With price, service and product availability being nearly equal among Joe Contractor's favorite electrical supply houses, the chance to earn a dream vacation might be the factor that tips the scale in one electrical distributor's favor.
“Incentive travel is one of those things that can make a wholesaler stand out — be different — and offer something unique and special,” says John Rich, president of Green Rich & Associates/Westgate Travel Services, Avon, Ohio. Although incentive travel has ebbed and flowed over the years, the long-term trend line shows a steady increase, according to Rich. The industry veteran has been building travel-incentive programs for wholesalers and manufacturers in the electrical, plumbing, lumber and HVAC industries for more than 30 years.
Companies' objectives typically involve growth: increasing total sales, adding new customers or expanding sales of specific product lines. Of course, the quality time salespeople spend with their customers while hosting a holiday at an often-exotic destination also plays a big role in a decision to make use of trip promotions as a marketing tool.
“There is no one promotion- incentive-motivational factor that affects 100 percent of the people on earth,” said Rich. “But we know travel has a very broad appeal, and that's why it works so well. The real trick for the distributor is do it in a way that makes it financially responsible so he can run a trip and not just give all his profit away.”
Becker Electric Supply, with headquarters in Dayton, Ohio, launched its first trip promotion in 2003 after three years of decreased sales. “We found we needed something to differentiate us to get that second look,” said Dianne Becker, marketing manager for Becker Electric Supply, which has eight total locations in four states: Ohio, Indiana, Kentucky and Georgia. Traditionally catering more to industrial customers, Becker Electric targeted its electrical contractor customers with the trip promotion because of rules against purchasing managers accepting trips at industrial companies. The trip promotion helped Becker Electric Supply grow the commercial and residential segments of its business.
The first program ran from Dec. 1, 2003 to Nov. 30, 2004. During that yearlong period, electrical contractor customers that earned 2,000 trip points were awarded a trip for one person to Cancun, Mexico. Customers accumulated one point per $100 of purchases up to the contractor's base quota. After meeting the base quota, a contractor customer earned five points per $100 of purchases. Monthly progress reports were mailed to customers showing how many points they had earned and how close they were to earning trips.
“It's based on incremental sales volume, which is how it's paid for,” said Becker. “Customers receive points in exchange for increasing volume with Becker Electric Supply as opposed to a competitor.” In 2004, Becker Electric Supply increased total sales by 14 percent; Becker credits 10 percent of that revenue boost to the trip promotion.
More than 200 people went on that first trip: customers and their spouses as well as salespeople and their spouses. Becker Electric Supply's salespeople earned points based on how well their customer accounts were performing, by bringing in new business or by converting customers to specific product lines. “We want our salespeople to go on these trips,” said Becker. “The customer wants to be with his pal salesperson.”
Spouses also contribute to the success of trip promotions. “If we can get the information about the trip to that customer's spouse, who is usually a female, we in effect recruit a salesperson,” said Rich.
After the first trip, Becker said the momentum was automatic for Becker Electric Supply's second trip. Although base quotas grew for electrical contractors to earn the second trip, more than 260 people will be traveling to Puerto Vallarta this November. “You show these customers the benefits of group travel and how fun it is, and they can't wait to go on the next one,” she said.
The benefit of relationship building that incentive-travel marketing brings isn't confined to the distributor-contractor partnership in the supply chain. Electrical manufacturers have employed this tried-and-true marketing technique for decades to cement relationships with the principals of the electrical-wholesale companies through which they go to market.
Many who have spent their lives in the electrical industry fondly recall some of those truly decadent early trip experiences from the '60s. “In those days, I couldn't afford to go to the suburbs, so it was wonderful having those trips,” said 85-year-old Herb Colker, who with his older brother, Joe Colker, led family-owned West Virginia Electric Supply Co., Huntington, W. Va., for decades. Colker enjoyed trips to places like Hong Kong, Rome and Paris.
Relationship selling is becoming much more important today, says Gina Rueff, director of marketing for Thomas Lighting, the residential lighting arm of Genlyte Thomas Group, Louisville, Ky. “It's always been important, but it's becoming even more important,” she said.
Last year, Thomas Lighting hosted it first incentive trip in many years. With the projected slowdown in the residential construction market, Rueff said Thomas Lighting, which only sells through distribution, wanted to further cement and foster its existing relationships with its wholesalers and give more visibility to new products it was rolling out.
“We wanted to spend quality time with our people in a relaxed environment,” said Rueff. “We feel like there's no doubt the experiences you have together in a relaxed atmosphere can form bonding relationships.”
Structuring Trip Programs
Both Becker and Rueff employ incentive consultants to help with logistics and implementation of their specific programs. Consultants will custom design programs to meet a company's sales objectives, help select excursion destinations offering travel value and train the sales force on how to best use the incentive program to motivate customers.
“It's a lot of work,” said Becker. “It's not just getting a suntan. For me, it was like planning five weddings,” she said about the first trip. “I did all this work to make the first one a success — so it's like I have a template for success for the next one.”
Becker advises distributors launching trip promotions to chat with noncompeting wholesalers that have had success with the marketing tool to glean what worked for them. After more than 20 years of doing marketing, Becker said she had to realign her marketing paradigm to include incentive travel and realize the returns on the investment were there.
“It takes an extraordinary amount of time,” said Rich. “We all have so many hours a day we're going to work. If we're smart, we're going to put those efforts into whatever gives us the biggest return.”
What kind of return do distributors get? Anywhere from “It pays for itself, and we get to spend a week under ideal circumstances with our best customers building relationships” to “Wow, this thing was a cash cow,” according to Rich.
He says some distributors construct programs so the promotion pays for itself without much more. “They're saying this is a great way to take a vacation with their customers and get to know them better,” said Rich. “Other distributors put it together in a way that it makes them a lot of money. It depends on the particular goals of that distributor.”
What Incentive Travel Can Do
- Motivate your internal customers (your sales force).
- Command a larger percentage of your current customers' business.
- Start doing business with new customers.
- Increase sales of specific products.
- Maintain or grow margins. (Your customers become less price conscious.)
- Build customer loyalty.
- Receive the final look for customers' large orders.
- Maintain accounts on a current basis. (Convert customers from slow-pay at 120 days to 45 days.)
- Cultivate strong customer/distributor relationships. (What better place to nurture a relationship than on a world-class vacation?)
- Recruit the most powerful sales force you'll ever have at virtually no cost: your customers' spouses.
Source: Green Rich & Associates/Westgate Travel; www.westgatetravel.com