing the manufacturer s product lines. Loyal contractors are more likely to engage in brand discussions with homeowners. A strong loyalty program increases satisfaction, drawing contractors away from competitors, thereby increasing market share. Identify usage trends and track spending. A well-designed loyalty program helps track contractor buying habits and increases understanding of which products drive revenue in each sales cycle and marketing campaign. This allows manufacturers to develop effective sales and promotions for products during times when they are most in demand, determine which contractors to target, and how to best influence additional purchases in the future. The graph on the following page illustrates, by product category, how programs are structured. Contractors can act as field-level advocates for your business. However, to be effective, they need to see the program's benefits and clearly understand how it works. Knowing the right mix of what to offer contractors in your loyalty program is absolutely necessary to attract and retain this influential group of customers. 2
3 Loyalty Program Offerings by Product Category 100% 15% 21% 25% 18% 25% 26% 75% 24% 27% 25% 30% 28% 17% 50% 25% 0% 31% 15% 15% 15% Paints and Stains No Loyalty Program Rewards Focused 12% 25% Doors Marketing Support Focused 21% 24% 17% 31% 20% 18% 20% 14% 9% 10% 10% 12% Insulation Roofing Flooring Windows Training and Education Focused Multiple Element Focused Graph is for illustrative purposes only. The number of contractor loyalty programs is growing, but not all programs are successful nor do they lead to increased revenues. Best Practices in Contractor Loyalty Programs 2015 demonstrates what contractors are looking for in a loyalty program, why they participate (or don t), and more important, what motivates them to sell more of a manufacturer's product. For example: Are contractors incentivized more by free rewards, such as merchandise and trips, or business support tools, such as continuing education or lead generation? Do contractors prefer sales support materials or a chance to earn free tools they use every day? Or, are contractors looking for a combination of these benefits? Best Practices in Contractor Loyalty Programs 2015, for exterior and interior building products, will help manufacturers develop and implement more successful contractor loyalty programs. These reports will uncover the optimum mix of business support and rewards that contractors are looking for. Moreover, these reports will show manufacturers how to build, present and market these programs to contractors to maximize participation and retention. 3
4 Report Format Executive summary of key insights on contractor loyalty programs, how they are structured, enrollment and participation criteria, as well as marketing and promotion of successful programs. 1. Executive Summary Summary of key insights on contractor loyalty programs from manufacturers and dealers, including incentive structure, detail by product category, program marketing and promotion practices, and winning versus losing program formulas. Rewards and rebates vs. marketing and training support Impact of program structure by product category Aggressive vs. passive promotion Manufacturer / dealer / contractor benefit matrix 2. Contractor Loyalty Program Structure A summary of contractor loyalty program offerings within different building product categories, and their effectiveness in increasing contractor loyalty and spend. Loyalty program incentive structure by major building product category, including: Rebates and cash back Manufacturer / dealer sales and marketing support and/or materials Merchandise rewards through major retailer partnerships and gift cards Manufacturer branded merchandise Credits toward free tools and hardware used in the contractor's trade Training / product knowledge sessions Opportunities for continuing education credits Opportunities to offer enhanced guarantees and warranties Optimum combinations of multiple elements 3. Contractor Loyalty Program Enrollment and Participation Criteria A summary of contractor loyalty program enrollment and participation requirements by major building product category, and their effectiveness in encouraging or discouraging participation. Loyalty program enrollment structure by product category, including: Unqualified vs. qualified participation and enrollment Exclusivity incentive Purchase quantity qualifiers Multiple product category purchase qualifiers Contractor certification qualifiers Multi-tiered qualification-level program structures Ability to earn distinction as a manufacturer's preferred contractor 4. Marketing and Promotion of Contractor Loyalty Programs A summary of manufacturer and dealer / distributor strategy for marketing and promoting their contractor loyalty programs, including their effectiveness. Loyalty program objectives Rewarding the contractor for selling product Helping the contractor to increase close rate Helping the contractor to be more successful Helping the contractor to be more skilled Encouraging the contractor to sell more product Encouraging the contractor to not purchase a competitor's products Utilizing the contractor as a marketing tool Countering a competitor's loyalty program 4
5 Strategies to communicate the program to maximize participation Prominent banners on homepages, order pages, etc. Unique website or URL dedicated to promoting the program Easily accessible information on program features and benefits Detailed information on program features and benefits Easy-to-follow enrollment instructions Hard copy invitations to enroll (direct mail, , inserts in orders, invoices, etc.) Salespeople trained to encourage enrollment with every transaction What encourages the contractor to enroll or participate? Identifying the key drivers to increase contractor purchasing rates What contractors are saying about the programs they like and don't like Identifying the key drivers to increase contractor enrollment and participation rates 5. Loyalty Programs Effectiveness Assessment A realistic business assessment to help manufacturers and dealers create or improve the effectiveness of their contractor loyalty programs. Correlations and contrasts will be depicted among the different building product segments and loyalty program elements. Subscribers will be able to zero in on the issues most pertinent to their business to help them create a winning contractor loyalty program, or enhance their existing program. Apparent return on investment from various contractor loyalty programs Optimum contractor loyalty program elements by product category and contractor type Assessment of best practices for marketing and promoting contractor loyalty programs Detailed observations and strategies for attracting following contractor segments: Specialty contractors (for example: decking or roofing) Remodeling and general contractors Builders Changing contractor perceptions regarding loyalty programs Understanding the challenges for loyalty program success, both in engendering contractor loyalty and increasing sales Exterior Building Products Decking and Railing Entry and Patio Doors Roofing Siding Windows Trim and Moulding Interior Building Products Flooring Plumbing Fixtures Insulation Interior Doors Paints and Stains Cabinets and Countertops Loyalty program effectiveness, in terms of driving increased revenues and margins, maximizing contractor enrollment, and building greater contractor loyalty will be assessed directly from 1,000 contractor respondents. The results will be portrayed in graph and tabular formats to provide insights about the most effective elements of a successful contractor loyalty program. 5
6 About the Reports Best Practices in Contractor Loyalty Programs 2015 is available for either interior or exterior building products and presents a detailed, focused analysis to assist building products manufacturers in creating or improving their contractor loyalty programs. By revealing the components that have helped successful programs drive revenue increases and share, the reports will define how contractors view such programs, including offerings, ease of use, perceived value and participation rate. The reports will segment loyalty programs by product category and program type (marketing, educational, rewards) to present the optimal formula for success. They will identify the blind spots in current manufacturer marketing and promotion efforts aimed at the contractor, helping the manufacturer understand when and why contractors decide to participate in these programs. Subscription Features Best Practices in Contractor Loyalty Programs 2015, for either interior or exterior building products is an indispensable tool for decision makers, offering a definitive 360-degree view of the industry. These reports feature detailed assessments of contractor loyalty programs, their incentive structure, program enrollment and participation criteria, strategies (and the effectiveness of those strategies), as well as best practices for marketing and promotion. Voice of Customer Database Voice of Customer research captures responses from over 1,000 contractor interviews. The research reveals information focused on contractor loyalty programs and the influence of: Program elements Incentive structures Marketing activities Communication strategies Online Data Visualization Tool: Create Your Own Scenarios Subscribers have online access to the contractor research data via Principia s online data visualization tool. The platform gives users the ability to translate database queries into pictures of data to see patterns, identify trends and discover visual insights. Explore the data and perform your own analysis to combine multiple views into interactive dashboards. Highlight and filter data to show relationships. It s a multifunctional tool that allows subscribers to find, analyze and present the data that is specific to your company s strategic initiatives. 6
7 The online platform enables users to login from any desktop or mobile device to access all of the data from the reports, with the added ability to instantly customize the data views with their own information. Use the tool to: Quickly analyze, visualize and share data Create rich analyses and interactive dashboards with intuitive drag-and-drop functionality Filter, drill down and combine multiple views of data with a few clicks Instantly update with your own data and generate custom reports How much influence does each of the following have on your home improvement project decisions? Which of the following jobs would you do yourself, buy materials and hire a contractor to complete, or hire a contractor to complete entirely? Which of the following products did you purchase using a manufacturer s customer loyalty Inside Principia s Voice of Customer Data Tool Data gathered from 1,000 contractors is accessible via Principia's interactive, online tool. Customize the data results to better manage customer relationships, create actionable insights, and drive financial metrics. All graphs are for illustrative purposes only 7
8 Reports Methodology Principia maintains a building products and construction industry database that serves as the starting point for the research. This includes research and information from previously completed relevant reports focused on exterior and interior building products. In addition, Principia relies heavily on primary research and surveys. Using the Reports Best Practices in Contractor Loyalty Programs 2015, for interior or exterior building products, provides a vital baseline analysis for business planning among building product manufacturers, distributors, and specialty retailers. The reports analyze contractor loyalty programs, their impact on purchase, how they influence the behavior behind product and brand selection and what marketing and promotion activities with those programs resonate with contractors. Why Subscribe? The reports are essential references for executives responsible for business planning aimed at the contractor loyalty programs in the United States. These include: Manufacturers Specialty retailers Pro dealers Distributors 8
9 Scope The reports focus on contractor loyalty programs for exterior and interior building products in the United States. Reports Timing The reports will launch in the third quarter of 2015 and be completed early in the fourth quarter of We are prepared to discuss the findings with you to meet your individual information needs. Subscription The subscription price is $15,000. 9
10 Best Practices in Contractor Loyalty Programs 2015 Exterior and Interior Building Products Subscription Agreement This agreement is between Principia Consulting, LLC, and (Client). Client agrees to subscribe to this multi-client, Best Practices in Contractor Loyalty Programs Client agrees to maintain the report(s) as company confidential for a period of three years from the signature date herein. Client will not reproduce in part or in whole the report by any means, will refrain from oral or written publication of any information presented in the report(s), and will take every precaution to prevent the disclosure of information in the report(s) to any third party. Principia Consulting, LLC, will not provide the information contained in these report(s), in whole or in part, to any party that is not a subscriber to the report(s) except for limited use for marketing purposes. Client agrees to subscribe to these report(s) for price noted in this agreement (payable in US currency). Principia Consulting, LLC, will provide an electronic copy of these report(s) for limited distribution upon completion and after the receipt of payment. In addition, the client will have a single seat license that provides online access to the data and analysis from the report(s) for a period of 2 years. Principia Consulting, LLC, will invoice Client for the full amount of the subscription fee. All invoices are due upon receipt. To confirm your acceptance of this proposal, please have an authorized employee sign and return a copy to Principia Consulting, LLC. Once signed by both parties, this document shall constitute a legal binding agreement between both parties. Subscription Price Non-Charter Member $15,000 Total Price (as agreed between Client and Principia) Exp. date Cardholder Credit card number VISA & MC Security # AMEX Security # Signature AGREED AND ACCEPTED Principia Consulting, LLC Signature Name Title Date Company Signature Name Title Date BILL TO Name Title Company Address SHIP TO Name Title Company Address City City State ZIP State ZIP Phone Phone 101 Lindenwood Drive Suite 225 Malvern, PA Fax: PrincipiaReports.com info@principiaconsulting.com
11 Principia Principia helps building materials companies grow profitably by providing business insights driven from broad and deep industry research to develop strategic implementation plans. For more information on our industry reports, visit PrincipiaReports.com For information on our custom consulting services, visit PrincipiaConsulting.com 101 Lindenwood Drive, Suite 225 Malvern, PA Main: Fax: principiaconsulting.com
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