98% of Customers Who Join a Rewards Program Provide an Email Address

Email Open Rates for Reward Members are 300% Higher Than Non-Members

Dealerships That Provide an Incentive for Customers to RETURN After a Visit Have a 20% Increase In Sales

Statistics Show a 35% Service Visit Increase with Rewards Members

Members Spend 11% More Annually on Service When Participating in a Rewards Program

I think it’s pretty obvious after seeing those numbers that having a Rewards Program in place can more than triple the overall profit for your dealership.

Customers are always looking for the best deal and the best ways to save money. When you offer a rewards program, you are giving your customers what they want. The upside for you? You create loyal, repeat customers that will return to your dealership time and time again and spend more money while doing it. What’s not to love? By contacting a third-party provider, like LoyaltyTrac to help you setup a successful rewards program, you can increase your customer base and profit.

Also, there is a huge marketing potential for your rewards members. With statistics showing a 300% increase in email open rates, you better have a marketing strategy in place to reach your rewards customers.

Offer special incentives to only your rewards members – like an extra 15% off their next service visit or double their reward points for that entire month.

It is important not to SPAM your reward members. Each customer’s email address is like gold, so don’t blow it by dumping ten or more emails a month into their mailbox. They won’t appreciate it and neither will your bank account. Instead, offer thought-out marketing campaigns each month that have a specific focus and offer real value to your rewards members. Take time to sit down and plan out your marketing strategy for the next two months, or even the whole year and craft engaging content.

By utilizing your rewards members through your email marketing, you will more than triple the ROI for your efforts.

What are some of the successes you have had with your rewards program? How are you utilizing your rewards program to grow your dealership?

​With service departments finally getting the credit due to them for contributing to the growth and profit of dealerships, pre-paid maintenance programs (PMP) are starting to make a huge impact on the overall profit of dealerships as well.

I think it is well established that most PMPs are being sold in the F & I department. But is that the only place that they can make the dealership money? Pricing your pre-paid maintenance program is a big part in whether a customer will even consider purchasing a plan.  Recently we noticed that dealerships were overcharging their maintenance plans, arguing “what’s the point if we can’t make profit on the program?”, which made us realize that some dealerships are taking the wrong approach to their PMP.

When selling a maintenance plan to a customer, you tell them that they are saving money in the long-run and that they will not have to worry about the maintenance on their vehicle for 2 -5 years, depending on the length of the plan they choose. But when looking at the benefits from a dealership standpoint, there are several things to look at, and not just the profit. If you are concerned about losing your shirt when selling PMPs, then consider building your own PMP through a third-party provider like UltraCare and keep more profit for yourself. By cutting out some of the costs associated with most PMPs, you can lower your prices and still come out ahead.

What should you consider when looking for a pre-paid maintenance program?

Pre-Paid Maintenance programs, when delivered effectively, increase customer loyalty and create repeat business for your service department AND sales department. A customer is seven times more likely to return to your dealership if they have purchased a maintenance program from you. In addition, customers are 83% more likely to purchase their next vehicle from you if they visit your service department regularly.

Try to keep the bigger picture in mind. By stepping out of the box of profit and stepping into the one of loyalty, you can start to see the forest and not just the trees right in front of you. PMP are a great tool for dealerships, but if not used correctly, they will be unsuccessful and can actually hurt your reputation with your customers.

So, it is not just about adding to the profit of the sell. It is about adding a loyal customer that will return multiple times and more than triple that number. Price your programs competitively and to the advantage of the customer. In the long-run you will make much more profit. Not to mention you will have a happy customer who will bring more customers to your business through word of mouth.

What successes have you had with your PMP? What are some of the frustrations you have with the PMP that you offer?

​With service departments finally getting the credit due to them for contributing to the growth and profit of dealerships, pre-paid maintenance programs (PMP) are starting to make a huge impact on the overall profit of dealerships as well.

I think it is well established that most PMPs are being sold in the F & I department. But is that the only place that they can make the dealership money? Pricing your pre-paid maintenance program is a big part in whether a customer will even consider purchasing a plan.  Recently we noticed that dealerships were overcharging their maintenance plans, arguing “what’s the point if we can’t make profit on the program?”, which made us realize that some dealerships are taking the wrong approach to their PMP.

When selling a maintenance plan to a customer, you tell them that they are saving money in the long-run and that they will not have to worry about the maintenance on their vehicle for 2 -5 years, depending on the length of the plan they choose. But when looking at the benefits from a dealership standpoint, there are several things to look at, and not just the profit. If you are concerned about losing your shirt when selling PMPs, then consider building your own PMP through a third-party provider like UltraCare and keep more profit for yourself. By cutting out some of the costs associated with most PMPs, you can lower your prices and still come out ahead.

What should you consider when looking for a pre-paid maintenance program?

Pre-Paid Maintenance programs, when delivered effectively, increase customer loyalty and create repeat business for your service department AND sales department. A customer is seven times more likely to return to your dealership if they have purchased a maintenance program from you. In addition, customers are 83% more likely to purchase their next vehicle from you if they visit your service department regularly.

Try to keep the bigger picture in mind. By stepping out of the box of profit and stepping into the one of loyalty, you can start to see the forest and not just the trees right in front of you. PMP are a great tool for dealerships, but if not used correctly, they will be unsuccessful and can actually hurt your reputation with your customers.

So, it is not just about adding to the profit of the sell. It is about adding a loyal customer that will return multiple times and more than triple that number. Price your programs competitively and to the advantage of the customer. In the long-run you will make much more profit. Not to mention you will have a happy customer who will bring more customers to your business through word of mouth.

What successes have you had with your PMP? What are some of the frustrations you have with the PMP that you offer?

When we hear the term “Fixed Ops” we think of something that cannot be changed. The concept of Fixed Ops is that they depend on the result of the variable operations within a dealership. The goal is that as car sales rise, so will service revenue. However, your service revenue can move up the charts without having to depend on your sales. Here’s how:

By marketing your service department to existing customers AND new prospects you can increase customer retention and gain new customers through what might have been a lost sale through your CRM.

Here are 6 Tips to make your fixed ops not so fixed:

1. Offer a Loyalty Rewards Program. Reward Members Spend 11% More Annually On Service When Participating In A Rewards Program. By rewarding your customers for returning, you let them know that they are valuable and they feel better about the fact that they are getting a discount for returning. 98% Of Customers Who Join A Rewards Program Provide An Email Address. What better way to build your email database for marketing specials in the future?

2. Offer a Pre-Paid Maintenance Program. By offering your customers the option of a pre-paid maintenance plan you take away the anxiety of the service bill and gain on average, a 35% Service visit increase.

3. Offer Monthly Specials. When a customer comes in for service and finds out that they need a timing belt and all fluids replaced, they may have a semi-meltdown at your desk. But if you have a special coming up the next month that will offer them some relief, they will be more likely to return for a major service.

4. Send Service Reminders to Your Customer Base. Set up automated messages that go out to your service customers who have not been in for 3, 6 and 9 months. Be sure that you are not emailing the same customer multiple times. Also, track what emails are working and which ones need revision. It is important that anytime that you market your company, you track the results.

5. Send monthly special emails. Send out monthly specials to your service customers AND Sales prospects within your CRM. Most sales leads purchase AFTER 60 days, which means you have time to build a strong relationship with them. By converting a slow buyer to a service customer you will build a relationship of trust and secure a sale in the future.

6. Coupons. Women make up 73% of service customers. We all know that women love coupons. Some women will buy something JUST because they have a coupon. So, give your customers a 10% off coupon when they spend a certain amount to use on their next visit and be sure to include coupons on your service page and in all of your email communications.

By taking the time to strategize a marketing plan for each month of the year, you can optimize your service revenue and continue to grow your customer base.

What programs have you implemented to help grow your fixed ops revenue?

When we hear the term “Fixed Ops” we think of something that cannot be changed. The concept of Fixed Ops is that they depend on the result of the variable operations within a dealership. The goal is that as car sales rise, so will service revenue. However, your service revenue can move up the charts without having to depend on your sales. Here’s how:

By marketing your service department to existing customers AND new prospects you can increase customer retention and gain new customers through what might have been a lost sale through your CRM.

Here are 6 Tips to make your fixed ops not so fixed:

1. Offer a Loyalty Rewards Program. Reward Members Spend 11% More Annually On Service When Participating In A Rewards Program. By rewarding your customers for returning, you let them know that they are valuable and they feel better about the fact that they are getting a discount for returning. 98% Of Customers Who Join A Rewards Program Provide An Email Address. What better way to build your email database for marketing specials in the future?

2. Offer a Pre-Paid Maintenance Program. By offering your customers the option of a pre-paid maintenance plan you take away the anxiety of the service bill and gain on average, a 35% Service visit increase.

3. Offer Monthly Specials. When a customer comes in for service and finds out that they need a timing belt and all fluids replaced, they may have a semi-meltdown at your desk. But if you have a special coming up the next month that will offer them some relief, they will be more likely to return for a major service.

4. Send Service Reminders to Your Customer Base. Set up automated messages that go out to your service customers who have not been in for 3, 6 and 9 months. Be sure that you are not emailing the same customer multiple times. Also, track what emails are working and which ones need revision. It is important that anytime that you market your company, you track the results.

5. Send monthly special emails. Send out monthly specials to your service customers AND Sales prospects within your CRM. Most sales leads purchase AFTER 60 days, which means you have time to build a strong relationship with them. By converting a slow buyer to a service customer you will build a relationship of trust and secure a sale in the future.

6. Coupons. Women make up 73% of service customers. We all know that women love coupons. Some women will buy something JUST because they have a coupon. So, give your customers a 10% off coupon when they spend a certain amount to use on their next visit and be sure to include coupons on your service page and in all of your email communications.

By taking the time to strategize a marketing plan for each month of the year, you can optimize your service revenue and continue to grow your customer base.

What programs have you implemented to help grow your fixed ops revenue?

Many dealerships price prepaid maintenance programs (PMPs) high enough to shatter success from the start. Thinking that the real benefit comes from profit built into the plan along with forfeiture, they create a price point that’s prohibitive. While some new buyers will take the bait, the typical consumer, when asked to pay $895 for three years of scheduled maintenance, simply adds up the cost of nine or ten oil changes and a half dozen tire rotations and says, “Thanks, but no thanks!”

Successful PMPs are priced in such a way that even if a customer pulls out a calculator and – looking at the service menu – adds up the pricing for oil changes and tire rotations, the total represents at least an equal amount to what the F&I manager is charging them for the PMP.

Dealers who understand the full purpose and potential of PMPs price them well below the actual retail value. Instead of trying to turn huge profits in the F&I office, these dealers focus on the long-term potential of each customer. When incremental upsell can average over $90 per visit, dealers quickly see revenue increase. Statistics also show that up to 83% of customers will repurchase a future vehicle if the dealer can keep them returning to their service lane for regularly scheduled maintenance. With these two factors alone, even a PMP given away for free would more than pay for itself by the end of its contracted term.

With this type of program properly priced and executed, PMP sales penetrations can reach up to 50% or more, providing dealers opportunities to continually win over their customers.

Does your dealership sell PMPs? If your penetration is less than 50%, you could be pricing them too high.

Many dealerships price prepaid maintenance programs (PMPs) high enough to shatter success from the start. Thinking that the real benefit comes from profit built into the plan along with forfeiture, they create a price point that’s prohibitive. While some new buyers will take the bait, the typical consumer, when asked to pay $895 for three years of scheduled maintenance, simply adds up the cost of nine or ten oil changes and a half dozen tire rotations and says, “Thanks, but no thanks!”

Successful PMPs are priced in such a way that even if a customer pulls out a calculator and – looking at the service menu – adds up the pricing for oil changes and tire rotations, the total represents at least an equal amount to what the F&I manager is charging them for the PMP.

Dealers who understand the full purpose and potential of PMPs price them well below the actual retail value. Instead of trying to turn huge profits in the F&I office, these dealers focus on the long-term potential of each customer. When incremental upsell can average over $90 per visit, dealers quickly see revenue increase. Statistics also show that up to 83% of customers will repurchase a future vehicle if the dealer can keep them returning to their service lane for regularly scheduled maintenance. With these two factors alone, even a PMP given away for free would more than pay for itself by the end of its contracted term.

With this type of program properly priced and executed, PMP sales penetrations can reach up to 50% or more, providing dealers opportunities to continually win over their customers.

Does your dealership sell PMPs? If your penetration is less than 50%, you could be pricing them too high.

General Motors recently announced a customer loyalty initiative to increase its customer retention rates from 52% to 58%. The car manufacturer has assigned a concrete value for every percentage point of improvement in customer retention rates: $700 million. If GM achieves their goal of 58% customer retention, it will add $4.2 billion in annual revenue to the bottom line.

Six percentage points may not sound like a lot, but 52% is the industry’s average and 58% would put GM in the same category as Toyota Motor Corp., the industry leader in customer retention rates. GM will soon be rolling out its rewards program, which will probably be similar to Toyota’s Rewards Points program and also to Ford’s Owner Advantage Rewards program, which both companies tout as a way of saying “thank you for your business each time you purchase parts or service from your participating dealership.”

It’s clear the car manufacturers are recognizing that customer loyalty is more than just a catch phrase: customer loyalty adds real dollars to the bottom line. If it can add $4.2 billion to GM’s ledger, what can it do for your dealership?

Earlier this year we released an e-book detailing the profits that dealerships realize as a result of enrolling customers in a loyalty rewards program. We analyzed more than 6 million repair order transactions in 72 dealerships, comparing loyalty program member spend versus non-member spend. The results speak for themselves:

Ÿ • Members visit service departments at least 1.6X more frequently during the year than non-members

Ÿ • Members spend $662.01 in service departments annually compared to $336.63 by non-members

Ÿ • Dealers see an average increase of $44 customer pay RO per visit, by members

Ÿ • The average customer retention rate of program members is $56.98% -- think GM would be happy with that?

Ÿ • Dealers sell an average of 15 additional units each month to loyalty program members who redeem their rewards points towards a vehicle purchase

Tom Wood Ford in Indianapolis, IN started their loyalty program in 2007. From 2008 to 2011, Service Manager Tom Kashman says his gross profit per month doubled. If you could double your service revenue, increase your customer pay RO revenue, and sell more units to loyalty program members, how much would that add to your dealership’s bottom line? Find out the real numbers that other dealerships have achieved by downloading our free e-book, The Hard Facts & Financial Impact Report: Auto Dealership Loyalty Programs and the Effects They Have on Profitability http://www.media-trac.com/resources/whitepapers.shtml

General Motors recently announced a customer loyalty initiative to increase its customer retention rates from 52% to 58%. The car manufacturer has assigned a concrete value for every percentage point of improvement in customer retention rates: $700 million. If GM achieves their goal of 58% customer retention, it will add $4.2 billion in annual revenue to the bottom line.

Six percentage points may not sound like a lot, but 52% is the industry’s average and 58% would put GM in the same category as Toyota Motor Corp., the industry leader in customer retention rates. GM will soon be rolling out its rewards program, which will probably be similar to Toyota’s Rewards Points program and also to Ford’s Owner Advantage Rewards program, which both companies tout as a way of saying “thank you for your business each time you purchase parts or service from your participating dealership.”

It’s clear the car manufacturers are recognizing that customer loyalty is more than just a catch phrase: customer loyalty adds real dollars to the bottom line. If it can add $4.2 billion to GM’s ledger, what can it do for your dealership?

Earlier this year we released an e-book detailing the profits that dealerships realize as a result of enrolling customers in a loyalty rewards program. We analyzed more than 6 million repair order transactions in 72 dealerships, comparing loyalty program member spend versus non-member spend. The results speak for themselves:

Ÿ • Members visit service departments at least 1.6X more frequently during the year than non-members

Ÿ • Members spend $662.01 in service departments annually compared to $336.63 by non-members

Ÿ • Dealers see an average increase of $44 customer pay RO per visit, by members

Ÿ • The average customer retention rate of program members is $56.98% -- think GM would be happy with that?

Ÿ • Dealers sell an average of 15 additional units each month to loyalty program members who redeem their rewards points towards a vehicle purchase

Tom Wood Ford in Indianapolis, IN started their loyalty program in 2007. From 2008 to 2011, Service Manager Tom Kashman says his gross profit per month doubled. If you could double your service revenue, increase your customer pay RO revenue, and sell more units to loyalty program members, how much would that add to your dealership’s bottom line? Find out the real numbers that other dealerships have achieved by downloading our free e-book, The Hard Facts & Financial Impact Report: Auto Dealership Loyalty Programs and the Effects They Have on Profitability http://www.media-trac.com/resources/whitepapers.shtml

I have written several blogs in the past about the success of customer loyalty program promotions in auto dealerships. I am mainly interested in cost-effective actions that dealers can successfully use to help drive profits.

A recent Summer Service Special email promotion designed and delivered by LoyaltyTrac, a leading points-based loyalty program provider, caught my eye because of the high success rate. It had a remarkable open rate of over 26% and also produced a substantial amount of service appointment bookings and profit – the campaign returned excellent results.

Ad agency quality emails were sent to a highly targeted group of reward program members, with the direct Subject Line: “Sizzling Summer Specials – Oil Change and A/C”.

The email was short and to the point and also included a link to make it easy for the reader to immediately schedule a service appointment with just a click of the mouse.

Richfield Bloomington Honda sent out 5,803 messages of which 1,542 were opened – a very healthy open rate of 26.57% -- double the DMA (Direct Marketing Association) average of 12-14% for opt-in lists. As a result the dealership scheduled 60 service appointments online – just by having the “Click Here to Schedule Service” button visible and distinct. This email campaign generated more than $14,000 in revenue in one week – and this is just from the customers who booked directly through the email!

Jason Weverka, Service Manager at Richfield Bloomington Honda, stated “We are having a great response on the campaign. A lot of people are coming in with the printed offer; it has been very successful. I really liked the oil change and the A/C specials for the summer.”

Glenbrook Hyundai ran the same campaign to a smaller customer base. It sent out 915 emails of which 246 were opened – again a great open rate of 26.89%.  The campaign also resulted in 16 service appointments scheduled to date online.

As these results show, communicating seasonal offers to your customers can be highly effective. Customers welcome relevant messages that have value to them. The key is to send well-written, targeted messages to the right people at the right time. Keep it short and to the point. Engage users with a straightforward email subject line and content that is informative, easy to digest and adds perceived value.