Building and contractor industries have hundreds of thousands of small businesses that buy billions of dollars’ worth material, supplies, services, and equipment needed by them to do their jobs. COVID-19 has accelerated a landmark shift in how they make their purchases. While the buying was earlier dominated by purchasing from distributors and retailers, more than 40% contractors have started buying online directly or through marketplaces. This ratio is going to increase in the favor of online buying, since 91% contractors have made at least one purchase online. 90% of those surveyed are also demanding brands to provide the same loyalty rewards regardless of the channel of purchase. The research also indicates that 8 out of 10 contractors prefer discounts right at the time of purchase, instead of points or miles that they can accrue for later redemption. [1]
This drives us to the conclusion that 90% Contractor Programs need overhaul. Contractor Reward programs today suffer multiple challenges.
- Bad User Experience (UX) – Most brands demand contractors to scan and upload (or email) invoices of their purchase (or worse, enter product codes manually) to get rewards. Scanning invoices or entering product codes is, needless to say, cumbersome, and significantly decreases participation in the schemes.
- Unattractive Rewards: Most contractors would like incentives that translate to discount (or equivalent) to help them understand their margins and do their business better. Most goods offered in reward catalogs have little or no utility in the contractor’s business.
- Poor Engagement – Contractors expect brands to share rich content and information about how they can do their job better and win more customers. They would like to stay updated with latest products in the market, new innovations that brands are using, and be aware of ways to sell these products to their customers. Most brands today lack on demand support and effective communication channels with their contractors.
- No Personalization – lack of segmentation of contractors based on the business (and other characteristics about their profile) leads to one-size-fits-all approach while designing and executing reward programs. This leads to little motivation for contractors who do not see these reward programs as the right fit for them.
In our experience, well designed and efficiently executed contractor reward programs can increase sales by up to 18% in six months. A better user experience leads to 10x higher participation in reward programs, Gamification and instant gratification leads to 80% higher monthly active users (contractors) who engage, in-app marketing leads to higher levels of awareness and brand equity, and segmentation drives 5x higher consumption.
All of this can be achieved by using dynamic QR codes. Dynamic QR codes (powered by O4S cloud-based platform) provide unique ID (UID) for all product units. They act like SSN for your products. These QR codes can be programmed using the cloud-based platform to contain details about the product and incentives associated with each product purchase, segmented to fit different categories of contractors (highly personalized!). Contractors simply need to scan the QR code on the products they purchase to get points instantly (great UX!). These points can be converted to cash discount or converted to gift cards on demand (instant gratification!). All of this can happen inside a branded white label application, that can host content to create awareness and increase knowledge on contractors, in an easily consumable format as per the latest trends – videos, stories etc.
Multiple fortune 500 companies are moving their reward programs from manual invoice and code-based rewards to QR code scan-based rewards. AkzoNobel has implemented this solution in 9 countries for two hundred thousand contractors and have seen a 14% increase in their sales . Honeywell has implemented this new technology in 4 countries for 50,000 technicians and witnessed an increase of 15% in sales .
Contractors have clearly stated their preference for channel agnostic reward programs. The ball is now in brands’ court. Brands that move swiftly and adopt new technologies that provide a great contractor reward experience, in-app marketing and awareness, and highly personalized programs will witness a sustained increase in sales and capture more and more market share. The rest risk falling behind, if not completely perishing. The time is now.
