With forced business closures, unprecedented rates of unemployment, and major disruptions across supply-chains, an economic downturn due to the COVID-19 pandemic is inevitable, posing a threat to HVAC industry distributors, contractors, and engineers in the B2B channel. When revenue growth is inhibited, HVAC professionals must adapt their marketing and sales strategy to focus on what they can control. By utilizing the advantages of customer loyalty and retention practices, businesses will be better suited to maintain their most profitable resource – their customers – and weather the storm of economic uncertainty.
Why Customer Loyalty?
While many of the impacts of COVID-19 are unlike anything the world has experienced before, the economy is no stranger to volatility. Coming off the devastating subprime mortgage crisis of 2008, Harvard Business Review published the article, “How to Market in a Downturn,” citing customer loyalty as a key player in recession tactics: “During recessions it’s more important than ever to remember that loyal customers are the primary, enduring source of cash flow and organic growth.”
We can take this line of thinking one step further by combining it with the popular economic theory known as the Pareto Principle. Often referred to as the “rule of 80/20,” the theory states that 80 percent of your business’s sales come from a mere 20 percent of your customer base. This theory, originating outside times of economic hardship, not only highlights the importance of retaining the top earning 20 percent of your customer base, it makes customer loyalty essential to succeed in the HVAC industry.
Put Your Customers First
With the onset of a pandemic, distributors, contractors, and engineers alike are suddenly tasked with adapting business practices to meet safety guidelines. With uncertainty regarding impact on productivity, your HVAC partners are actively seeking ways to guarantee business as usual.
When it comes to sales strategy, time is money, meaning your partners are prioritizing products that will both satisfy the customer and provide the biggest return. This is the ideal time to capture their attention and identify your brand as a solution, not only with a message of hope, but tangible actions taken by your business for the purpose of helping customers overcome their own difficulties.
If you are currently utilizing a reward program as part of your customer loyalty marketing strategy, this is the time to leverage its power. Acting as a direct line to your customers and their sales behavior, you can begin structuring sales promotions and other key performance indictors around your partner’s channel abilities and needs. Start by identifying exactly how your partner’s priorities have shifted and where productivity may have been affected.
If you typically reward your customers based on volume of sales, but your partners are struggling with a disrupted supply chain, examples of restructured sales promotions to keep them engaged include the following:
While small shifts like these can pose a threat to short-term profitability, the reality is that an economic slump poses an even larger threat. These practices should be seen as a long-term strategy; an active investment in your customers to capture mind-share and market-share when other companies are withdrawing their resources in panic. Furthermore, providing a structured model of sales practices through a customer loyalty program that results in profitable and rewarding experiences will not only positively motivate your customers in a time of chaos, but will build brand loyalty that remains well past the life of the pandemic.
Using Digital Routes to Enhance Customer Loyalty Marketing
When budgets are tight, customers are more inclined to spend their money on brands with which they have an established relationship and trust to be a profitable investment. Marketing is the first step in establishing and reinforcing this relationship with your customers.
When it comes to digital marketing, it is important to differentiate between customer loyalty best practices and strategy focused on acquiring new customers. Customer acquisition techniques, such as spending funds on temporary digital ads in an attempt to cast a wide net, are simply not feasible when budgets are limited. When investing in digital loyalty marketing, such as implementing an online customer loyalty program, businesses are executing strategic, personalized marketing aimed and sourced directly to top-tier customers.
By building an online platform where contractors and distributors can collect rewards and stay updated on the latest product information, your brand stays top of mind as your business out-markets your competitors. Increased sales and happy, loyal channel partners can have a drastic impact on the success of your business in times of economic uncertainty, and digital marketing techniques can help you get there.
When is the Right Time to Invest?
While there are many factors responsible for generating success in a business, the advantages of an active customer loyalty strategy take precedence in an economic downturn. Regardless of whether or not your business is able to fully finance a customer loyalty marketing strategy amidst a pandemic, now is the time to begin seeking ways to connect, motivate, and help your partners, fostering growth for both their business as well as your own. In unprecedented times, we have a choice: to make ourselves small and brace for the impact or to reach out to those around us and find strength to move through. In solidarity we find stability, which is why it is never too early to start earning your customers’ loyalty.
Mark Herbert is president and CEO of Incentive Solutions (www.incentivesolutions.com). He has more than 30 years of experience overseeing business operations within the incentives industry. Incentive Solutions currently manages more than 220 programs, many of which are in the HVAC industry. Mark Herbert may be reached at firstname.lastname@example.org.