There are many benefits to having an automotive loyalty program at your dealership to increase business and customer retention. You must be mindful, however, of some dangers that exist if the program is not implemented and administered properly.

Loyalty programs seek to reward behaviors. For dealerships, automotive loyalty programs exist to reward customers for spending money at your dealership whether that’s in your sales, service or parts department. 

In the behavioral theory of operant conditioning, the negative contrast effect exists. This effect happens when a customer is rewarded for certain behaviors and then those rewards are reduced or withdrawn. Customers are, in turn, less likely to exhibit the reinforced behavior in the future than if they had never been rewarded at all. The theory explains that the customer starts to view the desired behavior as work where they were only temporarily rewarded. In the long run, this could even make the customer feel like the behavior is a chore. For example, if you reward a child for washing the dishes for a period of time, then withdraw the reward, the child starts to view washing the dishes as a chore. This would decrease their desire to wash dishes, as there is no longer a reward to be achieved as a result of successfully completing the behavior.

If we extend this theory into the world of retail business and loyalty programs, the goal of the program is to incentivize your customers for being loyal. By implementing these rewards, you’re instilling in your customers an expectation of reward for a behavior. Let’s say you offer your customers a free oil change after every 3 purchased as part of a loyalty program. In the past, I’ve shared with you the “Endowed Progress Effect” which states that customers are more likely to increase the effort they put forth to achieve a goal if the goal seems more achievable. Conversely, the negative contrast effect would say that not only would removing this reward make your customers less likely to be motivated to complete it, they would make less effort to come in to your dealership.

The important thing to remember is that when implementing a loyalty program at your dealership, consistency and a commitment are required. By removing a reward system after your customers get acclimated to it, you could actually diminish the business you encouraged and achieved when you rewarded your customers.

It has been proven by countless businesses of all sizes that loyalty programs can increase service and sales revenue and customer loyalty. A loyalty program is a long-term commitment. If you aren’t consistent, your customers won’t be either.

There are many benefits to having an automotive loyalty program at your dealership to increase business and customer retention. You must be mindful, however, of some dangers that exist if the program is not implemented and administered properly.

Loyalty programs seek to reward behaviors. For dealerships, automotive loyalty programs exist to reward customers for spending money at your dealership whether that’s in your sales, service or parts department. 

In the behavioral theory of operant conditioning, the negative contrast effect exists. This effect happens when a customer is rewarded for certain behaviors and then those rewards are reduced or withdrawn. Customers are, in turn, less likely to exhibit the reinforced behavior in the future than if they had never been rewarded at all. The theory explains that the customer starts to view the desired behavior as work where they were only temporarily rewarded. In the long run, this could even make the customer feel like the behavior is a chore. For example, if you reward a child for washing the dishes for a period of time, then withdraw the reward, the child starts to view washing the dishes as a chore. This would decrease their desire to wash dishes, as there is no longer a reward to be achieved as a result of successfully completing the behavior.

If we extend this theory into the world of retail business and loyalty programs, the goal of the program is to incentivize your customers for being loyal. By implementing these rewards, you’re instilling in your customers an expectation of reward for a behavior. Let’s say you offer your customers a free oil change after every 3 purchased as part of a loyalty program. In the past, I’ve shared with you the “Endowed Progress Effect” which states that customers are more likely to increase the effort they put forth to achieve a goal if the goal seems more achievable. Conversely, the negative contrast effect would say that not only would removing this reward make your customers less likely to be motivated to complete it, they would make less effort to come in to your dealership.

The important thing to remember is that when implementing a loyalty program at your dealership, consistency and a commitment are required. By removing a reward system after your customers get acclimated to it, you could actually diminish the business you encouraged and achieved when you rewarded your customers.

It has been proven by countless businesses of all sizes that loyalty programs can increase service and sales revenue and customer loyalty. A loyalty program is a long-term commitment. If you aren’t consistent, your customers won’t be either.

As football season approaches, I am reminded of a story that was widely publicized last spring. Joe Flacco, having just signed a $121 million contract with the Baltimore Ravens which made him the highest-paid player in the NFL, decided to celebrate by going to McDonald’s. Why would a man who could obviously afford to celebrate anywhere choose a $7 meal at McDonald’s?

No one really knows for sure but it’s not the only example of high-profile people celebrating milestones in their lives at places that may seem unusual. Jeff Van Gundy also celebrated his contract extension at McDonald’s and Phil Mickelson celebrated his Master’s win at Krispy Kreme (much to the chagrin of McDonald’s, I’m sure).

In a recent research paper, scientists explore the idea of loyalty and fanaticism citing companies such as Volkswagen, Apple, Nike and Harley Davidson, among others, as having “cult-like following(s)”. They attribute this to emotional attachments developed through past experiences and over time. Business leaders have talked about creating brand evangelists; the importance they can have over the growth and exposure of your business. According to the paper, brand evangelists “can act as opinion leaders to bring others’ attention to the brand and attract new customers”.

While dealerships may not have the brand recognition of McDonald’s, cars have historically been a way in which people celebrate milestones in their lives. Countless parents have purchased cars for their children as they graduate college or to celebrate a significant event in their lives. You hear stories of these occurrences every day at your dealership, I’m sure. If you gave every child that came into your dealership with their parents a lollipop or popcorn, that child may start looking forward to their parents’ service visits.

People can also develop emotional attachments to a brand through their parents’ choices. Think of that cool Mustang a father owned but never let their child drive. When it comes time for that child to buy a car, a Ford Mustang will most likely be on their wish list.

Car dealerships have the opportunity to be a part of special moments in many people’s lives. For most consumers, the simple act of buying a new car is a special moment. Combine that with a life event (and the buyer’s emotional attachment and memories to that event). A car dealership can be a part of the memory of that event by enhancing it, even if it’s as simple as placing a bow on the car or helping with a surprise. In this way, the dealership can become a part of a positive life experience and begin a relationship that can last a lifetime.

As football season approaches, I am reminded of a story that was widely publicized last spring. Joe Flacco, having just signed a $121 million contract with the Baltimore Ravens which made him the highest-paid player in the NFL, decided to celebrate by going to McDonald’s. Why would a man who could obviously afford to celebrate anywhere choose a $7 meal at McDonald’s?

No one really knows for sure but it’s not the only example of high-profile people celebrating milestones in their lives at places that may seem unusual. Jeff Van Gundy also celebrated his contract extension at McDonald’s and Phil Mickelson celebrated his Master’s win at Krispy Kreme (much to the chagrin of McDonald’s, I’m sure).

In a recent research paper, scientists explore the idea of loyalty and fanaticism citing companies such as Volkswagen, Apple, Nike and Harley Davidson, among others, as having “cult-like following(s)”. They attribute this to emotional attachments developed through past experiences and over time. Business leaders have talked about creating brand evangelists; the importance they can have over the growth and exposure of your business. According to the paper, brand evangelists “can act as opinion leaders to bring others’ attention to the brand and attract new customers”.

While dealerships may not have the brand recognition of McDonald’s, cars have historically been a way in which people celebrate milestones in their lives. Countless parents have purchased cars for their children as they graduate college or to celebrate a significant event in their lives. You hear stories of these occurrences every day at your dealership, I’m sure. If you gave every child that came into your dealership with their parents a lollipop or popcorn, that child may start looking forward to their parents’ service visits.

People can also develop emotional attachments to a brand through their parents’ choices. Think of that cool Mustang a father owned but never let their child drive. When it comes time for that child to buy a car, a Ford Mustang will most likely be on their wish list.

Car dealerships have the opportunity to be a part of special moments in many people’s lives. For most consumers, the simple act of buying a new car is a special moment. Combine that with a life event (and the buyer’s emotional attachment and memories to that event). A car dealership can be a part of the memory of that event by enhancing it, even if it’s as simple as placing a bow on the car or helping with a surprise. In this way, the dealership can become a part of a positive life experience and begin a relationship that can last a lifetime.

A recent study by Barclays Bank revealed interesting statistics about consumer behavior as it relates to small and medium-sized businesses. The study included the retail behavior of 2,006 consumers and also surveyed loyalty business practices of 1,216 decision makers from small to medium sized businesses. It  found that 59% of consumers stated that loyalty to a business began with a smile. More interestingly, only 54% of the decision makers said that they practiced this in their businesses.

Other notable statistics from this study are that only 36% of consumers attributed their loyalty to great customer service, 22% said that the business remembering and recording previous transactions influenced them and 60% said that they are “always, often or sometimes willing to pay more” for those services.

Customer retention is important not only for company growth but increased profitability. “Cutting customer losses by 5 percent can boost profits by 25 to 125 percent,” according to an article in the Houston Chronicle.

This survey was done for Barclays Bank, (the seventh largest bank in the world; with over 48 million customers in 50 countries), to determine whether a loyalty program was a wise investment.  They’ve since begun implementation of a customer loyalty program that rewards their most loyal customers with decreased fees.

It amazes me that only a little over half of these decision makers reported that smiling at their customers was a practice they employed. Humans are, by nature, emotionally driven. If your dealership isn’t training your employees to smile and be friendly, no automotive loyalty program will be able to help you. My guess is that while you expect your employees to smile and be friendly to your customers, it is probably not a policy.

And a smile is just the start of a great customer loyalty program. When a repeat customer comes into your dealership, do your employees have the ability to see all of that customer’s transactions? Take service for example; many customers patronize a single place for all their service needs for the simple fact that all of their vehicle’s service records are maintained there. Automotive loyalty programs can help you extend this into all departments of your store making your loyal customers easily identifiable by your service, sales and parts departments.

Don’t forget that personal touches are imperative to your dealership’s long-term success. When you go into a business and are greeted by name by an employee who smiles at you and has knowledge of your history with their business, you are impressed and in turn, keep coming back. 

Efforts in increasing customer retention and loyalty today will help your business grow and increase your dealership’s profitability. Smiling at a customer is only the start, however. Customer retention isn’t easy in today’s hyper-competitive world, especially in the automotive industry. If a smile, great customer service, recording previous transactions and a dealership loyalty program are all aligned, you can increase customer retention and develop life-long loyalty.

A recent study by Barclays Bank revealed interesting statistics about consumer behavior as it relates to small and medium-sized businesses. The study included the retail behavior of 2,006 consumers and also surveyed loyalty business practices of 1,216 decision makers from small to medium sized businesses. It  found that 59% of consumers stated that loyalty to a business began with a smile. More interestingly, only 54% of the decision makers said that they practiced this in their businesses.

Other notable statistics from this study are that only 36% of consumers attributed their loyalty to great customer service, 22% said that the business remembering and recording previous transactions influenced them and 60% said that they are “always, often or sometimes willing to pay more” for those services.

Customer retention is important not only for company growth but increased profitability. “Cutting customer losses by 5 percent can boost profits by 25 to 125 percent,” according to an article in the Houston Chronicle.

This survey was done for Barclays Bank, (the seventh largest bank in the world; with over 48 million customers in 50 countries), to determine whether a loyalty program was a wise investment.  They’ve since begun implementation of a customer loyalty program that rewards their most loyal customers with decreased fees.

It amazes me that only a little over half of these decision makers reported that smiling at their customers was a practice they employed. Humans are, by nature, emotionally driven. If your dealership isn’t training your employees to smile and be friendly, no automotive loyalty program will be able to help you. My guess is that while you expect your employees to smile and be friendly to your customers, it is probably not a policy.

And a smile is just the start of a great customer loyalty program. When a repeat customer comes into your dealership, do your employees have the ability to see all of that customer’s transactions? Take service for example; many customers patronize a single place for all their service needs for the simple fact that all of their vehicle’s service records are maintained there. Automotive loyalty programs can help you extend this into all departments of your store making your loyal customers easily identifiable by your service, sales and parts departments.

Don’t forget that personal touches are imperative to your dealership’s long-term success. When you go into a business and are greeted by name by an employee who smiles at you and has knowledge of your history with their business, you are impressed and in turn, keep coming back. 

Efforts in increasing customer retention and loyalty today will help your business grow and increase your dealership’s profitability. Smiling at a customer is only the start, however. Customer retention isn’t easy in today’s hyper-competitive world, especially in the automotive industry. If a smile, great customer service, recording previous transactions and a dealership loyalty program are all aligned, you can increase customer retention and develop life-long loyalty.

Frequent travelers have many choices when choosing airlines. Some choose an airline for their frequent flier benefits; some for their convenient routes or frequent itineraries and some have airlines chosen for them by their companies. For many years, Delta Airlines has been at or near the bottom of almost every survey conducted regarding airline customer service. In fact, they were named one of the worst 15 companies (out of all companies) for customer service by the American Consumer Satisfaction Index. Delta finally decided it wanted to change. How could they transform their reputation from that of an airline with horrible customer service to the opposite, however? They spent a long time living up to their bad reputation. How could they possibly change that image and regain the trust of travelers?

A recent article tells the story of a Delta employee going above and beyond for a traveler. A story so out of character from their reputation that you’re forced to consider the fact that maybe... just maybe… they’re sincere.

A traveler returning to the U.S. from Paris had accidentally dropped her passport into a mail bin. As she proceeded to freak out thinking she’d be stranded in Paris, while everyone explained that she’d have to wait for the postal officials to open the box, one person listened and assisted her in her time of need. That person just happened to be a Delta employee. The Delta employee personalized the problem and not only helped her get a boarding pass, then through security and safely onto the plane; he made sure that the next day her passport was retrieved and mailed back to her. This was done while also keeping her up to date numerous times throughout the day.

We don’t know whether this is a new strategy that Delta adopted which empowers employees to go above and beyond or not. However, if it’s not, the positive attention it got them should make them take notice.

Car dealerships typically start with a bad reputation in a shopper’s mind. If the customer is unfamiliar with your dealership, statistically they just assume the dealership can’t be trusted. In fact, a Gallup survey done at the end of 2012 placed consumer trust in car salespeople right below that of Congress. In fact, car salespeople have been at the bottom of the list every year except 2011, when they tied members of Congress with a 7% honesty rating. Car salespeople's perceived honesty has never climbed out of the single-digit range in the history of the list.

Reputation management is certainly something that’s top-of-mind for most dealerships today. Cultivating and nurturing existing relationships towards a public display of affection (positive review) is still challenging to manage but with consumers being more tech savvy all the time, it’s getting easier. Of course, the opposite is also true. Consumers will much more quickly take out their frustration online concerning a poor experience at a dealership than they used to.

So how can a business maintain customer satisfaction (if they have earned it already) or rebuild the customer’s trust (if they haven’t)?

It’s important to teach your employees that every action they take is one that is a reflection of your business and set forth expectations that you have for them as brand ambassadors. Empower your employees to make judgment calls and take action to avoid a negative customer experience and reward them when appropriate.

Car dealerships start at the bottom of the hill and must make huge efforts on a daily basis to climb towards a solid reputation. Every misstep is magnified tenfold as a customer is more inclined to believe something that reinforces the stereotype. So it’s even more important for car dealerships to go above and beyond for their customers and make every possible effort to insure a positive customer experience for every customer, every time.

Delta still has a long road ahead to transform from an airline that lives at the bottom of the customer satisfaction chart to the top. But by encouraging and allowing its employees to make decisions like this, they’re taking a step in the right direction.

Frequent travelers have many choices when choosing airlines. Some choose an airline for their frequent flier benefits; some for their convenient routes or frequent itineraries and some have airlines chosen for them by their companies. For many years, Delta Airlines has been at or near the bottom of almost every survey conducted regarding airline customer service. In fact, they were named one of the worst 15 companies (out of all companies) for customer service by the American Consumer Satisfaction Index. Delta finally decided it wanted to change. How could they transform their reputation from that of an airline with horrible customer service to the opposite, however? They spent a long time living up to their bad reputation. How could they possibly change that image and regain the trust of travelers?

A recent article tells the story of a Delta employee going above and beyond for a traveler. A story so out of character from their reputation that you’re forced to consider the fact that maybe... just maybe… they’re sincere.

A traveler returning to the U.S. from Paris had accidentally dropped her passport into a mail bin. As she proceeded to freak out thinking she’d be stranded in Paris, while everyone explained that she’d have to wait for the postal officials to open the box, one person listened and assisted her in her time of need. That person just happened to be a Delta employee. The Delta employee personalized the problem and not only helped her get a boarding pass, then through security and safely onto the plane; he made sure that the next day her passport was retrieved and mailed back to her. This was done while also keeping her up to date numerous times throughout the day.

We don’t know whether this is a new strategy that Delta adopted which empowers employees to go above and beyond or not. However, if it’s not, the positive attention it got them should make them take notice.

Car dealerships typically start with a bad reputation in a shopper’s mind. If the customer is unfamiliar with your dealership, statistically they just assume the dealership can’t be trusted. In fact, a Gallup survey done at the end of 2012 placed consumer trust in car salespeople right below that of Congress. In fact, car salespeople have been at the bottom of the list every year except 2011, when they tied members of Congress with a 7% honesty rating. Car salespeople's perceived honesty has never climbed out of the single-digit range in the history of the list.

Reputation management is certainly something that’s top-of-mind for most dealerships today. Cultivating and nurturing existing relationships towards a public display of affection (positive review) is still challenging to manage but with consumers being more tech savvy all the time, it’s getting easier. Of course, the opposite is also true. Consumers will much more quickly take out their frustration online concerning a poor experience at a dealership than they used to.

So how can a business maintain customer satisfaction (if they have earned it already) or rebuild the customer’s trust (if they haven’t)?

It’s important to teach your employees that every action they take is one that is a reflection of your business and set forth expectations that you have for them as brand ambassadors. Empower your employees to make judgment calls and take action to avoid a negative customer experience and reward them when appropriate.

Car dealerships start at the bottom of the hill and must make huge efforts on a daily basis to climb towards a solid reputation. Every misstep is magnified tenfold as a customer is more inclined to believe something that reinforces the stereotype. So it’s even more important for car dealerships to go above and beyond for their customers and make every possible effort to insure a positive customer experience for every customer, every time.

Delta still has a long road ahead to transform from an airline that lives at the bottom of the customer satisfaction chart to the top. But by encouraging and allowing its employees to make decisions like this, they’re taking a step in the right direction.

“The British are coming” shouted Paul Revere in his famous midnight ride frantically trying to warn colonists of the impending attacks by England.

Did you know that statistically only 4 in 10 people cared about this news? Only 40% of colonists supported the revolution, with some historians even estimating support in the 20-30% range. The other 60% were either loyal to the Crown or wanted nothing to do with picking sides. Winston Churchill once said, “History is written by the victors.” If you were to take a history class in England, you would be taught a whole new perspective on the outcome of the Revolutionary War. Their viewpoint is, at a very basic level, that they let us win.

With the celebration of our Independence only a couple of days away, we celebrate everything that the United States embodies: freedom, choice and opportunity. Even after the war was “won” in 1783, many didn’t know what to think. People weren’t sure if they were just trading one government for an equally bad one. Not until 1787, four years later, was the Constitution signed, and it didn’t go into effect until 1789 when it was ratified by eleven states.

Today, of course, the United States enjoys patriotism and loyalty from many and was found to be the most desired place in the world to live when Gallup polled foreigners who desired to relocate.

So how did this country, which began with a rebellion that had the support of less than half its residents transform itself into the country that today enjoys some of the most loyal people in the world?

It all began with a promise. The basic principle of that promise was the freedom of choice. Think about it. In the Bill of Rights, all 10 amendments have to do with personal freedom and restriction of government to impose on that. For over 200 years, America has kept that promise and become a place that people want to live.

Businesses themselves may or may not exist if it weren’t for the promises that were made and kept in the centuries that have passed.

Just like the loyalty our country has earned from us, customer loyalty begins with a promise.  As a business, your dealership needs to define that promise and then keep it… no matter what. You must make that promise as unbreakable as the Constitution and show your customers through your actions that there are no exceptions.

Do this and you will not only earn their loyalty, you will become a place others want to do business with as well.

“The British are coming” shouted Paul Revere in his famous midnight ride frantically trying to warn colonists of the impending attacks by England.

Did you know that statistically only 4 in 10 people cared about this news? Only 40% of colonists supported the revolution, with some historians even estimating support in the 20-30% range. The other 60% were either loyal to the Crown or wanted nothing to do with picking sides. Winston Churchill once said, “History is written by the victors.” If you were to take a history class in England, you would be taught a whole new perspective on the outcome of the Revolutionary War. Their viewpoint is, at a very basic level, that they let us win.

With the celebration of our Independence only a couple of days away, we celebrate everything that the United States embodies: freedom, choice and opportunity. Even after the war was “won” in 1783, many didn’t know what to think. People weren’t sure if they were just trading one government for an equally bad one. Not until 1787, four years later, was the Constitution signed, and it didn’t go into effect until 1789 when it was ratified by eleven states.

Today, of course, the United States enjoys patriotism and loyalty from many and was found to be the most desired place in the world to live when Gallup polled foreigners who desired to relocate.

So how did this country, which began with a rebellion that had the support of less than half its residents transform itself into the country that today enjoys some of the most loyal people in the world?

It all began with a promise. The basic principle of that promise was the freedom of choice. Think about it. In the Bill of Rights, all 10 amendments have to do with personal freedom and restriction of government to impose on that. For over 200 years, America has kept that promise and become a place that people want to live.

Businesses themselves may or may not exist if it weren’t for the promises that were made and kept in the centuries that have passed.

Just like the loyalty our country has earned from us, customer loyalty begins with a promise.  As a business, your dealership needs to define that promise and then keep it… no matter what. You must make that promise as unbreakable as the Constitution and show your customers through your actions that there are no exceptions.

Do this and you will not only earn their loyalty, you will become a place others want to do business with as well.