The Basics of a Retention Program

The Basics of a Retention Program

Through your own custom loyalty program, you can brand your dealership and give each customer an incentive to return.

The key component of a successful loyalty program is awarding your customer with points per dollar spent. A simple, effective, low-cost, commonly accepted practice in retail is to reward customers for their business. We see this every day in air travel, rental cars, hotels, grocery stores, etc.

You can design your own custom loyalty program for your unique dealership. You can plan your program to make it so simple that it is practically “hands-free” in its application. Through this process, you brand your dealership and give each customer an incentive to return to your business to receive their rewards.

Keeping your customer in your service/parts department after the sale provides you with greater opportunities for re-purchase and a supply of excellent pre-owned inventory. The most successful dealers reward their customers and provide a level of service that is second to none. This combination simply cannot be beat.

Encouraging your customer to give your service/parts department an opportunity to provide them with great service is always a challenge. Providing them with an oil/filter change and tire rotations at no cost during the first year has proven to be a primary motivator. Coupling this with a low-cost, pre-paid maintenance program, which is introduced at vehicle purchase and followed up by service, is a fail-safe way to increase profitability and ensure you receive their business.

Leading-edge dealers looking for long-term retention will provide some type of engine/powertrain guarantee/warranty for as long as the customer owns the vehicle. This gives the customer peace of mind that he/she does not have to worry about a catastrophic failure.

The only requirement is that the customer have oil changes and all the manufacturer-recommended services performed according to time/mileage. This will result in an increase in vehicle service contract sales. The customers in your primary market area will readily return to your business since they know that you have a vested interest in making sure they are satisfied, and you will make it easy to submit claims.

A combination of all the above has produced retention numbers more than 90% and a long-term relationship with the customer. Dealers are seeing their opportunity for re-purchase go from an average of 36% to over 86%! Additionally, our analysis of service/parts profitability shows that a customer who is a member of a loyalty program will spend more per repair order than a customer who is not a member. The range we see is a minimum of $12 up to $236 per repair order! Just a minimal increase in number of repair orders and more dollars per will substantially improve your bottom line. Of course, you must surprise your customer by exceeding their expectations or your efforts are in vain. Remember that there are many choices for purchasing a vehicle or obtaining service. You must be the one that stands out from the crowd and earns their business.

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