Subscription marketing has been around for a long time; now it is even in the auto industry. Every week you see something about subscription marketing in another periodical. With Ford and General Motors developing programs that combine everything you could possibly want in a purchase and individual dealers designing their own programs to sell more cars and give people more choices; looking at the big picture, subscriptions are important to the industry.
This type of marketing is really a win-win for both the company and the customer. The company gets a customer who pays for their product every month, which greatly reduces marketing cost. It creates a recurring income for the company, which makes budgeting easier. It is a very cost-effective method of retaining your customer over a long period of time. It also offers a unique branding opportunity. For the customer, it cuts down on upfront cost and they only pay for what they use. There is a convenience factor that may be the best part for the customer. When you bundle a group of services, the customer usually saves money, and they can stop the program whenever they want — no contracts are involved.
Most of the talk in our business has focused on selling more cars. I think the best profit opportunity for the average dealer is to design a subscription program for the service drive in place of their current retention program. Most dealers, in trying to retain more of their customers for service, have retention programs like lifetime oil changes or lifetime powertrain. These are great ways to retain your customer but they are extremely expensive. A subscription program for service can alleviate so many of the problems of trying to retain a customer for the life of their car. Some of these problems include throwing good money after bad, designing a no-value program that the customer sees right through, getting total buy in from everyone in the store on the importance of retaining a customer and tracking the effects of the program.
First, let’s look at the cost. Instead of paying $25,000 a month for a lifetime program, you have shifted the cost to the customer. If you set up your program using both F&I products and services, you can create a great value proposition for the customer. The program requires some thought ahead of time though. If you are going to bundle a lot of items together and charge retail prices, just save your time and do it the old-fashioned way. We are not trying to trick the customer into doing business with us; we are trying to make it easier and more beneficial for them. You don’t need buy in from the entire store on retaining your customers; your branding message and retention can be handled in one department. Finally, tracking is simple. Instead of trying to figure out if all the money I’m spending on lifetime powertrain or advertising is working, it becomes as simple as asking, “How many did we sign up this week?”
In setting up your subscription program, there are a few things to keep in mind. First, beta test it with a focus group. It is better to work out the bugs in a small-group setting then just throwing it out there to see if it sticks. This type of marketing opens an entire new avenue for the service drive to promote their business. Develop some video content for your Facebook page to advertise your new program. Saturation mailers have become extremely inexpensive; do a 100,000-piece mailer to your PMA to announce the program. This form of conquest marketing can grow your customer base overnight. Have a customer who likes the program write an article to the local paper and, while you’re at it, invite the local automotive reporter to your store to do an article on the program. As they say in the tech world, there is nothing like a program going viral.
There are many examples of subscription marketing, but the best example may be with the Millennial generation. They have embraced Dollar Shave Club, Pandora, Netflix and XM radio, and what dealer doesn’t want to attract more of them to their business? Although the car industry has been slow to the party, there is plenty of time to catch up. Years from now, all service may be sold this way, but now is the time to design the first step toward convenience, value and branding for your customers that they are enjoying in other industries.
Click here to view more solutions from Jack Garrity and Dealership for Life.
