I was waiting in the airport at Jacksonville, Florida, for a plane the other day and overheard a passionate discussion from several passengers who were talking about the various rewards programs they had joined. One was discussing free lodging, another a free flight, another merchandise. One even got an entire week’s vacation using her 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 lick and paste 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 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.
For a very long time, retailers have recognized the value of rewarding customers for their business, and it continues to this day. 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 provide nice perks for the amount of travel I do. I can tell you that my loyalty to certain brands runs deep, and I 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 actually have is a level playing field. You are no different from your competitors and that is a fact.
A well thought-out, professionally executed rewards program will give you the edge against your competition. And, if you’re thinking it’s difficult to administer and will 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 effort from your staff. The key to making it easy is to have an administrator that has both software and data exchange connected to your DMS. The rest is simple and is both customer and employee friendly.
But, what about the cost? Your customers only earn rewards when they spend money with you. Isn’t that what you’re wanting them to do every time you open your doors? The beauty and magic of 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 percent rebate on dollars a customer has already spent with them. The only real cost is a miniscule administration fee from your rewards partner.
A side benefit 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 do. Offering points for purchases is just one method. How about if you offer points for events such as attending your “new owner” clinic, “liking” you on social media or giving you a review on DealerRater? What about giving them a surprise gift on their birthday, for returning your online surveys or coming in on an “off” day in service just to receive bonus points? You can also use a points program to thank members of the military, firefighters, police officers, paramedics and others for their community service.
Most dealers pay cash for a customer referral purchase — which the receiving customer most likely spends 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? What an amazing concept!
So, if you’re serious about creating lifetime customers — and motivating those customers to do what you want them to do to create more sales — then you need to consider installing and providing a rewards program that has value to your customers.