Can Loyalty plans work for end consumers of Building materials & home maintenance Brands?
- Anupam Ahluwalia
Brands try hard to win customer loyalty, that’s well recognized, customer Loyalty really does deliver value is also not disputed, however how can Building Material & Home Maintenance Brands win end consumers loyalty is a much harder question.
In this blog, I have tried to analyze this question and support my opinion with some analysis.
Since monetary benefit aspect of Loyalty awards is really just Brands sharing some of the margin they make it from the paying customer in first place, it usually holds little influence in customer buying decision.
This is even more irrelevant in small value purchases which are usually one off, such as home maintenance products etc.
Hence, monetary benefit by itself is probably not a strong tool to win customer loyalty. Although it may be for intermediate, influencing workers, such as Painters for Paint Brands, Architects for cement/steel, electricians for switches etc since the repeat purchases amount to a significant value over a period of time.
Customization of service to specific customer is another tool that Brands use to win customer loyalty, however it depends on following two factors:
- Extent of service component in a product package
- Extent of ‘touch’ of a product in personal space
IIn general, all products include some component of service which influences the consumer buying decision- thus customer purchases a package or a deal. However, extent of importance of service to customer differs in product types- usually represented as service as a % value of the overall package.
Examples of products with service component as % of value in package are as below:
- High % service: IT products, Airline seats (nearly pure service) etc
- Medium % service: Personal vehicles, Air conditioners etc
- Low % service: switches, furniture etc
The products that are used by customers in personal space, lets class them by extent of intrusive use:
- Highly intrusive: Mobiles, pillows etc
- Least intrusive: pipes, cement, steel etc
Summary for Building materials & Home maintenance products
In general, as above indicates, there seems to be a significant problem for Building materials & home maintenance products, as tools available to win customer loyalty are quite limited, because:
- Most products contain a low service component
- Most products have limited scope to 'live' in personal space of customer
Should it thus mean that it is futile for Brands in Building materials and home maintenance products to try and win customer loyalty and just rely on Brand recall etc?
Fortunately, it is not the case.
Various research has established that Loyalty Plans do work in most cases and deliver significant returns to organizations in following ways:
- Reduced direct cost of marketing
- Reducing the overall customer acquisition and retention cost
- Increased margins due to lower operating margins
- Reduced cost to understand consumer preferences
Hence question is what can Building Materials & Home maintenance Brands do win Loyalty of their customers?
The answer lies in the fact that Brands need to strive to add service component in the 'package/deal' where there seems to be no scope at the outset.
Following are some of the ways Brands can add service in the mix of offerings to customers:
- Providing them with interesting information- it should have educational value or help them make an informed decision
- Making it easier, or on tips access information about their products on demand
- Making customer feel valued at the time of purchase- by small means such as token gifts
- Making customer feel engaged with Brand via greetings, congratulatory messages on special occasions
- Making customer feel part of community by providing a means to connect with Brands based community such as customer support officer- loyalty plan forums etc.
All of above are not high spend items, however, these do add an element of service to the product purchase and thus have the potential to realize the benefits of Loyalty Plans to Brands.
I have summarized these in the figure below:
Though it leaves the question of channel still open, as in order to package above, you must find a way of knowing individual customer.
Conclusion
Building Materials and Home Maintenance Brands can benefit from customer loyalty too if they use approaches that allow them to package elements of service in their offerings. However, in order to do so, as a first Brands must try and leverage channels that enable them to get a connect with consumers first, because traditional channels of offline retail provide limited such opportunities.