How to Build Lifelong Customers Using Loyalty Programs

Maximize your dealership’s profits from the people you already know

We all know the cost of attracting a new buyer is much higher than retaining an existing customer—nearly five times higher.



As staggering a statistic as this is, it shows the value of building a lifelong customer. Loyal customers visit more, spend more, give great feedback and reviews, and recommend a dealership to their friends and family.

As the vehicle sales market changes, more and more dealers are realizing the value of retaining existing customers. Establishing a relationship of trust and respect with your existing customers through value-added offerings like loyalty programs provides opportunities to maximize profits from people you already know.

By implementing a loyalty program aimed at buyer retention, dealers have a unique opportunity to establish personalized touch points with customers.

Dealers that don’t foster repeated interaction with buyers risk their customers developing the attitude that just any dealer can offer them the oil changes or brake pads their vehicle needs throughout its lifetime. When customers feel there they have an ongoing relationship with their dealer, however, they are more likely to return for service or new purchases.

When dealers consider utilizing a loyalty program, it’s important to understand the various elements of the program, and how they can impact the customer relationship and, ultimately, sales. The most effective strategies in a loyalty program focus on customer service and the buyer’s experience.

Dealers need to determine the basics of the program they provide their customers. They determine what customers can apply their points toward: entertainment, auto repairs, points toward the purchase of a new car, or others. Most auto dealerships use co-op funds toward their loyalty program.

An example of an effective loyalty program begins with a photograph of the new buyer taken by the salesperson, which starts the ongoing relationship between the customer and the dealership. This photo can then included in touch points like a personalized calendar that can be hung on a refrigerator, or on incentive mailers with special offers for customers.

Loyalty-program customers also have the opportunity to accumulate reward points through vehicle purchases, referrals to new customers, service department visits, social media posts, and online reviews. Points can be redeemed toward service or a new purchase from the dealership, or at local restaurants, entertainment venues, and more.

Vendors that administer loyalty programs for dealerships can offer such elements as personalized customer photos in postcards, e-mails, quarterly follow-up messages, birthday and holiday cards, sharable social media sharing, and more. A third party that administers loyalty programs can also provide the dealership with monthly summaries, analytics, an automated, customizable schedule, and more.

Through loyalty programs, dealers cultivate customers who will take advantage of the personalized offers. They love to receive points for purchases and will visit the dealership frequently to accumulate and redeem points.

If you’re not taking advantage of a loyalty program to stand out in the crowded automotive retail market, now is an excellent time to discover what one can do for your bottom line.

Karl Schmidt is president and founder of Massillon, Ohio–based Retain, LLC. He offers business owners in the automotive, real estate, and other industries an opportunity to improve customer loyalty. Karl’s philosophy is “the fortune is in the follow up” and effective, personalized customer service is key for retention. For more information, visit www.retainloyalty.com.

Karl Schmidt

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