Every business that has offered a loyalty rewards program has seen a variety of responses to every reward offered. Some rewards are rarely – if ever – redeemed by members, while another reward may seem to be the only reward members want. And while we may switch out unused rewards for others we see as more valuable, the success of that reward will likely remain low unless we’ve evaluated and employed the characteristics of highly successful rewards in our own reward selection.

Detailed below are eight properties that we believe are the foundation of the most successful rewards. A good reward should incorporate many – if not all - of these properties:

Flexible – Most loyalty programs are set up to last years, even decades. Your rewards should be flexible enough to adapt through any changes that may develop over the course of the program. Changes in membership numbers, the economy, product pricing and various other conditions are inevitable, and you should ensure each reward is able to cope with these changes over time.

Affordable – Select rewards that your business will be able to afford over an extended period of time and through multiple redemptions. Be sure to calculate the cost of the reward accurately so that you can adequately budget to see its affordability.

Simple – The more complicated the reward, the more frustrating it will be – for you and for your rewards members. It should be easy for your customers to estimate the value of the reward to themselves. (And remember that customer-perceived value may well be different from the value your business associates with the reward.)

Attractive – The reward is what will encourage your customers to join your loyalty program. No matter how elaborate and valuable your program is, if your rewards are not attractive, your customers won’t join.

Unique – The more unique each reward is, the better your loyalty program will stand out from the programs of your competitors. You want your program to distinguish your business, to set you apart – and above – the rest. And while it’s easy to find rewards that are expensive, you need to remember to keep the rewards affordable, as discussed above. The challenge is to find unique rewards that have a high customer-perceived value, but that don’t cost your business a fortune.

Seen to Be Attainable – It is possible for a person to win $1 million, but the average person wouldn’t necessarily see it that way. You don’t want your rewards to simply be attainable; to your customers, the rewards must be seen to be attainable.

Aspirational – Aspirational rewards are often more attractive over a longer period of time. Many customers feel a level of guilt if they see they are getting something for nothing, particularly if they are receiving luxury rewards and high-end soft rewards. Allowing your members the opportunity to earn these rewards will actually help many of them to reduce this feeling of guilt and allow them to appreciate the reward for a longer period of time. It also gives them something to look forward to, something to work towards, that they can feel good about once they’ve achieved the reward.

The Right Image – The image of the reward must match your company’s image, as well as the image of the customer. Harley Davidson can reward its members in different ways than BMW could. Be sure to involve your marketing department as you discuss what rewards to include; make your rewards part of your branding process.

How have you used these reward traits in your own loyalty programs? Are some more widely effective than others?

What other characteristics have you found to be essential in the making of good rewards?

Every business that has offered a loyalty rewards program has seen a variety of responses to every reward offered. Some rewards are rarely – if ever – redeemed by members, while another reward may seem to be the only reward members want. And while we may switch out unused rewards for others we see as more valuable, the success of that reward will likely remain low unless we’ve evaluated and employed the characteristics of highly successful rewards in our own reward selection.

Detailed below are eight properties that we believe are the foundation of the most successful rewards. A good reward should incorporate many – if not all - of these properties:

Flexible – Most loyalty programs are set up to last years, even decades. Your rewards should be flexible enough to adapt through any changes that may develop over the course of the program. Changes in membership numbers, the economy, product pricing and various other conditions are inevitable, and you should ensure each reward is able to cope with these changes over time.

Affordable – Select rewards that your business will be able to afford over an extended period of time and through multiple redemptions. Be sure to calculate the cost of the reward accurately so that you can adequately budget to see its affordability.

Simple – The more complicated the reward, the more frustrating it will be – for you and for your rewards members. It should be easy for your customers to estimate the value of the reward to themselves. (And remember that customer-perceived value may well be different from the value your business associates with the reward.)

Attractive – The reward is what will encourage your customers to join your loyalty program. No matter how elaborate and valuable your program is, if your rewards are not attractive, your customers won’t join.

Unique – The more unique each reward is, the better your loyalty program will stand out from the programs of your competitors. You want your program to distinguish your business, to set you apart – and above – the rest. And while it’s easy to find rewards that are expensive, you need to remember to keep the rewards affordable, as discussed above. The challenge is to find unique rewards that have a high customer-perceived value, but that don’t cost your business a fortune.

Seen to Be Attainable – It is possible for a person to win $1 million, but the average person wouldn’t necessarily see it that way. You don’t want your rewards to simply be attainable; to your customers, the rewards must be seen to be attainable.

Aspirational – Aspirational rewards are often more attractive over a longer period of time. Many customers feel a level of guilt if they see they are getting something for nothing, particularly if they are receiving luxury rewards and high-end soft rewards. Allowing your members the opportunity to earn these rewards will actually help many of them to reduce this feeling of guilt and allow them to appreciate the reward for a longer period of time. It also gives them something to look forward to, something to work towards, that they can feel good about once they’ve achieved the reward.

The Right Image – The image of the reward must match your company’s image, as well as the image of the customer. Harley Davidson can reward its members in different ways than BMW could. Be sure to involve your marketing department as you discuss what rewards to include; make your rewards part of your branding process.

How have you used these reward traits in your own loyalty programs? Are some more widely effective than others?

What other characteristics have you found to be essential in the making of good rewards?

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?

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?

Rewards drive behavior, whether you’re training your dog to sit, potty-training your toddler or encouraging specific buying habits from your customers. By rewarding the behavior you want and not rewarding the behavior you would like to discourage, you can generally predict the direction a behavior will trend.

Perhaps the most crucial part of customer loyalty programs are the rewards, and a good reward will accomplish many different things. We’ve provided a list below detailing the different functions of a good reward. We suggest you evaluate your rewards individually to determine if the rewards you’ve employed in your loyalty program are fulfilling their overall purpose.

1.  A Good Reward Provides Your Customers a Reason to Participate.  

2.  A Good Reward Says “Thank You” to Your Customers. 

3.  A Good Reward Encourages Customers to Supply Useful Data.  

4.  A Good Reward Changes Customer Behavior. 

5.  A Good Reward Retains Existing Customers.  

6.  A Good Reward Attracts New Customers.  

7.  A Good Reward Differentiates Your Business From Your Competitors.  

8.  A Good Reward Improves Your Relationship with Your Customers.

Does your dealership's rewards program fulfill all of these functions? What rewards have you found to be the most effective overall?

This blog is condensed from www.drivingretention.com, your one stop resource for customer loyalty solutions.

Rewards drive behavior, whether you’re training your dog to sit, potty-training your toddler or encouraging specific buying habits from your customers. By rewarding the behavior you want and not rewarding the behavior you would like to discourage, you can generally predict the direction a behavior will trend.

Perhaps the most crucial part of customer loyalty programs are the rewards, and a good reward will accomplish many different things. We’ve provided a list below detailing the different functions of a good reward. We suggest you evaluate your rewards individually to determine if the rewards you’ve employed in your loyalty program are fulfilling their overall purpose.

1.  A Good Reward Provides Your Customers a Reason to Participate.  

2.  A Good Reward Says “Thank You” to Your Customers. 

3.  A Good Reward Encourages Customers to Supply Useful Data.  

4.  A Good Reward Changes Customer Behavior. 

5.  A Good Reward Retains Existing Customers.  

6.  A Good Reward Attracts New Customers.  

7.  A Good Reward Differentiates Your Business From Your Competitors.  

8.  A Good Reward Improves Your Relationship with Your Customers.

Does your dealership's rewards program fulfill all of these functions? What rewards have you found to be the most effective overall?

This blog is condensed from www.drivingretention.com, your one stop resource for customer loyalty solutions.

In a lagging economy, keeping your loyal customers loyal can become increasingly more challenging, but there is probably no other time when good customer loyalty is more vital to your business. Your loyal customers are your high-value clients, bringing in as much as 80% of your overall sales, according to Pareto’s principle (the 80-20 Rule). These customers will not leave you for your competitors based merely on prices; customers stay loyal to businesses that provide them additional value and consistently outstanding customer service.

We’ve provided 5 tips for maintaining customer loyalty in any economic climate. These steps will help you gain a better understanding of who your best customers are and what you can do to keep them loyal.

1. Ask Them What They Think.  Survey all of your customers, former customers and potential customers with just two simple questions: a. On a scale of 1 to 10, would you recommend us to others? (1 = definitely no, 10 = definitely yes) and b. Why or why not? The answers to these two questions tell you how what general percentage of your customers is loyal as well as their reasons behind why they are or not.

2. Stay In Touch.  Whether it’s included in a loyalty program or you purchase on separately, find an email marketing tool and use it wisely. Be sure to target messages to the right customers at the right time. Provide your customers specific information they would find helpful and special offers that are customized just for them. Let them know about contests, upcoming events, new products, etc. But don’t send out too much too often. Find a balance between encouraging their patronage without taking advantage of their trust.

3. Go the Extra Mile.  In addition to your advertisements, announcements and non-solicit emails, sign up for a greeting card system or set up recurring email campaigns. Send birthday greetings with a gift or special offer just for them. Thank them on their “customer” anniversary for their continued patronage to your business. Send them a greeting if you’ve not seen them x-number of months and extend a special offer for their return visit. This personal touch helps your customers understand that you value them as individuals and invites more loyalty and trust.

4. Encourage Participants, Not Spectators.  Keep your loyal customers involved and ask for their opinions on any pending changes or new directions in your business arise. You never want to make a business decision that will alienate your loyal customers. (Remember the Pareto principle!) As loyal customers, they will love having a say in things and will provide an invaluable incite to your focus groups and planning meetings. Plus, once a decision is reached, their word-of-mouth marketing will achieve more success than almost any other marketing efforts you employ.

5.  Say It To Their Face.  Never shy away from an opportunity to thank your customers for their business. Train your employees to extend sincere thanks for even the smallest business transaction. Greet your customers by name (when you can) and encourage all your employees to do the same. Host customer appreciation events. Support local charities. Be involved in their (your) community and you will be surprised how much you get ahead by simply giving back!

This list is by no means exhaustive. Please share any other approaches you have taken to keep your loyal customers loyal.

This blog was reprinted from Driving Retention, the auto dealer’s one-stop service rewards program resource.

In a lagging economy, keeping your loyal customers loyal can become increasingly more challenging, but there is probably no other time when good customer loyalty is more vital to your business. Your loyal customers are your high-value clients, bringing in as much as 80% of your overall sales, according to Pareto’s principle (the 80-20 Rule). These customers will not leave you for your competitors based merely on prices; customers stay loyal to businesses that provide them additional value and consistently outstanding customer service.

We’ve provided 5 tips for maintaining customer loyalty in any economic climate. These steps will help you gain a better understanding of who your best customers are and what you can do to keep them loyal.

1. Ask Them What They Think.  Survey all of your customers, former customers and potential customers with just two simple questions: a. On a scale of 1 to 10, would you recommend us to others? (1 = definitely no, 10 = definitely yes) and b. Why or why not? The answers to these two questions tell you how what general percentage of your customers is loyal as well as their reasons behind why they are or not.

2. Stay In Touch.  Whether it’s included in a loyalty program or you purchase on separately, find an email marketing tool and use it wisely. Be sure to target messages to the right customers at the right time. Provide your customers specific information they would find helpful and special offers that are customized just for them. Let them know about contests, upcoming events, new products, etc. But don’t send out too much too often. Find a balance between encouraging their patronage without taking advantage of their trust.

3. Go the Extra Mile.  In addition to your advertisements, announcements and non-solicit emails, sign up for a greeting card system or set up recurring email campaigns. Send birthday greetings with a gift or special offer just for them. Thank them on their “customer” anniversary for their continued patronage to your business. Send them a greeting if you’ve not seen them x-number of months and extend a special offer for their return visit. This personal touch helps your customers understand that you value them as individuals and invites more loyalty and trust.

4. Encourage Participants, Not Spectators.  Keep your loyal customers involved and ask for their opinions on any pending changes or new directions in your business arise. You never want to make a business decision that will alienate your loyal customers. (Remember the Pareto principle!) As loyal customers, they will love having a say in things and will provide an invaluable incite to your focus groups and planning meetings. Plus, once a decision is reached, their word-of-mouth marketing will achieve more success than almost any other marketing efforts you employ.

5.  Say It To Their Face.  Never shy away from an opportunity to thank your customers for their business. Train your employees to extend sincere thanks for even the smallest business transaction. Greet your customers by name (when you can) and encourage all your employees to do the same. Host customer appreciation events. Support local charities. Be involved in their (your) community and you will be surprised how much you get ahead by simply giving back!

This list is by no means exhaustive. Please share any other approaches you have taken to keep your loyal customers loyal.

This blog was reprinted from 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.

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.