INCENTIVE PROGRAMS HAVE become a way of life for marketers. It's next to impossible to travel anywhere or charge anything without considering the rewards that come from accumulating frequent flyer miles or reward points. Well, why not apply that same idea to purchases involving bricks, windows, flooring, and everything else that builders buy on a regular basis? That's what The Builder's Circle wondered before rolling out a new program that rewards builders for their purchases across a wide range of home building product categories.
“To the builder, it works like a frequent flyer program,” explains Scott May, vice president and general manager at Builder's Circle, which is based in Norcross, Ga. The company has signed up nearly two dozen leading manufacturers and suppliers so far, each exclusive to its category, with a wide assortment of rewards for participating builders. The program was formally launched at the International Builders' Show in January.
“When you use any of the manufacturers' products, you get points” redeemable for sports tickets, trips, and hunting, fishing, and golf outings and equipment, he explains. Builders can also earn rebates and future discounts on the same manufacturers' products.
There is a one-time sponsorship fee, which May would not disclose, and then sponsors must pay a few cents per point issued on their products, based on a percentage of sales.
The only job the builder has to do differently is submit receipts or proofs of purchase to Builder's Circle. The builder can submit invoices via a toll-free fax number or mail them in using pre-addressed, postage-paid envelopes (provided in each member's “welcome kit”). “We've found that some members create a ‘Builder's Circle' file, copy invoices, and use the file to organize them. That way, it is easy for them to pull the invoices when they are ready” to submit them, explains May.
But paperwork, however minimal, always feels like a burden. “We are looking into alternative ways to capture invoice information,” says May. “In short, we want to make it as easy as possible for the member while still being verifiable for the sponsor. Obviously, builders are free to purchase from manufacturers outside The Builder's Circle.”
The Builder's Circle sends quarterly statements to participants listing their points. Builders can also check their points online at www.builderscircle.com.
What's The Catch? The biggest problem so far is skepticism that the rewards come so easily, says May. “At the IBS show, we talked with a lot of builders, and some of them were taken aback. It's free, they're getting rewards, but what's the catch?” There is no catch, May explains. “The manufacturers want to thank and reward the builders for using their products.” Once that was explained, he was able to sign up 650 mostly small- and mid-size builders.
Big builders might find the program problematic, concedes May, because many of them already have a rebate or reward program or a special relationship with manufacturers and suppliers, and Builder's Circle requires exclusivity. “You can't double-dip,” says May. That is, receipts from a purchase cannot be applied both to claim points from Builder's Circle and to receive benefits under a big builder's existing program. The program currently targets builders constructing about 150 homes annually.
Bruce Kunz, purchasing manager at Highland Homes, which builds about 120 homes a year in the Austin, Texas, metro area, joined Builder's Circle during the IBS. He says many of his purchasing decisions are made “out of habit, for lack of a better word.” The participating manufacturers are well known to him. He's primarily interested in redeeming points for rebate dollars, he says. “It's tangible, I can put it on my bottom line, and it's measurable.” Other programs, which offer free products for model homes or advertising, seem a little less appealing.
Kunz says he is pleased about the cooperative aspect of the program and what it says about the home building industry. “I think we'll see more groups like this assemble and go after the builder trade,” he says. “These types of programs are advantageous to everybody.”