What Does the Skilled Labor Shortage Mean for Your Channel Loyalty Program Marketing?

When it comes to their channel loyalty program marketing, many building materials manufacturers and distributors are facing a problem: There just aren’t enough contractors and dealers to go around! A couple decades of pressuring kids to go to college, at the expense of the trades, has created a shortage of skilled labor in the building materials industry. Millennials simply aren’t interested in taking on these roles.

Consider the following stats:

• 93% of surveyed construction businesses have more projects than they do the skilled labor necessary to complete them.
• Less than 4% of remodelers, electricians, HVAC installers, plumbers, and building business owners are between the ages of 18 and 24. In fact, the median ages for all of these industries range between 41.3 and 46.6.
• 70% of construction businesses report they rarely or never see recent high school grads joining their labor force.

This means that many manufacturers, distributors, and wholesalers are having to sell into (and through) an ever-smaller pool of contractors and dealers. This puts competition for mindshare and B2B customer loyalty at a premium. After all, for many B2B sales organizations, contractors and dealers are a key conduit to the end consumer.

What Happens to Loyalty Program Marketing When Demand is Higher Than Supply?

The shortage of skilled building materials contractors and dealers means that the brand preference and purchasing decisions of this customer base can have far-reaching implications. Partners at this stage in the channel have choice. They are in demand. If you are attempting to sell through these types of channel partners, chances are your competition is already offering them an attractive array of incentives, SPIFFs, and rebates.

Additionally, consumer-side demand has driven up the wages of dealers and contractors. This means that you have to up the value proposition of your loyalty program rewards in order to make an impact. But even more than that, your loyalty program marketing needs to stand out, engage your audience, effectively convey your value proposition, and differentiate your brand from the competition.

Stand Out by Enabling Your Channel Partners to Sell Your Products

Another effect of the skilled labor shortage is that building materials dealers and contractors are busy. This means that it’s up to you to educate, train, and enable them. Doing so will make it easier for them to sell your product to the end consumer, but you have to make receiving this education quick and low-effort on their end.

While you can use content from your loyalty program marketing to engage and educate your channel partners, you can also incentivize them to take interactive online quizzes. This makes learning about your products more interactive and helps you verify that your participants are actually engaging with your content and learning more about your brand. Plus, it gives them a compelling reason to do so. We recommend keeping content brief and bite-sized for maximum participation. You can divide this training into tiers, so that you can keep things high level for the general audience, while giving more motivated participants the change to go in-depth.

Additionally, tracking the results of these quizzes can show you where your loyalty program marketing is coming up short. Are there questions about your products and brands that contractors are missing across the board? That could be an indication that your pamphlets, sales sheets, and other messaging might not be communicating the right things.

You can also use this type of platform to create daily trivia for your participant base. Even if your trivia is fun and light-hearted, it keeps dealers and contractors coming back to your site. In doing so, they will be exposed to more of your content and will be more likely to remember your brand when planning their next project. And as their point balances increase, and they get closer to being able to redeem those points for online rewards, they will be more likely to participate in additional, sales-based promotions.

Provide Loyalty Program Software That Makes Engaging Your Program More Convenient

In addition to value proposition and sales enablement, another factor that will play a major role in the success of your loyalty program is convenience. If dealers and contractors are always in the field or on a project, ease-of-access will play a major role in how active they are in your loyalty program.

Here are a couple incentive technology features and strategies that will make your program more accessible:

• Provide single sign-on by integrating your training program, your customer portal, and your loyalty program.
• Use announcements on your loyalty program website to share relevant messages with your participants every time they log in.
• Offer a mobile app that lets dealers and contractors upload invoices and other documents from the field.
• Incorporate push notifications with your loyalty program marketing.
• Regularly survey your dealers and contractors. Let them know you’re invested in their experiences, and continually look for opportunities to be a better partner to them.
• If you are collecting information about end consumers through warranty registrations or sales invoices, share some of that data with your channel partners. Giving dealers and contractors more insight into their customer base will enable them to do their job more effectively.
• Keep your participant data clean! Make sure your loyalty program marketing is actually reaching your participants by cross-referencing contact information, monitoring email delivery rates, and using a variety of mediums to reach your participants.

How Can We Incentivize and Train the Dealers and Contractors of the Future?

Even as robotics become increasingly prominent in the building materials industry, full automation is years away – and even then, there will still be people who have to program, service, repair, and manage the robots. Who will carry the torch in the meantime?

Many analysts are looking to Generation Z to fill the skilled labor gap. Incentives drive behavior. And at the moment, working as a dealer or a contractor in the building materials industry has a lot of upside: high wages, job security, and the diminishing returns of a college degree. But will that be enough to attract the next generation of talent to the industry? And what can today’s manufacturers and distributors do to drive loyalty in this segment?

According to Forrester’s Principal B2B Analyst, Jay McBain, the onus is on manufacturers and distributors to begin targeting influencers who have sway with Generation Z to begin reshaping the way society views skilled trade workers. When asked about this problem at our annual BthruB Leadership Summit, McBain cited how the digital transformation will make these positions more appealing to the up-and-coming, tech-savvy workforce. Virtual reality training will enable tomorrow’s contractors, who are just as likely to be driving a Tesla as they are the ubiquitous white vans of yesterday.

It’s up to manufacturers and trainers to begin educating the next generation in the workforce on the changing value proposition of skilled labor. Dealers and contractors just entering the workforce will be particularly receptive to loyalty program marketing that enables them and trains them to be better at their jobs. According to Forbes, Gen Z is highly motivated by their paycheck, so helping them get a jump on their career in skilled labor is a great way to start building those relationships.

Additionally, Gen Z expects the personalization, digital connectiveness, opportunities for feedback, and even the competitive aspects that a loyalty program can provide.

There’s an eBook for That!

If you’re interested in learning more about channel incentives, you’re in luck. This year we released the 2019 Guide to a Successful Dealer Incentive Program, which you can download for free here.

Good luck with your channel sales goals this year! Start building that loyalty and keep an eye on our blog for the latest in incentive strategy.

Yours,

Mark Herbert

President & CEO
Incentive Solutions