Reward programmes: Are they worth it for builders’ merchants?

Article topics

1. What is a customer reward programme?
2. Why can a reward programme benefit your builders’ merchants?
3. Ten steps to implementing a reward programme

You’ve optimised your website navigation, implemented product placement in your brick-and-mortar stores, and spent time making the checkout process as simple as possible.

But what else can you do to boost sales?

Introducing a reward programme can be a fantastic way to encourage customers, both domestic and trade, to place more orders.

Join us as we look at the benefits of customer reward programmes and show you how to create your own in ten easy steps.

What is a customer reward programme?

A customer reward programme (or a loyalty programme) is a marketing strategy that incentivises customers to buy more from your builders’ merchants business by offering them something of value.

Let’s say a customer signs up for your rewards programme and earns points on every purchase they make. They can use these points to get discounts on future purchases or get exclusive perks.

Why can a reward programme benefit your builders’ merchants?

Many builders’ merchants offer some type of reward programme. The average tradesperson spends £1,110 a year on tools alone, so by encouraging them to buy from your business, you can reap the benefits!

Here are some more reasons why it’s worth implementing a customer reward programme.

It improves customer loyalty

A reward programme gives customers an incentive to not only buy more regularly from you, but to spend more each time.

According to Citigroup, 86% of customers are more loyal to the brands in whose rewards programmes they take part in.

It boosts brand awareness

A high-quality reward programme with excellent benefits can encourage customers to recommend you to others.

73% of people say they are more likely to recommend brands with good reward programmes.

Innovative programmes can raise your profile too. Screwfix always receives a rush of publicity when it launches its ‘Stacks of Rewards’ promotion, where customers can get an extra 10% off all orders by shopping and completing challenges.

It helps you shift specific products

If you have particular products you want to promote or clear from your warehouse, a customer reward programme can help.

Just offer double points or an exclusive discount, and you can easily sell additional units.

It provides you with valuable customer data

A customer reward programme makes it easy to link a sale to a specific customer – all they need to do is swipe their card in-store or enter their card number online.

This can help you see which customers are buying from you most frequently, which products are most popular at certain times of year, and which stores are excelling in specific product categories.

Ten steps to implementing a reward programme

If you want to introduce a customer reward programme to your builders’ merchants store, how do you go about it?

The good news is that it’s not as hard to do as you might think – you just need a plan in place.

Here are ten steps to help you launch the perfect reward programme for your store.

1. Understand your objectives

The first step is to understand why you want to launch a rewards programme. This will help you determine how you build your platform, what rewards you offer, and how you market it to customers.

For example, let’s say your goal is to attract new customers to your builders’ merchants store. You may offer a large sign-up bonus and make it as easy as possible for shoppers to earn their very first reward to keep them interested.

If your aim is to encourage existing trade customers to spend more, you may see benefits from implementing a tiered reward system or bonus points for reaching a specific spending threshold.

2. Do your market research

It’s important to ensure your rewards programme is geared towards your target audience.

If you don’t have a target audience in place for your business, now is the time to identify who your ideal customer is.

When you know who your target audience is, look at your existing data to see what products they are buying and at what frequency. This will help you see which products to offer rewards on and which type of reward system will bring the most benefits.

We also recommend asking your customers for their thoughts. Send them a feedback form asking if they’d be interested in a rewards programme, which incentives would make them sign up, and how they’d like to redeem their rewards.

3. Do your market research

There are two different types of reward systems: flat-rate and tiered.

Flat-rate systems offer the same benefits to everyone and are typically the simplest type of reward programme to implement.

Tiered systems offer different levels of incentives depending on how frequently customers buy from your business. While they’re harder to implement, tiered systems can encourage customers to spend more.

For example, while Toolstation offers a basic rewards system for everyone, it offers an additional 5% discount for customers who spend at least £75 a month.

Half of customers say they are willing to change their behaviour to reach a higher tier within a loyalty programme.

Also consider whether your customer reward programme will be free or if customers need to pay a subscription fee.

Paid-for reward programmes typically do better in the grocery, clothing, and beauty sectors than they do in the building industry. However if you can offer genuine value, you may appeal to subscribers.

4. Choose your rewards

Now the fun part! Choosing what your rewards will be.

You don’t necessarily have to provide money off or free products. For example, City Plumbing lets customers exchange points for football matches, city breaks, and even free training courses.

Here are some of the options available to you, and remember that it’s okay to mix and match:

• Points: Customers earn points that they can exchange for free products, money off their next purchase, or cash back
• Discounts: This can be a percentage-based discount (10% off), a fixed-value discount (£10 off), or a spend-threshold discount (get £20 off when you spend £100)
• Free products: Customers get a free item or service with a purchase (for example, a free screwdriver set, merchandise, or free delivery)
• Experiences: This can be early access to your Black Friday sale, or exclusive members-only events

You may choose to partner with other brands to offer rewards. This can be a great way to boost brand awareness, reach new audiences, and offer perks you may otherwise not have been able to offer. For example, B&Q offers discounted Hertz van hire as part of its reward programme.

You can also consider gamification. This is when you apply gaming elements to your reward programme to encourage customers to engage. For example, Tool Station offers entry into a prize draw when customers spend £100 on shower products.

Gamification can boost customer engagement by up to 47% and loyalty by 22%.

5. Set up the system

You have two options when creating a customer reward programme:

• Use off-the-shelf reward programme software
• Build your own system

Using off-the-shelf software is easier and cheaper, but building your own bespoke system means you can implement the features that are right for you.

When determining which system to use, ask the following questions:

• Is the software compatible with my eCommerce platform of choice?
• Does it integrate with my trade account functionality?
• Does it integrate with other software (for example, can customers add their reward card to their Google or Apple Wallet?)
• Does it use personalisation to offer tailored deals and perks to customers?
• Does it come with a knowledge base or self-service help desk so customers can solve any issues they have with their accounts?
• How will the software work offline (i.e. in your brick-and-mortar stores)?

Don’t forget to create a terms and conditions page for your reward programme, which is easily accessible from as many pages of your website as possible. Use this page to specify:

• Who is eligible to join
• What you will do with customer data (link this to your privacy policy)
• How points are earned
• How points can be redeemed
• When points expire
• How you will communicate any changes to the programme
• How customers can get in touch with any questions

Do you need an app?

Some builders’ merchants and home improvement stores provide a reward programme app. Customers can download the app to take advantage of exclusive deals and access their card.

However, mobile apps take time and money to build, manage, and update. It’s better to have a mobile-responsive website that all customers can access whether they’re on their home computers or smartphones.

6. Train your staff

When you launch your customer reward programme, it’s vital that the staff in your brick-and-mortar stores understand how it works.

This will help them answer any questions customers have and encourage in-store sign-ups.

Provide them with training and resources and make sure they’re in a position to provide the best customer experience they can.

7. Develop your marketing

Before you launch your programme, you need to think about how you will market it to both new and existing customers.

Here are some of the ways you can promote your new reward programme, both offline and online.

Online

• Search engine optimisation (SEO)
• Email marketing
• Pay-per-click (PPC) advertising
• Partnership marketing (working with other businesses)
• Social media marketing
• Digital PR (press releases and backlink building)

Offline

• In-store advertising (use a QR code to make it easy to sign up online)
• Print ads in newspapers and magazines
• Television and radio commercials
• Advertising posters and billboards
• Direct mail
• Event sponsorship

Which marketing channels are right for your needs? It depends on your budget, target audience, and the ultimate goal of your reward programme.

For example, if you have a small marketing budget, it’s best to use SEO and email marketing to promote your reward programme rather than expensive advertising.

Don’t forget to analyse your marketing channels to see which drive the most sign-ups and sales – we’ll go into more detail about this later.

8. Launch your programme

We recommend launching your customer reward programme early in the week.

It may be tempting to launch it on a Thursday or Friday in time for the weekend and the surge in DIY projects. However there is the risk that something may go wrong and you won’t have the resources in place to put things right.

Make sure you have a support team on standby, ready to help customers and in-store staff.

9. Monitor Performance

Tracking your reward programme performance means you can see if you’re getting a good return on investment and are in a position to achieve your goals.

While it’s important to measure the number of sign-ups you receive, also consider how many customers sign into and use the platform on a daily, weekly, or monthly basis.

If your sign-ups are high but active participation is low, it may indicate that your platform is hard to use or has a poor user experience.

Compare the number of sales and order value your members make versus non-members. This will show if your customer reward programme is making an impact.

Don’t forget to ask for customer feedback at all stages of the process. For example, if a customer closes their rewards account, ask them why.

10. Refine, adapt, and evolve

33% of businesses say that one of the biggest challenges when implementing a rewards programme is keeping up with competing programmes.

Regularly reviewing the success of your programme and making continuous improvements will ensure it always provides value and stays one step ahead of your rivals’ customer reward programmes.

Build the perfect customer reward programme with Xigen

So, is a customer reward programme worth it? Definitely!

While it may take a little organisation to implement and promote, a reward programme not only drives new customers to your store, but encourages current customers to spend more.

Still not sure? Let us leave you with one final statistic – 90% of all companies now offer some form of customer reward programme.

If you’re not, you may be missing out! If you need a little extra help getting your customer reward programme up and running, get in touch – we’ll help you create a loyalty programme your customers will love.