Home Improvement (HI) retailers and suppliers have differing approaches to what they consider loyalty programs, ranging from professional member discounts, to rebates, to credit card rewards. But are rebates programs enough to create loyalty with today’s do-it-yourself (DIY) and do-it-for-me (DIFM) customers?
Mindstream views reward programs through the holistic lens of a larger Customer Experience (CX) executions. To truly engender loyalty, programs must not only include a discounting system but also additional layers of robust multidimensional attributes to surround customers in the experience of the brand and give them a reason to be loyal.
The HI category has multifaceted audience types, including professional businesses, contractors, and various levels of DIYers and DIFMers. The key to a valuable program is to engage with customers where and when it matters most. To create a loyalty program strategy, it’s important to build consumer-centric foundations with considerations of expectations, evolutions, and personalization.
The expectancy of some type of reward is not just becoming a retail norm; customers have come to expect transactional programs with any retail exchange, including cumulative paybacks. Though discounts and rebates can speak to a part of the delight of a loyalty program, there’s so much more Home Improvement brands can do to provide exceptional loyalty ecosystems. The effect of growing evangelism and lifetime ambassadors is just the beginning. If there’s one thing I know as an avid DIYer, it's that we create brand and retail relationships with our tools and projects, often based on the ease and joy gained from how we’ve gone from thinking of a great project from start to finish. Purchasing tools or building supplies is part of that project journey. Evolving a loyalty program will add an insatiable layer of surprise and delight for all customers.
It’s important for brands to define the difference between a reward and what adds value to customer’s experiences, and too not just follow the template others have used in or out of category. One size does not fit all, and centric loyalty programs are an evolutionary step Home Improvement brands can maximize as a differentiator.
Reward definitions can vary depending on product or service categories and are foundational for a brand-centric loyalty program. The HI category has a unique set of users and influencers, offering a unique opportunity to satisfy the reward craving. From a DIY and DIFM customer perspective, bundling what can evolve their maker-skills will nurture their engagement with a brand, and strengthen brand loyalties. Knowing what passion points and needs intersect with that buyer’s purchase growth can frame what “loyalty points” bubble up to.
Each market has unique lines of business. Home Improvement is a category amongst itself, with niche shoppers. Consider this scenario: you have a new DIYer who’s starting to populate their toolbox and hand tool collections. Their account purchase data will begin to map out buying habits. This creates a guide map for brands to what topics or products will resonate with them and allow for the personalization of offers, promotions, and media. Tailored content and rewards can be pushed as they evolve into "practitioners".
Brands need to "orchestrate, package, and deliver a mix of benefits that will drive purchase behavior and deliver value to existing and empowered customers." - Forrester
Loyalty systems can also award skill badges as a pride point. This pride can cascade into social channels channels, raise exposure, create project aspirations in others, and accelerate a brand. A loyalty payout can even be boutique links to topic-specific education and tutorial media. If you increase a DIYer’s skillsets, they become more entrenched in the project. Thus, additional buying habits will follow, and their needs and knowledge will evolve. This creates an interesting cycle of reward opportunities. It can bring them back again and again.
As Forrester recently commented, brands need to “orchestrate, package, and deliver a mix of benefits that will drive purchase behavior and deliver value to existing and empowered customers.”
To ensure success, you also have to consider the barriers to entry that may be in play, and solve them. Some improvement retailers like Home Depot and Ace Hardware are already collecting purchase information. Ace has a type of loyalty program in place. Home Depot doesn’t, but is at the cusp with their discount program. Both have a huge opportunity to elevate their programs and to be leaders in the HI space.
Our Mindstream strategists recently worked with a major retail client and uncovered proof points that the right point of sale or CRM system can create a benefits program that resonates with customers and build brand loyalty. Also, with the right system architecture, a data-driven loyalty profile can create a unique benefits program a consumer would strive for.
Since 2020, hundreds of loyalty programs emerged as did changes in customers' buying habits. 86 percent of online shoppers now belong to at least one kind of loyalty program.
The want and desire for evolved HI loyalty programs is there. Customers are waiting. Offering digital solutions that tie in data-driven experiences can empower and grow purchase behaviors. If you harness their points of pride, you will have their loyalty for life.
To help kickstart loyalty program evolution, we’ve curated a hit list of steps that can move you to the next level. This initial roadmap can increase sales, raise brand affinity, and lure the growing landscape of DIY loyalists and evangelists.
We’re passionate about the DIY and DIFM markets. We’ve also successfully driven loyalty program development and integration. Recently, our strategy and insights teams conducted a large volume of secondary research about how your customers think, what loyalty means in 2021, and what this means for brands moving forward. There are a lot of approaches to engage DIY and DIFM customers. The maker’s space is electrified, and brands have a great opportunity to make a mark with loyalty. We would be happy to talk you through this work, answer any questions you have, and assist with everything from program creation, creative execution, to analytics and reporting to make your brand a success. Contact us.
Interested in learning more about the newest DIY generation? Download "THE BIRTH OF A NEW GENERATION: Gen-DIY"