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How Lumberyards Can Gain Incremental Sales and Boost Contractor Loyalty

As a lumberyard distributor, you know that contractors are a very important piece of the sales channel puzzle. Building contractors are the ones “in the trenches,” on job sites, speaking with consumers who are paying for residential or commercial construction projects. For this reason, contractors have immense sway over your consumers’ lumber purchase choices. If you can increase contractors’ brand loyalty to your products, you can increase sales, decrease churn and improve profit margins. Contractor loyalty programs such as those offered by Atlanta-based Loyaltyworks can help you achieve that loyalty.

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Who Should Your Program Reward?

According to the 80-20 rule, 80% of your income comes from a loyal 20% of customers. What most people don’t think about is the fact that, within that income percentage, 20% are stuck contributing very little to your income. That leaves a 60% group you can influence. In that 60% group is where you have the greatest impact for margin improvement. They just need the motivation to become more loyal to your brand. If you execute an effective reward program with clear objectives and worthwhile rewards, the odds are in your favor.

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You can turn the 60% group into dedicated customers who always turn to your brand first for their flooring needs, regularly taking advantage of your promotions and growing your incremental sales by buying more and different kinds of lumber from you, in different styles and grades.

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What Can a Reward Program Do for You?

What do we mean by “effective” reward program? What makes a reward effective enough to motivate that 60% group and grow your incremental sales? Think about it: would a branded coffee mug or discounted company products inspire you to change your behaviors in a significant way? Probably not. Luckily, we’re living in the digital age, where things like company sweatshirts aren’t your only option for contractor rewards. You can use online reward technology to run a points-based program. Companies like Loyaltyworks partner with various quality vendors in order to offer millions of travel, merchandise, and event ticket options. All your contractors can find something in this online shopping mall that they want, something much more enticing than a company shirt that will be tossed into a closet and forgotten forever.

How Can You Afford It?

So how do you budget and find the funds for an effective reward program with such desirable, diverse rewards? Co-op dollars are an option. Lumber vendors often provide funds to their distributors in order to run a rewards program that moves their products through the building supply chain. You can receive funds from multiple vendors, re-allocate those funds, and consolidate them to create a program that works for you.

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You can set minimum program requirements that will still allow smaller customers to participate. Establish your goals and track them using program reporting tools to ensure you are not funding rewards for companies that are not willing to commit to you. You can also set individual goals so that customers must meet those goals before being paid out. This guarantees a positive ROI, which guarantees the incremental growth that funds the program.

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You don’t have to be at the mercy of your contractors. By partnering and sharing rewards with them, you can cultivate the ideal sales channel relationship, one that’s mutually beneficial. By making smart use of vendor funding and offering contractors rewards they truly value, you can shift brand loyalty to your favor.

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Jeff Cagle
Account Executive for The ISI Group of companies, consisting of:

  • Incentive Solutions, Inc.
  • Loyaltyworks
  • Travel Solutions
Direct Contact: 678-514-0212
Sales Hotline: (800)-844-5000