How to Make Manufacturer Rebates Your Customer Retention Building Blocks

It costs more to acquire a new customer than keep one you already have, but the majority of your profits can come from existing customers

There may be nothing more valuable to any business than customer retention. Compared to the first-time customer, repeat customers spend more money per visit, save the business money, and typically account for more than half of total revenue.

A Bain & Company study found that customers persuaded to make 10 purchases will refer 50% more people than a one-time purchaser. Of course, that’s easier said than done for automobile dealers.

Once customers leave the lot, they may not see the need to return until their leases expire or they want to trade up to new cars years from now. That’s why a service center rebate program can play a critical role in converting those one-time customers into your top revenue generator and most effective marketing asset.

If you currently allocate the largest percentage of your marketing budget to acquiring new customers, you’re not alone. After all, that process is more expensive and time-consuming than customer retention. Every industry and market is different, so it’s not possible to establish one Golden Rule for customer-acquisition costs.

Generally, however, it costs between four to 10 times more to acquire a new customer than it does to keep an existing one. Yet the majority of your profits will come from existing customers, according to a 2015 LinkedIn article by Ian Kingwill.

That means the second sale, not the first, is the most important transaction. Research shows new customers have a 27% chance of visiting again. In contrast, if they come back a second time, the odds of them making a third purchase jump to 45%.

So repeat customers spend more money, and you need to spend less to keep them coming back than you will on acquiring a new customer. That’s why your rebate program should serve as a catalyst for making that conversion.

21st century rebates

You may view the rebate as a tired, old-school promotional tactic in an age where consumers expect instant gratification. Most manufacturer rebates don’t reward customers immediately, usually taking a few weeks before the check or gift card arrives in the mail.

So instead of allowing your rebate program to grow stale, take the opportunity to leverage the same technologies consumers rely on—cloud computing, powerful mobile devices, and social media platforms—to create opportunities to engage with your customers.

Your service center probably already features a number of product rebates that individual manufacturers offer. You can combine your own incentives on top of these rebates. This not only increases the likelihood that the customer will spend more money, but provides you invaluable personal information you can leverage as the foundation for your ongoing communications strategy.

Consider the customer that purchases four tires from a manufacturer that offers a $100 mail-in rebate. At the point of sale, your sales associate offers to add an additional $50 rebate from the dealership in the form of a gift card or credit that can only be spent at your service center or showroom.

Even better, the entire $150 is available instantly for your customer. Suddenly he has $150 to spend on new windshield wipers, an oil change, new brake pads, a new stereo system, etc.

Just as important, the rebate form provides you with the opportunity to collect the customer’s personal information. Always be transparent with these forms, however, because concerns about maintaining privacy have never been greater.

But don’t be shy: Your customers want to engage with you, and are happy to share some data—everything from their credit card numbers to their favorite hobbies—if they see the benefits to them.

Let’s revisit the example of the customer purchasing tires. He may accept your add-on rebate offer, but doesn’t need an oil change or other maintenance for another 3,000 miles. If you have that information on the rebate form, you will be able to follow up with him on a regular basis with offers for oil changes and other services.

By doing this, you stay front of mind when he’s ready, and perhaps more importantly, when he’s not. If his check engine light starts to flash, he will think of your dealership. He will happily drive past other dealers and service providers on his return trip to your service center.

Find a copilot

Putting a rebate program like this into practice may sound like a lot of work—and it can be. Consider handing off these duties to a third-party partner that has the system and capabilities to assist and communicate with customers quickly and efficiently.

Your customers will appreciate the effort you (through your behind-the-scenes partner) are making to address their questions or concerns, or in pointing them to self-help tools on your (or the manufacturer’s) website. Additionally, your partner can take the lead in analyzing customer information and creating triggers that automate ongoing communications.

The formula for success—collecting data, communicate incentives for return visits, repeat—becomes less time-consuming and costly, at the same time it increases sales and builds long-term customer loyalty.

With nearly 20 years of marketing services experience, Brian Phillipy, president of Afligo—a full-service marketing solution subsidiary of Systemax—is an industry expert that has provided marketing solutions to countless Fortune 500 companies, ranging from retail to telecommunications to manufacturers. Having worked 14 years at the Young America Corporation, Brian had the opportunities to work in nearly every facet of the industry, including operations, client services, business development, and customer service.

Brian Phillipy


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