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

Member spend is viewed as money that loyalty members actually spend in a dealer’s service department, both by individual RO and by annualized spend. Visit frequency is one key component, but perhaps more important is wallet share.

When we compared member spend vs. non-member spend rates across 72 dealerships, the results were significant:

Ÿ Average non-member per customer pay RO: $191.32

Ÿ Average member spend per customer pay RO: $235.01 (an increase of $43.69)

Ÿ Annualized total non-member service spend per 12 months: $336.63

Ÿ Annualized total member service spend per 12 months: $662.01 (increase of $325.38)

Dealerships with increased customer pay ROs and annualized spending credit their loyalty programs, citing higher customer retention rates and increased frequency of visits as reasons.

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.”

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 third blog in a five-part series where I explain how loyalty programs improve each of these metrics. Last week I touched on sales-to-service conversion. This week’s topic is service visitation rates.

Service visitation measures the rate at which loyalty program members are visiting the dealership’s service department for customer-pay retail transactions. Members’ visitation rates were then compared to that of non-members during the same period of time. Here are some of the results:

• Members have an average of 4.26 months between service visits, compared to an average 6.82 months between visits for non-members.

• Members visits service departments an average of 2.82 times per year, compared to non-members visiting an average of 1.76 times per year.

Only when the service department has an opportunity to service a customer can parts and labor profit opportunities be created. Our study found that rewards-based loyalty programs create more active and frequent visits. Do you track the average frequency of visits for your service customers? How do your numbers compare with these?

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.”

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 second blog in a five-part series where I explain how loyalty programs improve each of these metrics. Last week I touched on marketing responsiveness. This week’s topic is sales-to-service conversion.

Sales-to-service conversion measures first-time service visits that are retail in nature (warranty transactions excluded). This metric looks at customers who enrolled in a loyalty program after a vehicle purchase and returned for a customer-pay service visit. These results were for first-time visits only:

• Average percentage of customers who visited service within 60 days of vehicle purchase: 11.44%
• Average percentage of customers who visited service within 61-90 days of vehicle purchase: 12.73%
• Average percentage of customers who visited service within 91-120 days of vehicle purchase: 6.75%
• Average percentage of customers who visited service within 121-270 days of vehicle purchase: 14.54%
• Average percentage of customers who visited service within 271-365 days of vehicle purchase: 4.01%

In summary, enrolling customers into a loyalty-based rewards program results in an average 49% sales-to-service conversion rate in the first year. What do you think of these conversion rates? Do you track your dealership’s sales-to-service conversion rates and how do they compare to these percentages?

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.”

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

A couple of weeks ago, J.D. Power and Associates released a report titled “Beyond Satisfaction: J.D. Power 2012 Customer Service Champions—Brands That Deliver Service Excellence to Maximize Business Results.” The report concluded that consumers prefer brands with excellent customer service and don’t always focus on the lowest price. Auto related brands identified as “Champions” include Cadillac, Jaguar, Lexus and MINI.

Why is customer satisfaction important? J.D. Power finds a very strong link between levels of customer satisfaction and levels of customer recommendation and intent to repurchase. The report also finds that brands that provide exceptional customer service tend to consistently employ these specific practices:

1. Hiring the right people and empowering them with the best processes; as well as the ability and authority to make judgment calls to resolve issues on behalf of customers.

2. Understanding their customers and offering the right products through the right channels in ways that truly resonate with them.

3. Being consistent in branding and delivery of the service experience, particularly across various channels and customer touch points.

For more information on the J.D. Power and Associates report, you can download the Executive Summary here.

How can these three best practices be executed in your auto dealership? By empowering your employees, sending relevant and targeted communications and ensuring that you have a strong branding message. That is, you should be able to explain to customers why it’s better to buy from you instead of your competitor. Then, make sure every employee is trained on the branding message and knows how to properly greet and treat every customer.

What processes does your dealership have in place to deliver excellent customer service? Are your employees empowered to make decisions and resolve customer complaints?

Do customer loyalty programs work? A popular national chicken franchise spends more money on its loyalty program to retain customers for its $2 sandwiches than most dealerships spend to retain customers for $60,000 vehicles purchased from them. Does this make any sense?

Yet I hear all the time from dealers who are unsure about the benefits of customer loyalty programs and want to see hard facts about the ROI.

Well, now they can. In our newly released, free 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 loyalty programs, along with over 6 million repair order transactions over a period of 26 months.

Here are some of the findings. Members of loyalty programs in dealerships:

- Visit their service department every 4.26 months versus every 6.82 months for non-members

- Visit their service department more often: 2.82 times per year compared to 1.76 annual visits for non-members

- Spend an average of $662.01 annually compared to $336.63

- On average, dealerships enrolling customers in loyalty programs sell an additional 15 vehicles a month to customers redeeming rewards points/dollars toward those purchases.

The ebook also profiles several dealers who talk candidly about their experiences and success with loyalty programs. Are you convinced yet? Want more facts? Download our free ebook here http://www.media-trac.com/resources/whitepapers.shtml

Email and snail mail promotions are great methods for creating customer loyalty. However, you need to make sure that the information customers include during the signup process is accurately addressed in the marketing. There’s no greater feeling than receiving an unexpected coupon or discount on something you want to purchase. It’s a completely different story when the promotion is for something random that doesn’t remotely pique your interest.

Here’s an example of a mail promotion gone wrong: A few weeks ago, I received a pamphlet ad from a loyalty program I belong to at a major drug store; the advertisement was primarily for cosmetics and other feminine products that I will never have a use for and it completely alienated me from their program.

Are you doing this in your dealership service department? For instance, if a customer has just purchased a brand new vehicle and you send them a coupon for a 30,000 or 60,000 mile maintenance service, the chances of that coupon being redeemed are slim to none. Not only are you wasting postage and/or time, but you may be making the customer wonder, “Why did they send this to me?” That customer would probably better appreciate a 10% discount on accessories to personalize their new vehicle.

When creating your marketing campaigns, do you check to make sure customers are receiving a relevant promotion? What promotions have you created recently that have resulted in high redemption rates and loyal customers?

The National Business Research Institute has created a valuable infographic focused on customer loyalty. NBRI explains, “Customers are a business’ most important asset, without them the business wouldn’t exist. So it’s imperative to keep these customers happy and improve their loyalty to your business.” They add, “We created this customer loyalty infographic to help you not only understand it, but to help you cultivate that loyalty among your own customers.”

We found NPRI’s presentation of the importance of customer loyalty in today’s economic society not only helpful and insightful, but easy to digest with specific details that would apply in a variety of business settings.

When considering that the decision-making process is 30% logic and 70% emotion, how do you feel that affects your business?

Source: Driving Retention and NBRII.com, February, 2012.

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!