Builders merchants are missing out on a significant profit boost by not using loyalty schemes to target customers, according to loyalty specialists Ikano Insight.
The firm predicts 40 per cent of trade retailers are not using any form of rewards for customers and believe many have an opportunity to engage building, plumbing, electrical, fitting and decorating firms as regular buyers.
Loyalty programmes can be designed to stretch customer spend and increase the consistency and frequency of purchases, so that rewards are based on incremental sales for the trade company.
Barry Smith, senior consultant for Ikano Insight, believes trade counters have a greater opportunity to make stronger returns on their investment than many other types of retailer.
“The nature of working in trade is that buyers are always going to need the goods, but they have plenty of choice of where to go,” said Smith. “It’s about giving them a reason to want to buy it from you.
“Trade counters work well with hard rewards, such as reductions for achieving threshold spends, in the form of cashback or a percentage, to encourage a higher frequency and consistency of customer spend.
“Softer benefits can still work though, as perks such as onsite delivery will be particularly attractive to busy contractors. There is a careful balance to be had between the two in order to retain consistent business and optimise customer engagement.”