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.

Prospects decide where to buy, in part, based on the speed and quality of sales follow-up. Statistics prove that if you can get your prospect back into your dealership quickly you will have a much higher likelihood of closing the sale. Dealers using an incentive program (such as our BeBack card), find that approximately 18% - 20% of prospects return and purchase a vehicle within 10-15 days of receiving the incentive card. Salespeople select the prospects who are leaving the dealership without making a vehicle purchase, and give them a denomination-based incentive card as an enticement to return and buy. These have been proven to work, time and time again!

A good incentive program also provides your dealership with a method to determine why customers did not purchase and maintains contact and top of mind for several more weeks as they consider their vehicle purchase more closely. Wouldn't you like to know why your customer did not make a purchase? E-mail a survey to your prospect as soon as they leave the dealership. The survey should seek to determine the exact reason(s) why the customer did not make a purchase. Based upon the customer reply, create another response tailored to their reason. You will be surprised by the candid customer responses. Our dealership customers who do this typically get a 30-40% response rate to the survey.

What incentives have you used to get customers back into your dealership? How many of them buy? Do you do surveys to find out why customers didn’t buy, and what is the main reason?

A new survey reveals that mobile and social media have a growing influence on retail purchase decisions. Here is a summary of the Consumer Insight Panel survey results conducted by Empathica, Inc. and published in a recent blog on Loyalty 360 (Loyalty Marketer’s Association):

- Half of consumers with smartphones have looked for online reviews about a retailer during a visit

- 55% of smartphone users have used their devices to check prices while shopping, and price comparison is the most common use for mobile technology in retail locations

Ÿ- The next most popular uses for smartphones while shopping include scanning a QR code (34%) and writing a review (9%).

Ÿ-  37% of consumers have used their mobile phones to visit a brand’s website

Ÿ- Nearly 75% of consumers use Facebook to make retail or restaurant decisions

Ÿ- Half of all consumers have tried a new brand due to social media recommendations

Ÿ- 26% of consumers said they would definitely avoid shopping at a store if they read a negative online review; however, negative reviews don’t necessarily dissuade consumers from trying a brand if the overall online presence is positive

Ÿ- Eighty-two percent of consumers are willing to engage retail and restaurant brands in online conversations if they believe it will improve future experiences, but only 62 percent believe that brands monitor online conversations and just 30 percent think that brands act on customer feedback.

The conclusion of the survey is that brands who are ignoring the use of mobile technology and social media are missing out on key opportunities to connect with customers. Also, monitoring, responding to and acting on customer feedback via social media is becoming more critical to building a loyal customer base.

As a retail owner, if you don’t understand how to implement an effective social media program or how to create a mobile presence, it’s time to find someone who does. It’s clear that retail brands that are effectively integrating these marketing tools are gaining an edge.

What mobile apps are your store using and do you track the traffic? What kind of results are you getting? How does your store effectively monitor, respond to and most important, act upon social media feedback?

Pre-paid Maintenance Plans (PMPs) keep customers returning to your service department and increase upsell opportunities, which is critical to increasing the service bottom line. Today’s self-administered, self-managed PMPs are appealing to customers, particularly those buying mainline domestic and import brands who seek value in everything they buy.

Today’s technology-driven plans make it very easy for dealers to customize what is offered in a PMP. Plans that provide the product (value) important to the local market will appeal more to buyers, making their presentation and sale in the F&I office or service lane more profitable and successful for the dealership.

It is these plans’ ability to retain a customer’s service business and then create upsell opportunities for additional customer-pay repair order (RO) business that make them like a money tree. These programs can triple the likelihood of the customer continually returning for service – a big growth over the 18 to 20 percent of customers who do traditionally return with a PMP’s incentive.

By converting PMP owners’ prepaid maintenance work to additional legitimate service needs, the additional retail parts and labor can produce healthy additional business. Some dealers report an additional $150 to $350 of up-sold retail customer-pay business per RO as a result.

Every plan will experience forfeiture. It results when a customer terminates the plan early or for whatever reason does not use the plan. In some PMPs, the third-party administrator holds this dealer-funded reserve. It is from this reserve that the administrator would often take up to 60 percent of the value of the cancelled services as part of its fee structure. Today’s self-managed plans enable the dealer to processes forfeiture through the general accounting ledger and add the reserve to their own bottom line.

For more information about the benefits of Pre-Paid Maintenance Programs, visit http://ow.ly/bN7Gj

 Last month General Motors announced a new compensation structure based on customer retention. The pay plan affects 29,000 salaried employees in the U.S., who will be paid bonuses based on how well they promote customer loyalty through return purchases and services. Third-party sales data and internal numbers will determine if a dealership hits its loyalty target.

It’s nice to know that the major manufacturers are realizing the importance of customer loyalty. For General Motors’—and other—dealerships who are ramping up their customer loyalty programs, here is a very short primer on how to set up a successful program:

1) Strategy: Offer multiple membership levels, including a free “starter” base level offer, ascending to an advocate level for the best customers who frequently buy and refer friends. The goal is to create customers who talk positively about their experience and refer family and friends.

2) Process: Identify dealership market segments; design appropriate promotions and communications; establish a schedule for customer communications; design the rewards redemption process and program results measurement tools; train employees to properly promote & explain the program.

3) Management: Establish best practices and determine how much of your program you want to automate. Assign management duties for each part of the program.

4) Reporting & Measuring: Determine which metrics should be used to provide an accurate analysis of how the program is benefiting the dealership. Examples include increasing customer retention rates, decreasing service acquisition costs, selling more maintenance, i.e. increasing RO hours and revenue.

Excerpted from MediaTrac’s white paper:  “The Auto Retailer’s Ultimate ‘How-to’ Guide to Customer Loyalty & Retention Program Set Up, Management & Measurement.” To download your free copy, click here: http://www.drivingretention.com/?p=661

Who doesn’t love free stuff? If your dealership has a loyalty program that allows customers to accrue rewards points, one of the best ways to encourage people to sign up is the promise of free stuff and/or valuable discounts down the road.

Customers who purchase a vehicle or come into your service department are ideal prospects for a loyalty program, but what about the customers who haven’t visited your shop lately? What about friends of your customers?

Social Media is a great way to spread the word about your loyalty program to potential customers who don’t know much about your dealership and who aren’t on your e-mail lists. A loyalty program has the same appeal to them as it does to the customers who visit your store: free stuff! So promote the free stuff you do give away! Here are a few tips on how to do that:

1. Conduct a Facebook Poll: If your customers interact with your Facebook page, ask them what types of rewards they would prefer. People love to fantasize about getting stuff for free! Here’s an example:

Q: If you were a member of a loyalty program, which reward would you cash your points in for?

-Restaurant gift certificate

-Spa treatment

-Rental car credits

-Service department discounts

Another suggestion is to announce that you’re going to add a new rewards option, and that you’re going to let your Facebook fans choose which reward it’s going to be. Then list the options in a poll.

2. Tweet: Send a tweet every time a customer redeems their loyalty points for a reward. “Mrs. Jones just received 30% off her oil change,” or “Congrats to Sara J. who just received a $100 gift certificate to Outback steakhouse.” Add a link to information about your loyalty rewards program on your website. The idea here is to encourage your other Twitter followers to think, “Hey wait a minute. I want discounts. I want gift certificates. How do I get that?”

3. Run a Facebook contest for your loyalty program members. Encourage them to send in a photo of themselves enjoying their reward; or ask them a question like, “If you could have any reward in the world, what would it be?” and to post a photo of that reward. Whoever is selected as the winner gets more rewards points, of course. And all your Facebook fans who aren’t loyalty program members may just be tempted to sign up.

4. Run a loyalty program special just for your social media fans. Offer free rewards points to your Twitter followers and/or Facebook fans just for signing up (within a certain time frame) for your loyalty rewards program. The great thing about this type of promotion is that there is no obligation to buy anything up front, but once somebody signs up there’s a good chance they will want to continue to accrue more points. For your social media fans that are already loyalty program members, offer them extra rewards points if they come in for a service or buy accessories or parts within the next month.

It’s a proven fact: loyalty program members spend more and add more revenue to a dealership’s bottom line every year, compared with non-members. So the more people you sign up, the more revenue you will get!

Do you have any additional ideas on how to use social media to promote your loyalty rewards program? Have you ever used social media to promote your program and if so, what type of results did you get?

One of my favorite comedians is Bill Engvall, who does the “here’s your sign” gags. (i.e. A buddy and I went fishing. When we got to the dock I pulled out a big string of bass. Some guy on the dock asks, “Hey, y’all catch them fish?” I said, “Nope. We talked ‘em into giving up. Here’s your sign!”)

As business managers and/or owners, we all like to think we’ve got a pulse on employee morale, which is a critical component to how successful a business is. As someone who makes a living knowing what makes customers loyal, I know for a fact that if a dealership’s employees aren’t happy, chances are that dealership will not have happy customers. Front line employee interactions with customers can make or break those customer experiences. Unhappy customers lead to fewer repeat customers and referrals, which eventually impacts the bottom line.

Yet occasionally, even the best business owners and managers are guilty of becoming overly absorbed with a particular issue, burying their head in the sand in response to a problem, or just being too darn busy to pay attention. They may miss those signs that should warn them when dysfunction is stealthily creeping into their corporate culture, ready to apply a long, slow chokehold that will lead to revenue decline.

So, in case you haven’t been paying attention to your corporate culture lately, here’s your sign!

1) If you haven’t changed with the times, here’s your sign! If the higher-ups at your dealership continue to do things because that’s the way they’ve always been done, or if they refuse to consider a new technology or marketing program because “we sold plenty of cars twenty years ago without that,” they need to get with the times. Today’s marketplace is very different than it was twenty years ago.

2) If you change with the times every week, here’s your sign! In contrast to never changing with the times, some managers change direction every week based on an article they read, a suggestion from a friend, news that a competitor is doing something, or even just on which way the wind blows. Sending employees scrambling in a different direction every week is counter-productive. Set long term goals, set programs and processes in place, and stick with them for at least six months to give them a chance.

3) If it takes too long to get stuff approved, here’s your sign! Efficient businesses demand efficient processes. If it takes a committee to get anything approved, or if employees aren’t following the processes in place, it’s a problem and there’s probably a reason. Do your processes need to be reviewed? What’s really slowing down employee productivity?

4) If you’re not rewarding your employees for innovation or hard work, here’s your sign! In general, it’s fair to expect employees to do their job without complaint. But if someone comes up with an innovative idea, or if an employee delivers results that you know must have taken extra hard work, reward them! Nobody wants to work somewhere if they don’t feel appreciated.

5) If you have high turnover, here’s your sign! Now I realize the retail automotive industry has higher turnover than most, but why is that? If you have more employees quitting than are leaving because of lay-offs, chances are there’s something wrong with your corporate culture. What is it? Conducting exit surveys is one way to find out; or it may require a little digging.

Fostering a positive work environment makes for happy employees, which in turn leads to happy—and loyal—customers. Have you taken a close look at your corporate culture lately? What do you think are signs of poor employee morale?

What’s the most incredible act of customer service you have ever performed for a customer, and did it inspire their undying loyalty? In this story by Peter Shankman, he recounts how after a long travel day he boarded a plane, tired and hungry. As a joke, he tweeted out to Morton’s steakhouse to please have a Porterhouse waiting for him at the airport when he landed. Of course he was not expecting any response, but guess what? At the airport Morton’s was there, waiting for him with a Porterhouse.

Shoe purveyor Zappos is also well-known for its great customer service. When this blogger’s mother was suffering from health issues and related problems with her feet, she had to return some shoes to Zappos and ended up getting into a long conversation with the customer service agent. The customer service person sent a bouquet of flowers to the mother and gave the mother, daughter and sister VIP memberships. The sister vowed to buy every pair of shoes from Zappos from then on.

And there’s the famous example of Southwest Airlines holding a plane flight for a grandfather who was flying to Denver to see his three-year old grandchild who had been beaten to death by his daughter’s live-in boyfriend, and who was scheduled to be taken off life support that night. When the grandfather arrived at the gate twelve minutes late for his flight he was shocked to find the plane still there. The pilot said, “They can’t go anywhere without me and I wasn’t going anywhere without you.” Cost of delaying flight: who knows and who cares? The knowledge that Southwest did the right thing and the amount of goodwill it created: priceless.

Of course, you don’t have to be a restaurant, retailer or an airline to provide outstanding customer service. Opportunities exist every day in your dealership. When was the last time you dealt with an upset customer or noticed that a customer seemed stressed? What did you do? Did you avoid them, get defensive, or did you ask questions so you would understand their concerns, stresses, problems or fears? Then did you go out of your way to provide a service that was above and beyond what was expected?

What is the best customer service experience that you have ever had, and did it inspire your loyalty to that company? What acts of customer service have you or your co-workers provided that created loyal customers for your dealership?

I have been doing regular blogs about successful promotions in dealerships that come to my attention. In this blog I wanted to let you know about a Prepaid Maintenance Plan (PPM) promotion that was extremely successful at Hare Chevrolet.

Hare Chevrolet has improved customer retention and increased its Customer Pay RO count by 12% since instituting a dealer branded Prepaid Maintenance Program (PPM) earlier this year. The program, which launched in March, and is dealer administered, has produced an average of $171 up-sell on every customer pay Retail Repair Order.

The dealership is in a highly competitive market place surrounded by four after market repair shops. The program has helped the dealership come out on top of its competition by ensuring service customers return to the dealership for future vehicle service needs.

The program, which focuses on selling maintenance plans to existing customers in the service lane, was kicked off in March with a service advisor sales incentive of an Apple iPad if they hit a quota of 22 plans sold. The incentive proved successful with all five service advisors exceeding their quotas resulting in 127 UltraCare plans being retailed to existing service lane customers. 

The dealership has continued the success of the incentive program by building in PPM sales as part of the service advisors’ pay plans. Hare Chevrolet now averages 62 plans sold per month, 80% of which are sold out of service and 20% out of F&I. Customers are much more likely to purchase a maintenance plan in service when they don’t have competing F&I products to consider and the loan to value issue is gone.

The dealership sells the plans at a cost basis. Rather than try and make a profit they are using these plans as a great retention technique, which is working well with retention rates increasing about 5% per month. However, an added bonus is that the average customer that visits for a simple oil change ends up spending an additional $171 per RO, so it is incredibly profitable as well.

Based in Noblesville, Indiana, Hare Chevrolet continues to hold the title of the country’s longest-lived family-owned vehicle retailer. Today the Chevrolet dealership sells about 400 cars per month and employs 150 people. Current managers Courtney Cole and Monica Peck, who are the great-great-great granddaughters of original founder Wesley Hare, offer 50 service stalls, and about 1000 new Chevrolets in its sales lot.

The latest in technology has allowed the dealership to keep in front of the pack in a fiercely competitive market, while also maintaining loyal customers.

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 is the final blog in a five-part series where I explain how loyalty programs improve each of these metrics. Last week I touched on retail member spend.  This week’s topic is member repurchase intent.

This metric measures the number and percentage of loyalty program members who purchased their second vehicle from the host loyalty dealership. Dealers say that loyalty programs, which allow members to apply their rewards dollars toward vehicles purchases, truly work. Driving repeat sales is easier when using incentives redeemed from an existing customer base.

An analysis of member repurchase habits in 72 dealerships with loyalty programs revealed the following:

• ŸAverage number of member new vehicle re-purchases per year per dealer: 126

  

• Ÿ Percent of members who have re-purchased a new vehicle from the original selling dealer: 12.4%
• Ÿ Average number of member pre-owned vehicle re-purchases per year per dealer: 58
• Ÿ Percent of members who have bought a subsequent pre-owned vehicle from original selling dealer: 4.7%

How do these figures compare to your re-purchase rates from customers who are not members of loyalty programs?

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.”