A fascinating article in Forbes shared a concept that is increasingly winning over customers. In the article, the author described what he termed “anticipatory customer service” as “a customer experience that manages to serve even the unexpressed wishes and needs of your customers through the use of technology and automation.”

People are busy. A gesture such as an emailed service reminder that a customer can view when they have time in their hectic schedule, is certainly appreciated by many. However, Anticipatory Customer Service takes this to another level. Depending on the circumstances and the customer preferences, not only would you e-mail the customer, you would also call them, send a text message and then a letter as well. This method works well for customers who want this communication. When a customer drops their car off for service, they want to be kept up-to-date on progress and completion.  If they’re in a meeting, they might prefer a text message. While if they are working at their computer, an email might be their preferred method. Anticipatory customer service is all based on providing consumers information before they know they want it themselves.

The popular pharmacy chain Walgreens has refined the art of Anticipatory Customer Service and makes dealing with them easy and convenient. They allow you to refill prescriptions online or via a free app. If that’s too hard (or you forget), they will e-mail you. All you then have to do is reply, and they will refill your prescription. When it is ready for pickup, they will email you again. If you forget to pick it up they will then call you and remind you that it’s ready… multiple times. Once you pick it up, they thank you through their rewards program. No doubt this works to Walgreens’ advantage by decreasing the amount of time between a customer being eligible for a refill, and actually refilling it. It also decreases the time between when the refill is ready and the customer collects it. The pharmacy doesn’t make money until the prescription is picked up. By continuously reminding customers, they are increasing their revenue.  Of course, there is a fine line between using multiple methods of communication and badgering a customer. So businesses need to ensure that there is a way for customers to inform them of their preferences.  This is simple through opt-out links on email communication and the “stop” message for text messaging.

Parallels definitely exist in the automotive world.  For example, minor and regularly scheduled service such as an oil change. Walgreens doesn’t know how many pills you have remaining, just as you may not know how many miles the customer has driven since their last service. However, based on the customer’s visit history, it can be closely approximated.

Many companies send out one email and call it a day. The strength in Walgreens system is its repetitiveness. A service customer may get that e-mail reminder and not be ready for an oil change based on mileage; or perhaps think it’s a good idea but be too busy to make an appointment. By continuing to contact them via multiple methods, you give yourself more opportunities to reach the customer at the moment in which they are ready.  A scenario none of us want to happen is to remind the customer, have them agree to the service, then they become busy and forget. You fail to stay in contact, and on a future date the customer pops into a Jiffy Lube to get that convenient oil change, simply because they are near it. I’m sure Jiffy Lube thanks you, however.

Making it as easy and convenient as possible for your customer to do business with you is the key point here. There is no reason why you can’t text a customer and allow them to text you back to make an appointment. The same applies to email, or a phone call reminding the customer about their upcoming service appointment. According to the article, “it’s here that you shift your customers’ perception of your company out of the ‘they’re perfectly fine, for now’ to ‘they’re my one and only.’ It’s here that they become truly committed to, loyal to, the idea of working with you on a permanent basis.”

A more proactive approach and the use of technology to maintain contact with your customers about information they WANT to receive, can help builds better relationships and a more loyal customer base.

Delta Airlines recently revamped its loyalty program changing how rewards are distributed to its customers.  In an article in Knowledge@Wharton, Peter Fader, Wharton Marketing Professor, applied the concept of customer centricity in reviewing Delta’s current loyalty program.

The concept is simply; “the recognition of differences across your customers.” Knowing that 4 percent of Delta’s customers accounted for 25 percent of their business, Fader found that a redistribution of rewards would truly allow Delta to better acknowledge their most valued customers. This led Delta to rethink their loyalty strategy so that it could be tailored more towards rewarding the customers that bring in the most revenue, rather than treating all loyalty members equally.

It’s actually quite innovative. It’s certainly easy to understand when illustrated by this example: A businessman who takes frequent short trips, on little notice and pays full fare, is rewarded less than the couple that travels infrequently, over long distances, books well in advance and at discounted rates. The article points out that, in the current state of many frequent flyer programs, it would be more difficult for the businessman to earn rewards and perks than it would be for the couple; even though he actually produces more revenue for the airline. According to Fader, “some customers deserve better treatment, and that should be decided on the basis of what they’re worth to the firm.” He further explains that when he’s defining “worth,” he’s not referring to what a customer has done in the past, but is basing it on a “projection of what we think this customer will be worth in the future.”

With the amount of data dealerships have at their disposal, it would certainly be possible to project customer lifetime value based on purchase trends and service revenue. Even Fader admits, however, that a healthy ecosystem will see some companies adopting customer-centric loyalty programs, while others continue to operate what he terms “performance superiority” programs, which reward people based on transactional frequency over revenue.

When considering net revenue during the initial transaction, a literal translation of this type of loyalty program to automotive dealerships might initially skew revenue (at least in sales) towards special finance customers. The customer with perfect credit, who negotiated you down to invoice less holdback, then brought his own financing, may not be the one who generated the highest gross of the day. But they may very well be the customer who brings the most revenue to the store over their lifetime. They are probably more likely to bring their car into your dealership for service than an independent auto repair facility, as price will be less of an issue.

On the flip side, sometimes, that special finance customer will be so thrilled with your assistance in getting them a vehicle, that they will bring you all of their friends and family to buy a vehicle. 

Delta’s new program is certainly an interesting concept and will be worth watching as its customers experience this program change. It will certainly experience some backlash from consumers who feel as if they are getting short-changed in the new system. However, no matter what happens, Delta will absolutely find out who its loyal customers are. Customers will make the choice to stay or defect to an airline that offers a more generous frequent flier program. 

Delta Airlines recently revamped its loyalty program changing how rewards are distributed to its customers.  In an article in Knowledge@Wharton, Peter Fader, Wharton Marketing Professor, applied the concept of customer centricity in reviewing Delta’s current loyalty program.

The concept is simply; “the recognition of differences across your customers.” Knowing that 4 percent of Delta’s customers accounted for 25 percent of their business, Fader found that a redistribution of rewards would truly allow Delta to better acknowledge their most valued customers. This led Delta to rethink their loyalty strategy so that it could be tailored more towards rewarding the customers that bring in the most revenue, rather than treating all loyalty members equally.

It’s actually quite innovative. It’s certainly easy to understand when illustrated by this example: A businessman who takes frequent short trips, on little notice and pays full fare, is rewarded less than the couple that travels infrequently, over long distances, books well in advance and at discounted rates. The article points out that, in the current state of many frequent flyer programs, it would be more difficult for the businessman to earn rewards and perks than it would be for the couple; even though he actually produces more revenue for the airline. According to Fader, “some customers deserve better treatment, and that should be decided on the basis of what they’re worth to the firm.” He further explains that when he’s defining “worth,” he’s not referring to what a customer has done in the past, but is basing it on a “projection of what we think this customer will be worth in the future.”

With the amount of data dealerships have at their disposal, it would certainly be possible to project customer lifetime value based on purchase trends and service revenue. Even Fader admits, however, that a healthy ecosystem will see some companies adopting customer-centric loyalty programs, while others continue to operate what he terms “performance superiority” programs, which reward people based on transactional frequency over revenue.

When considering net revenue during the initial transaction, a literal translation of this type of loyalty program to automotive dealerships might initially skew revenue (at least in sales) towards special finance customers. The customer with perfect credit, who negotiated you down to invoice less holdback, then brought his own financing, may not be the one who generated the highest gross of the day. But they may very well be the customer who brings the most revenue to the store over their lifetime. They are probably more likely to bring their car into your dealership for service than an independent auto repair facility, as price will be less of an issue.

On the flip side, sometimes, that special finance customer will be so thrilled with your assistance in getting them a vehicle, that they will bring you all of their friends and family to buy a vehicle. 

Delta’s new program is certainly an interesting concept and will be worth watching as its customers experience this program change. It will certainly experience some backlash from consumers who feel as if they are getting short-changed in the new system. However, no matter what happens, Delta will absolutely find out who its loyal customers are. Customers will make the choice to stay or defect to an airline that offers a more generous frequent flier program. 

In a world filled with loyalty programs, it’s always interesting when I talk to a dealership that harbors doubts. The cost involved in having a loyalty program is minimal compared to the revenue generated. However, at times it seems as if dealers are intimidated by the effort it would take to administer one.

Loyalty program benefits and results are wide-ranging and go far beyond simply giving away free or discounted products or services. A recent study by Forrester, names a few:

1. Just 51% of consumers that did not belong to a loyalty program reported that when they liked a brand they tended to stick to it. However, this increases to a healthy 64% if the consumer belongs to a loyalty program.
2. 48% of consumers who belong to loyalty programs reported that price is LESS important to them. This falls to 43% for those that do not belong to a loyalty program.
3. Consumers who belong to loyalty programs are willing to pay more for convenience (50%) than consumers who do not belong to a loyalty program (36%).
4. 52% of consumers who belong to loyalty programs “often tell [their] friends and family about new brands, products, or services,” versus 33 percent of people who don’t belong to a loyalty program.
    

It would seem logical that the primary motivation for joining a loyalty program in the first place is for discounts or to earn freebies and that may, in fact, be true. However, at some point after joining, consumer perception shifts away from price towards brand and convenience.

Consumers tend to shop at a particular grocery store because they get used to it. They know where everything is located within the store so it makes their time spent grocery shopping more efficient. The more they shop there, the more convenient it becomes for them. For example, Whole Foods is a very popular store, yet there are not a lot of them to shop at – only 360 stores across the entire U.S. and the United Kingdom combined. Compare that to Kroger, with 2,641 stores in just 34 states.  Kroger can dominate a market simply by being convenient; whereas Whole Foods is seeing sales decreases. What is Whole Foods doing to build sales and increase loyalty? They’re introducing a loyalty program.

The bottom line is that loyalty programs help increase business and also increase the revenue generated by that business. They help retain customers, build branding and gain free marketing via word of mouth. Whether you do it yourself or have a third-party assist you in administering it, loyalty programs pay off in more ways that you realize.

In a world filled with loyalty programs, it’s always interesting when I talk to a dealership that harbors doubts. The cost involved in having a loyalty program is minimal compared to the revenue generated. However, at times it seems as if dealers are intimidated by the effort it would take to administer one.

Loyalty program benefits and results are wide-ranging and go far beyond simply giving away free or discounted products or services. A recent study by Forrester, names a few:

1. Just 51% of consumers that did not belong to a loyalty program reported that when they liked a brand they tended to stick to it. However, this increases to a healthy 64% if the consumer belongs to a loyalty program.
2. 48% of consumers who belong to loyalty programs reported that price is LESS important to them. This falls to 43% for those that do not belong to a loyalty program.
3. Consumers who belong to loyalty programs are willing to pay more for convenience (50%) than consumers who do not belong to a loyalty program (36%).
4. 52% of consumers who belong to loyalty programs “often tell [their] friends and family about new brands, products, or services,” versus 33 percent of people who don’t belong to a loyalty program.
    

It would seem logical that the primary motivation for joining a loyalty program in the first place is for discounts or to earn freebies and that may, in fact, be true. However, at some point after joining, consumer perception shifts away from price towards brand and convenience.

Consumers tend to shop at a particular grocery store because they get used to it. They know where everything is located within the store so it makes their time spent grocery shopping more efficient. The more they shop there, the more convenient it becomes for them. For example, Whole Foods is a very popular store, yet there are not a lot of them to shop at – only 360 stores across the entire U.S. and the United Kingdom combined. Compare that to Kroger, with 2,641 stores in just 34 states.  Kroger can dominate a market simply by being convenient; whereas Whole Foods is seeing sales decreases. What is Whole Foods doing to build sales and increase loyalty? They’re introducing a loyalty program.

The bottom line is that loyalty programs help increase business and also increase the revenue generated by that business. They help retain customers, build branding and gain free marketing via word of mouth. Whether you do it yourself or have a third-party assist you in administering it, loyalty programs pay off in more ways that you realize.

I’m sure you’ve heard the phrase “Work your pay plan.” It doesn’t matter whether you held a position in sales, service, or parts, this advice has always been considered good. Towards the end of the month, when Sales Managers need those extra units sold on the weekends in order to hit bonuses from the manufacturer, they throw cash bonuses at the salespeople. The same thing happens in the service drive when it comes to tires or other service goals. It’s easy to see how a little extra cash might help motivate staff to work a little harder to achieve a sales goal. Recently a Nissan dealership in the San Francisco Bay Area provided a $30.00 incentive to the service writers for each pre-paid maintenance plan they sold in the service lane.  They quickly sold over 250 plans in one month generating over $50,000 in plan revenues. But just as importantly they easily retained those 250 plus customers for another two years of service. However, the next month there was no sales incentive and those same service writers sold only 14 plans.  So it is easy to see how engaged employees can either help or hinder a far more important goal... customer retention and loyalty.

The Temkin Group’s 6 laws of Customer Experience infographic contained two laws that, were they not next to each other, could be overlooked as being connected.

“#4: Unengaged employees don’t create engaged customers

 #5: Employees do what is measured, incented and celebrated.”

There are three types of employees: unhappy, satisfied and engaged. You notice that I left “happy” off of that list? It’s very simple, really. Your employees are either not happy with their job (whether you know it or not); are satisfied with their job (whether you know it or not); or are an engaged employee.  It’s fairly easy to identify a person who is unhappy with their job. They are typically going to underperform or perform at minimum acceptable levels; they may or may not have attendance issues… you see where this is headed? Hopefully, you know how to handle those types of employees. The trick is to be able to tell the difference between someone who is engaged with your company and someone who is simply satisfied with their position. The reason it’s so important is that, as the Temkin Group points out in their 4^th law, if your employees aren’t engaged with your company, they cannot create engaged customers.

The difference between someone who is simply satisfied with their position and someone engaged, is that an engaged employee will be a brand advocate. They are emotionally invested in the success of your business.  They work harder to make sure that the customer experiences the same feelings they have, and are just as disappointed when things don’t go right for the customer. They also go above and beyond to make it right. They may not have the best solution, but the fact that they are going to bat for the customer means that they care.

If you subscribe to the 5^th law described above, there could be an opportunity to include some incentives for customer experience. Many dealerships reward sales reps for perfect CSI surveys, so this idea isn’t foreign. It’s simply that once the perfect survey is rewarded, the incentives stop, so the salesperson moves on to the next customer. The same idea could be carefully implemented long term. Whereby excellent customer service experiences are rewarded or, at the very least, celebrated.

Identifying engaged employees, transforming satisfied employees into engaged ones, and turning around some of those unhappy employees, greatly increases the chance that your employees will then transfer that engagement to your customers. This creates better and more memorable customer experiences. Customer loyalty is based on the law of reciprocity. Provide those excellent customer experiences by having employees who want to give them, and your customers will reward you with their loyalty in return.

I’m sure you’ve heard the phrase “Work your pay plan.” It doesn’t matter whether you held a position in sales, service, or parts, this advice has always been considered good. Towards the end of the month, when Sales Managers need those extra units sold on the weekends in order to hit bonuses from the manufacturer, they throw cash bonuses at the salespeople. The same thing happens in the service drive when it comes to tires or other service goals. It’s easy to see how a little extra cash might help motivate staff to work a little harder to achieve a sales goal. Recently a Nissan dealership in the San Francisco Bay Area provided a $30.00 incentive to the service writers for each pre-paid maintenance plan they sold in the service lane.  They quickly sold over 250 plans in one month generating over $50,000 in plan revenues. But just as importantly they easily retained those 250 plus customers for another two years of service. However, the next month there was no sales incentive and those same service writers sold only 14 plans.  So it is easy to see how engaged employees can either help or hinder a far more important goal... customer retention and loyalty.

The Temkin Group’s 6 laws of Customer Experience infographic contained two laws that, were they not next to each other, could be overlooked as being connected.

“#4: Unengaged employees don’t create engaged customers

 #5: Employees do what is measured, incented and celebrated.”

There are three types of employees: unhappy, satisfied and engaged. You notice that I left “happy” off of that list? It’s very simple, really. Your employees are either not happy with their job (whether you know it or not); are satisfied with their job (whether you know it or not); or are an engaged employee.  It’s fairly easy to identify a person who is unhappy with their job. They are typically going to underperform or perform at minimum acceptable levels; they may or may not have attendance issues… you see where this is headed? Hopefully, you know how to handle those types of employees. The trick is to be able to tell the difference between someone who is engaged with your company and someone who is simply satisfied with their position. The reason it’s so important is that, as the Temkin Group points out in their 4^th law, if your employees aren’t engaged with your company, they cannot create engaged customers.

The difference between someone who is simply satisfied with their position and someone engaged, is that an engaged employee will be a brand advocate. They are emotionally invested in the success of your business.  They work harder to make sure that the customer experiences the same feelings they have, and are just as disappointed when things don’t go right for the customer. They also go above and beyond to make it right. They may not have the best solution, but the fact that they are going to bat for the customer means that they care.

If you subscribe to the 5^th law described above, there could be an opportunity to include some incentives for customer experience. Many dealerships reward sales reps for perfect CSI surveys, so this idea isn’t foreign. It’s simply that once the perfect survey is rewarded, the incentives stop, so the salesperson moves on to the next customer. The same idea could be carefully implemented long term. Whereby excellent customer service experiences are rewarded or, at the very least, celebrated.

Identifying engaged employees, transforming satisfied employees into engaged ones, and turning around some of those unhappy employees, greatly increases the chance that your employees will then transfer that engagement to your customers. This creates better and more memorable customer experiences. Customer loyalty is based on the law of reciprocity. Provide those excellent customer experiences by having employees who want to give them, and your customers will reward you with their loyalty in return.

Imagine having customers so loyal that they are willing to pay you just to do business with your dealership. Do you think a customer that makes an investment in your loyalty program would be more or less likely to remain loyal to you and your brand? Three companies have successfully managed to accomplish this and in a very big way.

Movie theater chain, AMC, has a loyalty program called “AMC Stubs.” They charge their customers $12 per year to be a part of the program. In exchange, members earn points for purchasing that $20 tub of popcorn that they can use towards future rewards (like more popcorn).  In addition, they waive service charges for any tickets purchased online and provide a VIP “red carpet” entrance for their best customers. If you were a moviegoer and paid to be a part of AMC’s loyalty program, the chances that you would patronize a different movie theater chain are greatly diminished. These consumers have essentially proven their loyalty with their wallets. AMC’s loyalty program isn’t any different from any other loyalty programs. Spend money. Earn points. Get rewards.  Yet customers are willing to shell out $12 per year simply to be a part of it. It was definitely a risky move for AMC to make customers pay to be a part of their program, yet it makes sense. There are many companies that have loyalty programs. Let’s take the example of grocery stores. How many grocery store loyalty cards do you own? Does owning one make you more likely to shop there, or do you simply use loyalty card at the store when you were already planning on shopping there? The point of a loyalty program is not simply to reward customers for their business, but to also encourage future business.  By charging the modest fee that they do, the customer is now more likely to choose an AMC theater when they go to a movie, rather than simply using the loyalty program when they ended up at an AMC movie theater.

The second company that does this is Amazon. Their Amazon Prime membership, while promoted as a membership, is considered by many experts to be a loyalty program. Their fee is definitely much more expensive; ringing up at $79 per year. For that fee, members receive free two-day shipping on any items fulfilled by Amazon, and access to a vast library of streaming movies and book rentals for Amazon’s Kindle e-reader. I guarantee you that the customer who spent $79 to participate in this program looks to Amazon first when shopping. Amazon has expanded into so many markets that one could just about fulfill all of their needs on the site. With free 2-day air, no sales tax in most states, and the fact that customers don’t have to wait long to receive their merchandise, it certainly creates a desirable value proposition. Amazon is now experimenting with same-day delivery service in several markets and recently announced delivery by drone (although they did concede that this was probably a ways in the future).

The third company we have all heard about is the Starbucks Steel Gift card. While it costs $450.00 to purchase, you do receive $400.00 in prepaid coffee products. Incidentally, it sells out within minutes each year that Starbucks offers it. The remaining $50.00 is put towards you very own Gold Starbucks Loyalty Membership. It is very similar to the American Express model which has been a huge success for many years. How many of you pay $450 for your American Express Platinum Card? While you are thinking about your existing loyalty program, or if you are contemplating a new program for your store, it might be wise to consider packaging some simple services into a pre-paid loyalty offering. Then watch what it does to your service spend and frequency of customer visit.

It’s certainly intriguing to watch, and an innovative idea. If you can get a customer to pay you for the privilege of doing business with you, or to be a part of a program that offers certain perks, you’re well on your way to creating an effective loyalty program that increases revenue from those customers.

Imagine having customers so loyal that they are willing to pay you just to do business with your dealership. Do you think a customer that makes an investment in your loyalty program would be more or less likely to remain loyal to you and your brand? Three companies have successfully managed to accomplish this and in a very big way.

Movie theater chain, AMC, has a loyalty program called “AMC Stubs.” They charge their customers $12 per year to be a part of the program. In exchange, members earn points for purchasing that $20 tub of popcorn that they can use towards future rewards (like more popcorn).  In addition, they waive service charges for any tickets purchased online and provide a VIP “red carpet” entrance for their best customers. If you were a moviegoer and paid to be a part of AMC’s loyalty program, the chances that you would patronize a different movie theater chain are greatly diminished. These consumers have essentially proven their loyalty with their wallets. AMC’s loyalty program isn’t any different from any other loyalty programs. Spend money. Earn points. Get rewards.  Yet customers are willing to shell out $12 per year simply to be a part of it. It was definitely a risky move for AMC to make customers pay to be a part of their program, yet it makes sense. There are many companies that have loyalty programs. Let’s take the example of grocery stores. How many grocery store loyalty cards do you own? Does owning one make you more likely to shop there, or do you simply use loyalty card at the store when you were already planning on shopping there? The point of a loyalty program is not simply to reward customers for their business, but to also encourage future business.  By charging the modest fee that they do, the customer is now more likely to choose an AMC theater when they go to a movie, rather than simply using the loyalty program when they ended up at an AMC movie theater.

The second company that does this is Amazon. Their Amazon Prime membership, while promoted as a membership, is considered by many experts to be a loyalty program. Their fee is definitely much more expensive; ringing up at $79 per year. For that fee, members receive free two-day shipping on any items fulfilled by Amazon, and access to a vast library of streaming movies and book rentals for Amazon’s Kindle e-reader. I guarantee you that the customer who spent $79 to participate in this program looks to Amazon first when shopping. Amazon has expanded into so many markets that one could just about fulfill all of their needs on the site. With free 2-day air, no sales tax in most states, and the fact that customers don’t have to wait long to receive their merchandise, it certainly creates a desirable value proposition. Amazon is now experimenting with same-day delivery service in several markets and recently announced delivery by drone (although they did concede that this was probably a ways in the future).

The third company we have all heard about is the Starbucks Steel Gift card. While it costs $450.00 to purchase, you do receive $400.00 in prepaid coffee products. Incidentally, it sells out within minutes each year that Starbucks offers it. The remaining $50.00 is put towards you very own Gold Starbucks Loyalty Membership. It is very similar to the American Express model which has been a huge success for many years. How many of you pay $450 for your American Express Platinum Card? While you are thinking about your existing loyalty program, or if you are contemplating a new program for your store, it might be wise to consider packaging some simple services into a pre-paid loyalty offering. Then watch what it does to your service spend and frequency of customer visit.

It’s certainly intriguing to watch, and an innovative idea. If you can get a customer to pay you for the privilege of doing business with you, or to be a part of a program that offers certain perks, you’re well on your way to creating an effective loyalty program that increases revenue from those customers.

Oftentimes, businesses adopt a rewards program to thank their frequent customers and to encourage and increase the likelihood that they will return. While these are both excellent reasons to have a rewards program, a business must carefully consider how to structure the program and what to offer to not only promote engagement with their customer, but to also create meaningful incentives that make sense from a revenue standpoint.

If you don’t have a loyalty program, consider a recent study by Nielsen that surveyed 29,000 people in 58 countries. 60 percent of respondents reported that loyalty programs were available where they shop, and 85 percent were more likely to choose that retailer over another. The fact that most major retailers have loyalty programs should be enough to convince you that you should also have one. All of these companies can’t be wrong, or can they?

Where most loyalty programs fail is because they are not well thought out from the onset. There’s a balance that must be created between what makes sense for your business and what rewards will actually be attractive to your customers. It certainly wouldn’t make financial sense for a dealership to give away a car even to its most loyal customer, despite the fact that this would probably be a pretty desirable reward and would certainly ring the free publicity bell.

Here are a few things to consider when designing your loyalty program.

1. Reward activities that generate new business – There’s nothing more satisfying or desirable for a dealership than obtaining referrals from satisfied customers. We also know that word-of-mouth is one of the most effective forms of generating new business. Consider adding to your loyalty program an appropriate incentive for new customer referrals by existing customers. Loyal customers bring in a lot of revenue over their lives so why not encourage and reward those same customers for assisting you in your customer acquisition efforts? Religiously servicing their vehicles with you is great. However, by rewarding customers for generating new or conquest business – sales or service – you turn that loyal customer into a willing and proactive brand advocate.
2. Make sure your incentives aren’t at the expense of revenue –Take a close look at the profit centers of your dealership when selecting rewards for your customers. Don’t offer rewards to customers that eat into your profit centers. Recent statistics show that a well-planned dealership loyalty programs will work wonders growing revenues by offering only a 4-5% average loyalty “discount.” That is typically less than most direct mail teasers dealerships often send out. How the consumer perceives a smaller “reward” can be just as effective as a free oil change. But it is dependent on how it is packaged to the customer.  If you generate a lot of revenue from oil changes, don’t offer free ones. Many dealerships choose their rewards from those services that are the most popular with their customers. However, they also tend to be the ones that generate revenue for the dealership. Consider identifying services that aren’t generating revenue and offering those as rewards. This way, your customers are still receiving value for their loyalty but it’s not coming at the expense of revenue. Many of today’s good loyalty programs will tell you exactly, by labor Op code, what services each member is using and those they are not. It’s the ones they are not using that should be incentivized.
3. Choose rewards that promote engagement – The ultimate test of the health of your loyalty program is engagement by your customers. Again, monitor which rewards are being redeemed and which ones are not. Many times a small tweak of a reward will bring up its redemption and incremental revenue generation.  Your loyalty offerings aren’t set in stone. If customers aren’t taking advantage of the offered rewards, your loyalty program isn’t working. It’s one thing for the customers to generate the points through frequent visits, and quite another for them to be doing so in an effort to earn one of your offered rewards.

The bottom line is that you want your loyalty program to encourage and reward people for their loyalty. If you’re not offering rewards that are desirable, your loyalty program has no meaning. In addition, if your loyalty program is rewarding your customers at the expense of revenue, it’s being counter-productive. A well-designed loyalty program will increase revenue, not detract from it.