Loyalty and Rewards Programs – What Works & What Doesn’t

loyalty programs

Make the right offer to the right person, at the right time, and you have a sale. It’s a great feeling.

But make that same offer to your customer at the wrong time and you’ve wasted money. Even worse, make that same offer to hundreds of the wrong people and you’ve wasted a lot of advertising money.

Avoid this Common Mistake

Here is an example of a poor loyalty program. When asked about their marketing programs, many service managers might tell you about the discounted oil change coupon they are mailing to everybody on their customer list. Not good. Some people in your CRM have moved away, own a different brand vehicle now or, sadly enough, have decided to never do business with your dealership again. Those are wasted offers on all the wrong people.

Conversely, many other clients in your CRM are already planning to buy their next oil change from you at full price, so you needlessly gave away margin by mailing them a discount coupon. A better offer (for those people) would have been a loyalty reward, perhaps a free car wash, an air freshener or another small item, perhaps every 4th visit.

The Point is to Make Your Customers Feel Special

Your dealer is not unique by instituting a loyalty program. You are merely catching up to the crowd.

One online study shows that 9 out of 10 people use at least one rewards program, and the typical consumer uses about six of them. They use them when buying groceries, fuel, meals out, haircuts, air miles, office supplies, movie tickets and even auto parts. Credit card companies are heavy promoters of rewards.

Know Your Market

Rewards and loyalty programs are not intended to bring in new customers. Your prospecting activities and advertising budget do that. Rewards are incentives for your present customers to keep them coming back.

Focus Your Spending Where It Will do the Most Good

Which of your recently acquired clients will grow into great customers? A data scientist can study your CRM and identify the people who are forming that buying pattern. You want to advertise specifically to those ‘prime’ customers early to encourage them, with your loyalty and rewards programs, to buy more with from you. It’s money well spent.

Integrate Your Rewards Programs Online and Offline

The market changed with the proliferation of smart phones. Participate in the new market. Many people (of all ages) like using a mobile app to track their rewards and loyalty points and bonuses.

What Rewards and Loyalty Programs Will Work in Your Dealership?

The ideas you think of yourself are the best ones. Don’t limit yourself to the very common oil change and frequent buyer deals. Be different. You can even offer different rewards for different groups of customers.

How about birthday specials, bonuses for military, senior citizen specials, or deals for parent of college students. You can make up any category of customer that makes sense. You want to do two things: Encourage frequent or bigger purchases (like selling extended warranties or service contracts) and earn referrals.

If you want to do oil change specials because you are comfortable with that, how about a “Bring a friend (a new customer) and get yours half off.”

Selling a New or Used vehicle?

Reward the buyer if they are already an established service customer. Give them a free meal at a nice restaurant. And ask for referrals right after you do that.

The Overlooked Gold Mine

Does your parts department actively market to all the repair shops in your trading area? Many dealers don’t, and merely rely on the shops to call them when they need parts. That’s very weak, because it’s being passive in the market.

What can you offer repair shops that buy a certain amount from your parts department within 90 days? Think of something. Where are you the most price competitive, since you already own the market for offering the best quality parts?

What about a sliding scale of rewards for increasing amounts of parts purchases? The reward can be as simple as a gift for the repair shop owner and their spouse, like the one you give new car buyers –  a free meal at a nice restaurant.