I was waiting in the airport at Jacksonville, FL for a plane the other day and several passengers were in a passionate discussion about various reward programs that they were members of. One was discussing free lodging, another a free flight, another merchandise. One even got an entire weeks vacation using their points. This conversation went on for at least half an hour! It made me think about the importance consumers place on rewards programs and how it has proliferated our retail environment. I am old enough to remember the early versions of rewards. I used to stick the stamps my grandmother earned by shopping at our local A & P.
They were called S & H Green Stamps. Stores sold detergent in boxes that contained dishes and other Prizes. Gas stations used to have pyramids of dishes that they gave away with a fill-up. It was exciting to shop with my Mom and pick out the cereal I wanted just because It contained a free toy. There were others that I can’t remember because I am getting old. For a very long time, retailers have recognized the value of rewarding customers for their business and it continues today. Today’s version of rewards generally takes the form of assigning a point value based on how much a customer spends. You see this in almost every sector of the economy. I travel a lot so, I belong to Airline, Hotel and Rental Car Programs, which is a nice perk for the amount of travel I do for work. I can tell you that my loyalty to certain brands runs deep and I try to find ways to do business with the companies that reward me the most.
What can we in the Automobile Industry learn from these reward programs and what would be the positive aspects of having a rewards program for our customers? The main objective of any rewards program is to create repeat business and that is certainly what we struggle to do as Dealers. Just providing “great service”, whether it is in Sales, Service or Parts, is just not good enough to create a lifetime relationship with our customer. Let’s face the truth…everyone in business thinks they are the best, so what we have is a level playing field. You are no different than your competitors and that is a fact!
A well thought-out and professionally executed rewards program will give you the edge against your completion. You are thinking that it is difficult to administer and that it is going to cost you a lot of money. Let me assure you that you would be wrong on both counts! Let’s discuss the administration. It is probably the easiest motivational program you could possibly install,
requiring very little hands-on by your staff. The key to making it easy is to have an administrator that has both software and data exchange with your DMS. The rest is simple and customer/employee friendly. But, what about the cost? Your customers only earn rewards when they spend money with you. Isn’t that what you try to get them to do every day you open your doors? The beauty and magic in any rewards program is that the customer can only redeem them at your store, and only to buy more stuff from you! You can even set the value of the redemption to your tolerance level. Most dealers I see are fully agreeable to set it at about a 5% rebate on dollars your customer has already spent with you. The only cost is a miniscule
administration fee from your rewards partner.
Side benefits of a points type rewards program is that you can use the points to motivate your customers to do the things you want them to. Offering points for purchases is just one way. How about if you offer them for events like attending your New Owner Clinic, liking you on Social Media, giving you a review on Dealer Rater, a surprise gift on their birthday, returning your on-line surveys, coming in on an “off” day in service just to receive bonus points, thanking them for community service such as military, fireman, policeman, paramedic, etc. Most Dealers pay cash for a customer referral purchase which the receiving customer most likely spend somewhere else. How about if you reward them with points instead of cash so they can only redeem them with you to buy something you are selling?
So, if you are serious about creating lifetime customers, motivating those customers to do what you want them to do, and therefore creating more sales, then you need to consider installing and providing a rewards program that has value to your customers.