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Jeff Dodson

Jeff Dodson President

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Why Dealers Should Say "NO" to Manufacturer Reward and Pre-Paid Maintenance Programs

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On the surface, manufacturer reward and pre-paid maintenance

programs seem like a great idea to many dealers. They’re intended to increase customer loyalty and visits to the service department, thereby providing repeat business and driving revenue. Take a closer look at OEM programs and you’ll find that not only do theynot provide much in the way of benefits – but they really don’t benefit the dealer at all. Here’s why you should be saying “NO” to OEM reward and PPM programs and “YES” to developing dealer-centric plans of your own.

Manufacturer’s reward and PPM plans are not seamless and they are generic.

 

Obviously, manufacturers are casting a wide net when developing reward and maintenance plans: They have to appeal to a huge existing and potential customer base. It’s all about the numbers with OEM programs to attract new prospects and encourage repeat purchases. It’s not possible for them to develop robust, effective programs based on specific demographics or personalized needs. These plans aren’t all that valuable to manufacturers in terms of revenue, so you can be sure benefits don’t trickle down to dealers.

 

Dealer-centric programs can be properly targeted.

 

Reward and PPM plan benefits are only used if they directly respond to the needs of customers; perks must have value to them. Dealers are in a better position to individualize and fine tune programs that prospects really want as compared to manufacturers.

 

  • Dealers that implement their own programs increase the number of service visits and decrease the amount of time in between visits. Any time a customer is in the store, there’s an opportunity to drive revenue.

 

  • Geography leads to higher rate of success with dealer-centric rewards and PPMs, because the store can determine what offerings appeal to vehicle owners. In the north, discounts on snow tire switch-outs will be valuable to customers. Southern dealers can offer A/C tune ups, a perk that’s very useful for their prospects.

 

An OEM program builds the manufacturer’s brand.

 

Manufacturers are known for the quality, safety and value of their vehicles – and to a lesser extent, their customer rewards and PPM plans. But what they do by providing OEM programs is reinforce their own brand and build their reputation. A dealer gains minimal benefit when a manufacturer promotes their reward and PPM programs, because they merely encourage customers to visit a local dealer.

 

Dealers build their own brand with focused reward and PPM plans.

 

When dealers implement programs that reward loyalty and encourage more frequent service visits, it builds a brand of its own. The majority of members of PPM plans do actually take advantage of the benefits offered by dealers, because they want to ensure they get value out of the price they pay. And because the dealer is in control of the program, it’s not bound by terms of the OEM plan: Dealers can extend benefits for all models they service and sell, instead of those offered by just a few manufacturers.

 

They may be cast as a smart way to boost revenue and increase customer loyalty, but OEM reward and pre-paid maintenance programs are a bust for dealers. Manufacturers aren’t in the position to know what your customers need and are only motivated to maintain their own reputation. Dealer-centric reward programs are more personalized for your prospects and advantageous for building your brand.

 

About the Author:

Jeff Dodson, Founder of the Dodson Group, challenges US and Canada car dealerships to say no to OEM and manufacturer reward programs and other approaches that are keeping dealers from increasing revenues and profits. 

Denim Simkins
@Jeff one of the things that I see flawed with an OEM product (and to be fair some of the "in-house" programs) is the dealer is looking at it as a tool to create profit and not the big picture of creating a value based offer that helps retain customers and build loyalty. And in most cases the follow up reminder is not effective or timely causing customers to forget they even have the services remaining. However I still see to many dealers not committing to a 30 minute quality oil change and tire rotation and customers simply will not come back even if it is FREE. They will not wait 90 minutes for this service.

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