Customer Loyalty and why it drives behavior

Michael Lee
Rewards programs have proven success in customer retention for years now. Let's talk to dealerships about retaining more sales customers for service, and driving their loyal cusotmers back to them more often.
Jim Bell
I don't think that it comes to programs. It all comes down to how you treat the customer. If you are going above and beyond, you will get the customer back. Yes, reward programs are a nice perk, but someone won't do just do business with you just because you have a rewards program. They will probably come back to you if you treat them well after the sale of the first vehicle.
Michael Lee
Jim, that's an interesting statement and very true with some customers. However, over 50% of the customers buying cars don't come back to the dealership for their service work. The right rewards program can not only mind the Sales to Service retention gap that all dealers see, it will also increase the RO count in service. This in turn will increase your bottom line. These programs wll drive customers back to you more often. Simply becsuse you are giving them something in return. This is not only starting to catch on in the automotive industry. Rewards program marketing techniques have shown great success in the hospitality industry, airlines, credit cards (AMEX) etc.. Rewards programs are what consumers respond to today. This is a long term plan for dealerships that want to increase their customer retention and maintain and increase their market share.
Larry Barditch
I agree, we need to treat our customers better, but we ALSO need to offer them more. We initiated a loyalty rewards program on Nov. 14th and have signed up over 1,000 loyal customers to the new program. These customers have earned over $30K in rewards dollars. The customers LOVE the program. We have capitalized off Amex, Best Buy and Capital One's expensive marketingefforts in educating customers about rewards. This is also a great data capture/append tool.
Jim Bell
I guess I have a hard time with that percentage being over 50% not coming back for service work. Our retention rate is through the roof. Yes, we do have a rewards program, but it isn't the reason that people come back. It is just a perk. It just comes down to how you treat the customer. When you have a lot of longevitiy within the service and sales departments, loyalty will be there.
Michael Lee
Jim, I understand you are having a hard time with that percentage and you should have a hard time with it. It's awful, and the bad thing about it is, it's TRUE! NADA numbers don't lie when they are looking at the Automotive Industry as a whole. Price and incentives drive customers behavior. Funny, I have a true story for you. I have a Land Rover, and they didn't bother to look at my history with them when trying to sell me on a $1,800.00 maintenance item. They treat me WONDERFUL!!! But as an existing custmer for over 10 years spending over $65,000 with them in New, Used Vehicle purchases, and service work, they refused to give me a discount. They have never offered me any incentive to come back there. Now, do you think I will ever go back? The answer is NO, I won't because every other industry I do business with offers me Rewards, Discounts. etc... That's why it's called retention. Treating the customer right is VERY important because they are hard to get and expensive to get but treating them right just isn't enough in today's economic climate. Consumers want more for their money. What your saying is that, there is no room for improvement with a rewards program. I assume you and I will have to agree to disagree on this one. We have staggering numbrs for our existing dealerships using our rewards program. We have shown an increase in Sales to Service retention and an increase in existing loyal customers coming back more often. This is what we are after in the Auto Industry!

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