As the economy has continued to fluctuate almost constantly, businesses have been forced to adapt processes and strategies to fit changing economic demands. One of the biggest changes in the automotive industry is that dealers are no longer able to wait for customers to come to them. Dealerships need to ensure that their sales teams are prepared to first find the sales.

Sales people will generally focus on the processes that deliver the dollars, and these processes have changed. Dealers are not waiting for a vehicle supply to push; rather they have to pull a demand for vehicle sales out of their customers. And if dealers want to effectively change to a demand-driven process, they need to reward the processes that create the right opportunities and deliver the right results.

We’ve included some suggested commission ideas that would be simple to implement and effective at driving desired behaviors from personnel in your service and sales departments and ultimately help your dealership build sales and revenue.

1) Service Retention

Many dealerships see a steep drop off in retention between the first and second vehicle service visits. By splitting a small commission between your sales department and your service advisor on returning service visits, you will encourage both departments to improve skills in customer service and upselling.

2) Orphaned Customers

Customers who haven’t been in for a service visit in over 12 months are probably having their vehicle serviced at a competitor. Generate a call list including orphaned customers and a word track for available employees to use to follow up with these lapsed customers. Offer a $5 or $10 commission for each service appointment made during these calls.

3) Internet Contact Requests

Whether it’s information from sales or service, if your customer completes a contact form online, they need to be contacted to schedule an appointment. Encourage your sales and service department employees to follow up quickly on Internet contact requests by offering a small bonus for each successful appointment made through an Internet lead.

4) Test Drives

“Test drives sell cars.” Dealers have been using this adage for years because it works. The closing percentage generally goes up if the prospective buyer has sat behind the wheel of the vehicle they’re considering. Use this tool to an even bigger advantage by incentivizing your sales department for what actually sells cars. (We also recommend you include a minimum close ratio to avoid “tampering” with the test drive commission program.)

5) Repeat Purchases

If your sales and service departments are doing a great job at keeping your customers coming back, reward them. Allot a specific amount to be shared between the two departments for each customer who purchases a new or used vehicle who is a current service customer (meaning they have been in for service sometime in the last 12 months).

6) Service Department Prospects

Maybe one of the best places to look for potential buyers is in your own back yard… or at least back door. Encourage your sales department employees to be proactive in reviewing scheduled appointments. Have them scout out customers with vehicles more than 2 years old and suggest they test drive a new model while waiting for their vehicle to be serviced. Pay a bonus for used vehicle trades sourced through the service department.

There are many ways to reward your employees for their efforts and hard work. What other incentives have you found to be successful?

Here are some facts about Prepaid Maintenance Plans (PMPs):

* Customers who use a dealer’s repair facility are 17 times more likely to purchase subsequent vehicles from that dealer.

* Boosting a PMP repair order with another $150 to $350 of additional up-sold retail customer-pay business adds serious money to the bottom line.

* When a PMP plan is built into used vehicle prices, a dealer can bump after-sale service use of the dealership from 15% to upwards of 50%.

* Typically one in five customers return to the dealership for service, but PMP plan holders visit servicing dealers at a rate of 72%.

* PMP plan holders who return to the dealership purchase incremental retail service about 90% of the time.

* PMP plan holders spend an average of $128 per visit for incremental retail service upsell products and services.

* A dealer that writes 1,500 repair orders per month can easily sell 150 to 200 maintenance policies just by asking the customer. In F&I, it takes a 500- to 600-unit store to generate the same 200 maintenance policies.

So, given these upsell profit opportunities, why are some dealers' prior experiences with PMPs disappointing? Many have said that customers simply won't buy these plans. However, when these programs are examined, it is clear why customers aren’t interested — because they are loaded with services of low value to the customer yet priced quite profitably for the dealership.

Today’s redesigned PMP programs offer a wide range of products and services, often with a tiered pricing structure that works for both the consumer and dealer. Additionally, today's PMP plans are software-driven, handling once time-consuming chores like plan registration, service claim and premium submissions. Because dealers control these programs, any reserve or forfeiture is immediate.

Every plan will experience forfeiture. It results when a customer terminates the plan early or for whatever reason does not use the plan. For most traditional PMP plans, the third-party administrator holds this dealer-funded reserve, from which they would take up to 60% of the value of the cancelled services as part of its fee structure. But the self-managed programs of today eliminate that third-party forfeiture, so the dealership keeps the excess revenue.

Dealers, have you ever tried a Prepaid Maintenance Program? What have your results been?

To learn more about MediaTrac’s Prepaid Maintenance Program UltraCare, click here: http://www.media-trac.com/products/ultracare.shtml

Here are some facts about Prepaid Maintenance Plans (PMPs):

* Customers who use a dealer’s repair facility are 17 times more likely to purchase subsequent vehicles from that dealer.

* Boosting a PMP repair order with another $150 to $350 of additional up-sold retail customer-pay business adds serious money to the bottom line.

* When a PMP plan is built into used vehicle prices, a dealer can bump after-sale service use of the dealership from 15% to upwards of 50%.

* Typically one in five customers return to the dealership for service, but PMP plan holders visit servicing dealers at a rate of 72%.

* PMP plan holders who return to the dealership purchase incremental retail service about 90% of the time.

* PMP plan holders spend an average of $128 per visit for incremental retail service upsell products and services.

* A dealer that writes 1,500 repair orders per month can easily sell 150 to 200 maintenance policies just by asking the customer. In F&I, it takes a 500- to 600-unit store to generate the same 200 maintenance policies.

So, given these upsell profit opportunities, why are some dealers' prior experiences with PMPs disappointing? Many have said that customers simply won't buy these plans. However, when these programs are examined, it is clear why customers aren’t interested — because they are loaded with services of low value to the customer yet priced quite profitably for the dealership.

Today’s redesigned PMP programs offer a wide range of products and services, often with a tiered pricing structure that works for both the consumer and dealer. Additionally, today's PMP plans are software-driven, handling once time-consuming chores like plan registration, service claim and premium submissions. Because dealers control these programs, any reserve or forfeiture is immediate.

Every plan will experience forfeiture. It results when a customer terminates the plan early or for whatever reason does not use the plan. For most traditional PMP plans, the third-party administrator holds this dealer-funded reserve, from which they would take up to 60% of the value of the cancelled services as part of its fee structure. But the self-managed programs of today eliminate that third-party forfeiture, so the dealership keeps the excess revenue.

Dealers, have you ever tried a Prepaid Maintenance Program? What have your results been?

To learn more about MediaTrac’s Prepaid Maintenance Program UltraCare, click here: http://www.media-trac.com/products/ultracare.shtml

On a scale of 1 to 10, please rate your most recent experience, with 1 being very dissatisfied and 10 being very satisfied.

This question seems pretty straightforward, but in fact, this is the most misinterpreted question on every customer survey. Many auto dealers erroneously equate “very satisfied” with “loyal” when this is not the case. A satisfied customer does not mean they have any intent to visit your business again or purchase from you in the future.

Customer loyalty, however, can be used to more reliably predict sales and financial growth. While satisfaction is an attitude, loyalty is a specific buying behavior.

A loyal customer:

•  Makes regular repeat purchases.

•  Purchases everything you sell that they could possibly use.

•  Encourages others to buy from you.

•  Demonstrates immunity to the pull of your competitors.

It should be noted that each trait of loyal customers contributes – either directly or indirectly – to your sales; so as your loyalty base grows, chances are your sales will too.

When surveying your customers, be sure to ask questions that help you understand their buying habits. Don’t limit yourself to finding their level of satisfaction; aim to find those who are loyal – and to keep them that way

How do you measure customer loyalty? What types of questions could you use in surveys to help you gauge loyalty?

This blog is condensed from the article “Loyalty: So Much More Than Satisfied” on Driving Retention, the auto dealer’s one-stop service rewards program resource.

On a scale of 1 to 10, please rate your most recent experience, with 1 being very dissatisfied and 10 being very satisfied.

This question seems pretty straightforward, but in fact, this is the most misinterpreted question on every customer survey. Many auto dealers erroneously equate “very satisfied” with “loyal” when this is not the case. A satisfied customer does not mean they have any intent to visit your business again or purchase from you in the future.

Customer loyalty, however, can be used to more reliably predict sales and financial growth. While satisfaction is an attitude, loyalty is a specific buying behavior.

A loyal customer:

•  Makes regular repeat purchases.

•  Purchases everything you sell that they could possibly use.

•  Encourages others to buy from you.

•  Demonstrates immunity to the pull of your competitors.

It should be noted that each trait of loyal customers contributes – either directly or indirectly – to your sales; so as your loyalty base grows, chances are your sales will too.

When surveying your customers, be sure to ask questions that help you understand their buying habits. Don’t limit yourself to finding their level of satisfaction; aim to find those who are loyal – and to keep them that way

How do you measure customer loyalty? What types of questions could you use in surveys to help you gauge loyalty?

This blog is condensed from the article “Loyalty: So Much More Than Satisfied” on Driving Retention, the auto dealer’s one-stop service rewards program resource.

Everyone loves to get more value out of an investment than they originally put in. It’s not very often, however, that both the dealer and the customer feel the same way when the customer leaves the dealership; one party or the other usually feels that they could have – or should have – gotten “more”.

It is possible, however, to have a “win-win” scenario, where both the dealer and the customer each come away feeling like they got the better end of the deal. Prepaid maintenance programs (PPMs) are software-driven business-tools that create a “win-win” scenario with no industry gimmicks and real, tangible results.

PPMs keep customers returning to your service department and increase upsell opportunities. The statistics speak for themselves: customers who use a dealer’s repair facilities are 17 times more likely to purchase their next car from that dealer. Keeping a greater percentage of customers returning to your service department can bring huge increases to your service bottom line too!

Everyone Participates. Given the price and administration structures of most traditional plans, regardless of the return promised on their sale to customers, many PPMs challenged all but the most advanced dealerships to afford and manage profitably. Technology removes these barriers by putting the administration, management and reserve functions at the controlling hands of the dealer.

In other words, key functions and processes, including redemption management as well as plan registration, service claim and premium submission, are carried out in-house through the dealership management system (DMS) and web-based software, making the PPMs not only more affordable, but more effective as well.

Thus, software-driven PPM programs are a great leveler. Their fees to the dealership are three to four times less than traditional third-party-based PPMs. They eliminate traditional “seeding fees” charged for setting up and maintaining the PPM reserve account. These fees average $10,000 to $14,000 collected by the third-party plans for every $1 million in reserve.

The hands-off freedom afforded by today’s PPMs give the dealer complete control, on a daily basis, over how money is reported, tracked and used. Earned reserve or plan forfeiture amounts are realized immediately – no sharing with an outside administration company.

Every plan will experience forfeiture. It results when a customer terminates the plan early or for whatever reason does not use the plan. For most traditional PPMs, the third-party administrator holds this dealer-funded reserve. It is from this reserve that the administrator would often take up to 60 percent of the value of the cancelled services as part of its fee structure. Today’s technology-driven plans enable the dealer to processes forfeiture through the general accounting ledger in the DMS.

The Other Side of Win is…Win. Today’s self-administered, self-managed plans also are more appealing to customers, particularly those buying mainline domestic and import brands who seek value in all they buy, whether automobile services or groceries.

Today’s technology-driven plans make it very easy for dealers to customize what is offered in the dealership’s PPM offering. Often this will result in a plan made up of products other than, or including, discounted prepaid LOF, tire rotation and fluid services. Plans that provide the product (value) important to the local market will appeal more to buyers, making their presentation and sale in the F&I office or service lane more profitable and successful for the dealership.

It is these plans’ ability to retain a customer’s service business and then create upsell opportunities for additional customer-pay repair order (RO) business at each plan service visit that make them like a money tree. These programs can triple the likelihood of the customer continually returning for service – a big growth over the 18 to 20 percent of customers who do traditionally return with a PPM’s incentive.

By converting PPM owners’ prepaid maintenance work to additional legitimate service needs (Your shop does insist on giving every vehicle that enters the store a free, no-obligation vehicle inspection, right?) the additional retail parts and labor can produce healthy additional business.

Some dealers report the ability to glean another $150 to $350 of additional up-sold retail customer-pay business per RO as a result.

When both sides win, what’s to lose? Technology-driven PPMs that dealers manage and control simply make it too attractive not to give prepaid maintenance programs a second look.

This blog is reprinted from www.drivingretention.com, your dealership’s one-stop service rewards program resource.

Everyone loves to get more value out of an investment than they originally put in. It’s not very often, however, that both the dealer and the customer feel the same way when the customer leaves the dealership; one party or the other usually feels that they could have – or should have – gotten “more”.

It is possible, however, to have a “win-win” scenario, where both the dealer and the customer each come away feeling like they got the better end of the deal. Prepaid maintenance programs (PPMs) are software-driven business-tools that create a “win-win” scenario with no industry gimmicks and real, tangible results.

PPMs keep customers returning to your service department and increase upsell opportunities. The statistics speak for themselves: customers who use a dealer’s repair facilities are 17 times more likely to purchase their next car from that dealer. Keeping a greater percentage of customers returning to your service department can bring huge increases to your service bottom line too!

Everyone Participates. Given the price and administration structures of most traditional plans, regardless of the return promised on their sale to customers, many PPMs challenged all but the most advanced dealerships to afford and manage profitably. Technology removes these barriers by putting the administration, management and reserve functions at the controlling hands of the dealer.

In other words, key functions and processes, including redemption management as well as plan registration, service claim and premium submission, are carried out in-house through the dealership management system (DMS) and web-based software, making the PPMs not only more affordable, but more effective as well.

Thus, software-driven PPM programs are a great leveler. Their fees to the dealership are three to four times less than traditional third-party-based PPMs. They eliminate traditional “seeding fees” charged for setting up and maintaining the PPM reserve account. These fees average $10,000 to $14,000 collected by the third-party plans for every $1 million in reserve.

The hands-off freedom afforded by today’s PPMs give the dealer complete control, on a daily basis, over how money is reported, tracked and used. Earned reserve or plan forfeiture amounts are realized immediately – no sharing with an outside administration company.

Every plan will experience forfeiture. It results when a customer terminates the plan early or for whatever reason does not use the plan. For most traditional PPMs, the third-party administrator holds this dealer-funded reserve. It is from this reserve that the administrator would often take up to 60 percent of the value of the cancelled services as part of its fee structure. Today’s technology-driven plans enable the dealer to processes forfeiture through the general accounting ledger in the DMS.

The Other Side of Win is…Win. Today’s self-administered, self-managed plans also are more appealing to customers, particularly those buying mainline domestic and import brands who seek value in all they buy, whether automobile services or groceries.

Today’s technology-driven plans make it very easy for dealers to customize what is offered in the dealership’s PPM offering. Often this will result in a plan made up of products other than, or including, discounted prepaid LOF, tire rotation and fluid services. Plans that provide the product (value) important to the local market will appeal more to buyers, making their presentation and sale in the F&I office or service lane more profitable and successful for the dealership.

It is these plans’ ability to retain a customer’s service business and then create upsell opportunities for additional customer-pay repair order (RO) business at each plan service visit that make them like a money tree. These programs can triple the likelihood of the customer continually returning for service – a big growth over the 18 to 20 percent of customers who do traditionally return with a PPM’s incentive.

By converting PPM owners’ prepaid maintenance work to additional legitimate service needs (Your shop does insist on giving every vehicle that enters the store a free, no-obligation vehicle inspection, right?) the additional retail parts and labor can produce healthy additional business.

Some dealers report the ability to glean another $150 to $350 of additional up-sold retail customer-pay business per RO as a result.

When both sides win, what’s to lose? Technology-driven PPMs that dealers manage and control simply make it too attractive not to give prepaid maintenance programs a second look.

This blog is reprinted from www.drivingretention.com, your dealership’s one-stop service rewards program resource.

The goal of any loyalty program is to create additional sales, service and parts profits, along with strong word-of-mouth advertising for the dealership that helps to retain customers’ business for longer. Whether you opt for a third-party loyalty program vendor or choose to implement one in-house, the following steps are crucial for a successful program:

1) Strategy: Offer multiple membership levels, including a free “starter” base level offer, ascending to an advocate level for the best customers who frequently buy and refer friends. The goal is to create customers who talk positively about their experience and refer family and friends.

2) Process: Identify dealership market segments; design appropriate promotions and communications; establish a schedule for customer communications; design the rewards redemption process and program results measurement tools; train employees to properly promote & explain the program.

3) Management: Establish best practices and determine how much of your program you want to automate. Assign management duties for each part of the program.

4) Reporting & Measuring: Determine which metrics should be used to provide an accurate analysis of how the program is benefiting the dealership. Examples include increasing customer retention rates, decreasing service acquisition costs, selling more maintenance, i.e. increasing RO hours and revenue.

Excerpted from MediaTrac’s white paper:  “The Auto Retailer’s Ultimate ‘How-to’ Guide to Customer Loyalty & Retention Program Set Up, Management & Measurement.” To download your free copy, click here: http://www.drivingretention.com/?p=661

The goal of any loyalty program is to create additional sales, service and parts profits, along with strong word-of-mouth advertising for the dealership that helps to retain customers’ business for longer. Whether you opt for a third-party loyalty program vendor or choose to implement one in-house, the following steps are crucial for a successful program:

1) Strategy: Offer multiple membership levels, including a free “starter” base level offer, ascending to an advocate level for the best customers who frequently buy and refer friends. The goal is to create customers who talk positively about their experience and refer family and friends.

2) Process: Identify dealership market segments; design appropriate promotions and communications; establish a schedule for customer communications; design the rewards redemption process and program results measurement tools; train employees to properly promote & explain the program.

3) Management: Establish best practices and determine how much of your program you want to automate. Assign management duties for each part of the program.

4) Reporting & Measuring: Determine which metrics should be used to provide an accurate analysis of how the program is benefiting the dealership. Examples include increasing customer retention rates, decreasing service acquisition costs, selling more maintenance, i.e. increasing RO hours and revenue.

Excerpted from MediaTrac’s white paper:  “The Auto Retailer’s Ultimate ‘How-to’ Guide to Customer Loyalty & Retention Program Set Up, Management & Measurement.” To download your free copy, click here: http://www.drivingretention.com/?p=661

1) Don’t aim for a quick fix: customer loyalty is a long-term commitment.

2) Make it a process, not a program.

3) Establish and empower your loyalty team. Also regularly measure and review staff performance.

4) Know your customers’ buying habits.

5) Provide attainable, affordable rewards.

6) Measure your costs and return. It pays to understand the economics of loyal customer relationships.

7) Have a plan to recover your costs.

8) Communicate often and personally with customers and loyalty program members.

9) Provide a perceived value to your customers/members

10) Keep it simple.

These 10 steps are excerpted from MediaTrac’s recently released white paper, The Auto Dealer’s Ultimate “How to” Guide to Customer Loyalty and Retention Program Set Up, Management & Measurement. For more information and detail about these steps please visit http://www.drivingretention.com/?p=661 and download your FREE copy.