It’s a scenario that’s become increasingly common for building materials manufacturers and distributors. Between offshore competitors, offsite construction, and online mega-retailers, your channel partners and B2B customers have more options than ever. And for cheap. You can easily find yourself in a race to the bottom or out of the picture altogether.

The good news is, that while this problem is common, it’s not unsolvable. Today, we’ll be looking at a case study of how we helped one of our clients overcome stagnating sales on one of their products. Not only did they hold the line against the cheap competition, but they were also able to increase market share, boosting sales by 15%.

And the best part is that they were able to do this without dropping their price.

Using a channel loyalty program to create a new value proposition.

So, if our clients couldn’t compete on price, how could they differentiate themselves in a marketplace where the scales were tipped against them?

The answer was a channel loyalty program. Together, we created a comprehensive approach, where we rewarded contractors and wholesalers for educating themselves on our client’s product and for purchasing a specific product line. In this case, it was 1/2” to 5/16” tubing.

But first, we would have to market to these channel partners to get them to enroll in the program.

Great rewards improve the success of your automated marketing

According to Mailchimp, manufacturing-related emails have an open rate of 19.82% and a CTR of 2.18%. However, what if that marketing email included access to a points program with millions of great rewards and the possibility of incentive travel?

Combining automated emails with targeted print ads, digital ads, and tradeshow booths, we were able to enroll over 4,000 contractors in the channel loyalty program. Of those, 62% actively participated in the program, buying tubing and redeeming points.

That’s a big jump from only getting 20.51% of your target audience to even open your email, much less click on it. But why was that the case?

The motivational power of rewards

We weren’t doing anything magical. What we were doing was giving the participants a chance to earn great rewards. Access to our diverse online rewards catalog and travel programs was part of the reason our client chose to work with us in the first place. We offered their target audience fast, automatic reward fulfillment, in-store pickup at certain brands, and millions of rewards,

Their choice paid off. The promise of rewards got contractors on board and participating in the incentive program. However, our clients needed the right incentive software to capture that motivation and use it to increase market share.

Using multiple incentive software modules for a comprehensive approach

Once their target accounts were engaged, our client used three incentive software modules to reinforce contractor loyalty, change buyer habits, and stay top-of-mind with their target audience.

• Performance Tracking: How do you make it easy and intuitive for contractors and other field reps to upload their sales claims on-the-spot? How do you verify those purchases? Peformance Tracking solves both of those problems, and enabled our client to track the success of each sales promotion.
• Learn-and-Earn: Getting channel partners educated on your products and invested in your brand can be an uphill battle. However, the Learn-and-Earn module makes this process easy and interactive, with quizzes, surveys, and trivia. Plus, there are points to earn towards compelling rewards.
• Quick Points: Quick Points are on-the-spot reward point certificates. In this case, our client rewarded points unexpectedly to contractors who were buying large amounts of tubing. Unpredictable rewards, otherwise known as intermittent reinforcement, are proven to result in behavior changes that are “hard to extinguish.” Think of it like a slot machine for your incentive program.

What was the payoff?

The rewards, combined with the incentive tech, resulted in noticeable changes in contractor loyalty. Contractors enrolled in the program were twice as likely to buy 1/2” and 5/16” tubing. Over the course of two years, the plumbing manufacturer was able to increase their sales on tubing by 15%.

While that’s a modest figure compared to some of our other case studies, you have to take into account that our client was able to do this in a super competitive market without dropping their price. In fact, contractors would’ve had financial incentives to reduce overheads and maximize profits by always looking for the cheaper option.

However, rewards gave them a reason to pay a little more for a higher quality product and allowed our clients to increase market share in a tough situation.

Interested in learning more about a channel loyalty program?

I’m excited to announce that, in addition to the e-book on dealer incentives we released last month, we’re working on a comprehensive guide to planning, structuring, and managing your channel incentive loyalty program to achieve ROI.

We’ll be offering this guide free-of-charge to help businesses better navigate their distribution channel and will keep you posted as we get closer to release!