Distributor: Capturing Incremental Market Share
A regional plumbing supply distributor takes advantage of high-demand/low-inventory market conditions with an aggressive loyalty program.
The Client and Their Past State
The Client
A leading $1B wholesale distributor of residential and commercial plumbing supplies.
The Audience
Contractors in the client’s channel.
The Objectives
To capture significant incremental market share and customer engagement for the client’s water heater division.
The client sought to fill a significant gap in supply chain by providing water heaters to the market where no other competitor could.
The Challenges
In a crowded market, differentiation was difficult. However, the industry was also experiencing regional supply chain issues.
The local competition was having serious issues securing enough water heaters from their manufacturer partners.
The Client’s Current State and Key Results
Sales Growth
Increased sales by 37% during the campaign period compared to the same period the prior year.
Number of Units Sold
The number of units sold up 3000 units or 20% YoY
New Revenue
New business grew $6.9M YoY during the program.
Fully Funded
The program was 100% funded by vendor Co-Op & MDF
Enrolled and Engaged
65% of all targeted plumbing & production contractors enrolled, leading to growth among activated contractors by 43% on average
“We want to provide value to our customers. When the pandemic struck, we were looking for different ways to connect with customers, make it fun and continue to provide value and services. That is where the program comes in and allowed us to reward customers for their spend.”
How They Got Here
Program Design
HMI and the client implemented a point-based water heater loyalty program to motivate and reward contractors for steering more water heater business to the client using personal tangible/experience-based rewards.
Earning & Recognition
Contractors have the opportunity to earn points for every $1 purchased of “featured” water heaters. Points can be used to purchase awards from a curated catalog.
Contractors are also assigned a personalized annual goal for their total water heater purchase volume based on their purchases last year and profitability. An opportunity to earn double points comes from purchasing beyond this goal.
Contractors may opt to spend points when issued or they may bank points and roll them over each year to save up towards aspirational awards such as high-end Merchandise, Electronics, Travel and Experience Awards.
Audience Segmentation
Based on the need to address different contractor audiences (plumbing and production), HMI recommended setting up differing earning criteria for each group.
Production Contractors (high volume, low margin customers) earn half as much as Plumbing Contractors, which makes it more feasible for the client to reward this group while still maintaining their budget.
Meaningful Rewards & Adoption
The program was socialized effectively throughout the client’s sales team from day one, which can have a massive impact on the success of any program. The sales personnel were excited to help drive adoption from existing and new accounts and get them earning.
A meaningful investment from the client, between .5%-2% on purchases, leads to meaningful earning opportunities for customers, who on average earned well over $1,000 worth of points per customer in the first year.
Customers can redeem their points towards tens of thousands of personal (tangible/experience based) rewards, in addition to benefitting from the great service and support our client provided to its customers.
Strategy & Implementation
The client turned to HMI to implement a comprehensive marketing communication campaign with an automated customer enrollment workflow targeting the client’s contractor customers. This program included:
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- A branded website which could be used to activate accounts and track and spend points.
- An announcement video explaining the program rules, rewards, and enrollment
- An in-depth invitation, activation, and automated email campaign
- Product marketing emails to encourage redemption of points and showcasing the excellent award options.
