Dealerships with the most effective loyalty programs drive results in five key areas: marketing responsiveness, sales-to-service conversion, service visitation, retail member spend and member repurchase intent. This blog will address the first of these: marketing responsiveness.

In a recent study, we tracked 14.8 million loyalty-based marketing communications and matched those communications to specific labor operation codes in the dealerships’ service DMS. Here are the results:

• Average number of unique loyalty-based communications sent by dealer every month: 6.36 (Note that not all members received every communication.)
• Average number of individual loyalty-based communications sent per month, per dealer: 32,643
• Average number of service appointments derived from loyalty communications per month, per dealer: 177
• Average number of loyalty communications required to garner one service appointment: 184

Knowing how many communications are necessary to garner an appointment makes it easy for service departments to achieve their goals.

How do you track the ROI and effectiveness of your marketing communications?

More information on this topic can be found in our free ebook, “The Hard Facts and Financial Impact Report: Auto Dealership Loyalty Programs & The Effects They Have on Profitability.”

Two weeks ago I posted a blog on this site detailing hard facts, numbers and results from dealerships’ loyalty programs. But sometimes facts aren’t enough and dealers want to hear what other dealers are saying.

In our latest ebook, titled “The Hard Facts and Financial Impact Report: Auto Dealership Loyalty Programs & The Effects They Have on Profitability,” we analyzed results from 72 dealerships using customer loyalty programs to retain service customers. The ebook offers evidence that loyalty program members spend three times as much as non-program members in the service department, with twice the number of annual service visits.

But even more important, here’s what several dealers are saying about their service rewards programs:

Tom Wood Ford in Indianapolis started enrolling customers in a rewards-based loyalty program in 2007. Its member service visitation and spend ratios are in line with the study averages: months between service visits for members, 5.28 compared to 8.43 for non-members, with member spend at $797.32 compared to $504.20.

Service Manager Tom Kashman says, “From 2008 through late 2011, my gross profit per month has doubled. This is a huge number, one that nobody is going to believe, but the numbers don’t lie. My belief is that you cannot run a successful service operation without having some type of retention tool paying back the loyal customer.”

Richfield Bloomington Honda in Minnesota reports similar healthy results from its loyalty program. General Manager Tim Carter reports 2.87 months between service visits for members, versus 5.95 for non-members, and the average annual service revenue per member is $927.34, versus $417.30 for non-members.

Want to hear more about what these and other dealers have to say about their loyalty programs? Follow this link to download our free ebook: http://www.media-trac.com/resources/whitepapers.shtml

Two weeks ago I posted a blog on this site detailing hard facts, numbers and results from dealerships’ loyalty programs. But sometimes facts aren’t enough and dealers want to hear what other dealers are saying.

In our latest ebook, titled “The Hard Facts and Financial Impact Report: Auto Dealership Loyalty Programs & The Effects They Have on Profitability,” we analyzed results from 72 dealerships using customer loyalty programs to retain service customers. The ebook offers evidence that loyalty program members spend three times as much as non-program members in the service department, with twice the number of annual service visits.

But even more important, here’s what several dealers are saying about their service rewards programs:

Tom Wood Ford in Indianapolis started enrolling customers in a rewards-based loyalty program in 2007. Its member service visitation and spend ratios are in line with the study averages: months between service visits for members, 5.28 compared to 8.43 for non-members, with member spend at $797.32 compared to $504.20.

Service Manager Tom Kashman says, “From 2008 through late 2011, my gross profit per month has doubled. This is a huge number, one that nobody is going to believe, but the numbers don’t lie. My belief is that you cannot run a successful service operation without having some type of retention tool paying back the loyal customer.”

Richfield Bloomington Honda in Minnesota reports similar healthy results from its loyalty program. General Manager Tim Carter reports 2.87 months between service visits for members, versus 5.95 for non-members, and the average annual service revenue per member is $927.34, versus $417.30 for non-members.

Want to hear more about what these and other dealers have to say about their loyalty programs? Follow this link to download our free ebook: http://www.media-trac.com/resources/whitepapers.shtml

Everyone knows Valentine’s Day celebrates the ladies. That’s why Bristol Toyota Scion in Bristol RI, recently used LoyaltyTrac, their service rewards program, to conduct an email campaign centered on Valentine’s Day being “Ladies’ Day”. Colorful, Valentine’s-themed emails were sent to all of their service reward members, with the Subject Line: Be Our Valentine - View Your Gift Inside. The email included an offer: Ladies Receive $15 Off Any Service of $35 or More. The campaign ran on 2/10/12, with available redemption being from 2/10-2/18.

This was the first LoyaltyTrac promotion Bristol Toyota Scion had ever done to its service reward members and it resulted in a very heartening open rate of 58.33%, far surpassing the Direct Marketing Association’s (DMS) average of 12-14% for opt-in lists.

Other LoyaltyTrac auto dealerships have achieved similar results with this Valentine Day-themed email campaign.  Howdy Honda in Austin, Texas, ran the same campaign and enjoyed an open rate of over 30%. The campaign also resulted in 41 service appointments scheduled and a nice profit too: estimated campaign revenue to date of more than $8,700.

Specially designed email campaigns themed around holidays and events can boost return business throughout the year. It's key to engage users with content that is informative, easy to digest and adds value. Good Luck!

Everyone knows Valentine’s Day celebrates the ladies. That’s why Bristol Toyota Scion in Bristol RI, recently used LoyaltyTrac, their service rewards program, to conduct an email campaign centered on Valentine’s Day being “Ladies’ Day”. Colorful, Valentine’s-themed emails were sent to all of their service reward members, with the Subject Line: Be Our Valentine - View Your Gift Inside. The email included an offer: Ladies Receive $15 Off Any Service of $35 or More. The campaign ran on 2/10/12, with available redemption being from 2/10-2/18.

This was the first LoyaltyTrac promotion Bristol Toyota Scion had ever done to its service reward members and it resulted in a very heartening open rate of 58.33%, far surpassing the Direct Marketing Association’s (DMS) average of 12-14% for opt-in lists.

Other LoyaltyTrac auto dealerships have achieved similar results with this Valentine Day-themed email campaign.  Howdy Honda in Austin, Texas, ran the same campaign and enjoyed an open rate of over 30%. The campaign also resulted in 41 service appointments scheduled and a nice profit too: estimated campaign revenue to date of more than $8,700.

Specially designed email campaigns themed around holidays and events can boost return business throughout the year. It's key to engage users with content that is informative, easy to digest and adds value. Good Luck!

Prepaid Maintenance Plans (PPMs) have traditionally been used as a customer retention tool by dealers, and rightfully so. Paying up front for services is a guaranteed way to get customers back into the service lane. But the pricing and structure of many PPMs administered by third parties did not make the plans very profitable for the dealerships, and even more important, for the customers.

The new generation of self-administered, self-managed PPM plans offer many benefits beyond customer retention—mainly, more revenue. PPM customers frequently purchase additional customer-pay retail parts and labor services that boost profitability.

Boosting PPM repair orders by upselling an additional $150 to $350 of retail customer-pay business adds serious money to the bottom line. A dealer who plugs a basic three-product PPM plan into every one of the 600 used units he or she sells each year can expect to generate more than $1.3 million in total incremental service revenue, even after factoring in a 55 percent utilization rate and plan costs.

So, given these upsell profit opportunities, why are some dealers' prior experiences with PPMs disappointing? Many have said that customers simply won't buy these plans. However, this may not tell the entire story. When those programs are examined, it is clear why customers wouldn't be interested — they were loaded with services of low value to the customer yet priced quite profitably for the dealership. This is unfortunate, as the nature of these plans and dealers' inability to sell the plans cost dealers much lost service business.

Newer, redesigned PPM programs help to eliminate this downside. Today's programs offer a wide range of products and services and are completely customizable to each dealership. They are also software-driven, handling once time-consuming chores like plan registration, service claim and premium submission. Because dealers control these programs, any reserve or forfeiture is immediate and goes directly to their bottom line.

Retention vs. revenue? A PPM should deliver both.

Prepaid Maintenance Plans (PPMs) have traditionally been used as a customer retention tool by dealers, and rightfully so. Paying up front for services is a guaranteed way to get customers back into the service lane. But the pricing and structure of many PPMs administered by third parties did not make the plans very profitable for the dealerships, and even more important, for the customers.

The new generation of self-administered, self-managed PPM plans offer many benefits beyond customer retention—mainly, more revenue. PPM customers frequently purchase additional customer-pay retail parts and labor services that boost profitability.

Boosting PPM repair orders by upselling an additional $150 to $350 of retail customer-pay business adds serious money to the bottom line. A dealer who plugs a basic three-product PPM plan into every one of the 600 used units he or she sells each year can expect to generate more than $1.3 million in total incremental service revenue, even after factoring in a 55 percent utilization rate and plan costs.

So, given these upsell profit opportunities, why are some dealers' prior experiences with PPMs disappointing? Many have said that customers simply won't buy these plans. However, this may not tell the entire story. When those programs are examined, it is clear why customers wouldn't be interested — they were loaded with services of low value to the customer yet priced quite profitably for the dealership. This is unfortunate, as the nature of these plans and dealers' inability to sell the plans cost dealers much lost service business.

Newer, redesigned PPM programs help to eliminate this downside. Today's programs offer a wide range of products and services and are completely customizable to each dealership. They are also software-driven, handling once time-consuming chores like plan registration, service claim and premium submission. Because dealers control these programs, any reserve or forfeiture is immediate and goes directly to their bottom line.

Retention vs. revenue? A PPM should deliver both.

The week between Christmas and New Year’s is a busy time of year for many auto dealers. It can be challenging for salespeople to keep up with all the showroom traffic, but that’s no excuse to let extra revenue opportunities fall through the cracks! While the customer is still engaged at the sales desk is the perfect time for a salesperson to boost revenue with the following programs:

Pre-Paid Maintenance Program: What better gift to give than an entire year of worry-free driving? A pre-paid maintenance program is the perfect new vehicle “accessory.” These plans can be sold in both the F&I and service departments. To maximize revenue, dealers should look for PPM plans that require no third-party administration, no sharing of program revenue or forfeiture and no service claim submission requirements. Plans should be customizable and branded to your store.

Loyalty Card: If your customers accumulate enough rewards points, they may be able to redeem them for a gift (either for themselves or a loved one) next year! Rewards should be tailored to what your customers want, such as a free dinner at a local restaurant, spa service, or coupons to local retailers. A points-based rewards program is very appealing to most customers, with the majority of customers choosing to opt in when offered. It doesn’t cost them anything, and encourages them to return to your dealership for service and parts purchases.

What other ideas or recommendations do you have for maximizing revenue opportunities in your auto dealership during the busiest sales week of the year?

The week between Christmas and New Year’s is a busy time of year for many auto dealers. It can be challenging for salespeople to keep up with all the showroom traffic, but that’s no excuse to let extra revenue opportunities fall through the cracks! While the customer is still engaged at the sales desk is the perfect time for a salesperson to boost revenue with the following programs:

Pre-Paid Maintenance Program: What better gift to give than an entire year of worry-free driving? A pre-paid maintenance program is the perfect new vehicle “accessory.” These plans can be sold in both the F&I and service departments. To maximize revenue, dealers should look for PPM plans that require no third-party administration, no sharing of program revenue or forfeiture and no service claim submission requirements. Plans should be customizable and branded to your store.

Loyalty Card: If your customers accumulate enough rewards points, they may be able to redeem them for a gift (either for themselves or a loved one) next year! Rewards should be tailored to what your customers want, such as a free dinner at a local restaurant, spa service, or coupons to local retailers. A points-based rewards program is very appealing to most customers, with the majority of customers choosing to opt in when offered. It doesn’t cost them anything, and encourages them to return to your dealership for service and parts purchases.

What other ideas or recommendations do you have for maximizing revenue opportunities in your auto dealership during the busiest sales week of the year?

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?