Auto dealer loyalty programs on the rise

May 5, 2014 12:00 AM

Increasingly, auto dealerships across the country are realizing the advantages of implementing customer loyalty programs. Not only do these initiatives pose an opportunity to reach more consumers, but they can also drive revenue by ensuring that clients keep coming back when they need an auto repair, tune up or any other service.

Loyalty programs expand
In fact, a recent survey by Auto/Mate Dealership Systems found that 54 percent of dealers already have some kind of loyalty or rewards program in place, and 20 percent are planning to or considering establishing one soon. Survey participants also revealed what business aspects they believe are most important in strengthening customer loyalty. Ensuring good customer service was a top factor, followed by providing service discounts & coupons competitive with local repair shops, an updated and useful website, happy employees, a good reputation management program and strong marketing outreach. Offering the lowest price and having a good social media program were at the bottom of the list.

"The vast majority (85 percent) of auto dealers believe that providing good customer service is the key to customer loyalty, but in my opinion the survey results reveal a lack of understanding as to how that excellence in customer service is achieved," said Mike Esposito, president and CEO of Auto/Mate.

Reaping a competitive edge
It's no surprise that dealerships are honing in on these efforts, either. Edmunds reported that a study by Performance Loyalty Group found when customers are enrolled in a loyalty program they visit that dealer's service department nearly twice as often and spend double the amount - an average of $662.01 each year as opposed to $336.63. Additionally, the study determined that dealerships with these programs sell 15 more vehicles a month than those without them. Edmunds explained that these 15 extra purchases happen because customers have rewards dollars or points to redeem.

One company that has seen great success with these initiatives is Nissan. Edmunds noted that its One To One Rewards program is offered at 80 percent of its dealerships. For every reward point, participants can get $1 toward their next transaction. Josh Clifton, a spokesman for Nissan North America Inc., told Edmunds that the program has not only increased the frequency of customer visits, the dollar amount per transaction and overall profitability at each dealership but also client satisfaction. Clifton also revealed that since the benefits have been so significant, Nissan is even developing a mobile app for the loyalty program.

"Dealers now have the proof that loyalty programs do retain customers, sell more service and sell more cars," said Mike Gorun, CEO of Performance Loyalty Group, in a statement.

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