Plug Your Service Revenue Leaks With a Loyalty Program

Is your service revenue leaking? Chances are, the answer is a resounding and costly “yes.”

DMEautomotive research shows that customers who spend $300 or more per year on service also spend a combined $1.5 million per year at competing shops. And this comes at a time when dealership service departments already fight an uphill battle against the ever-encroaching aftermarket.

The average time between dealership service appointments has increased by 4.2 days from 2013 to 2014, costing dealers an average $85,650 annually in service revenue, or about $20,400 in revenue per store for each day added to the interval.

One of the most compelling of dealers’ options to fight this expensive trend is a dealer-branded customer loyalty program. Dealers using a loyalty program experience an average reduction of 1.1 days in time to their customer’s first retained visit, resulting in a $27,000 average annual revenue lift.

In a study of 13 import stores, we found that dealerships experienced an increase of $362,000 more a year in combined sales and service revenue after launching a loyalty program compared to similar stores that did not.

Want more results? Go mobile. Our research has shown that 58% of loyalty emails sent to customers were being opened on mobile devices.

p 16 - DMEa chart Oct 2015 — Click to enlarge

Additionally, when surveyed about how they would prefer to receive a loyalty program reward, more dealership customers indicated they wanted to receive and store it in a mobile app rather than receive a traditional paper certificate. That answer wasn’t too surprising, given that mobile time now comprises 51% of all digital time (desktop at 42%; other devices at 7%).

Loyalty programs that can be integrated with a proven method of customer connectivity (like a dealer-branded mobile app) enable customers to easily view their loyalty points on their smartphones and access their loyalty reward savings certificates through the app.

But what makes a loyalty program effective? Where do you begin? Here are six steps to follow:

Implement a points-based loyalty program. Keep it simple. Decide how you want customers to earn their points.
Eliminate unwanted membership cards and unnecessary store process changes. Don’t ask your customers to suffer the clutter bug. Offer a loyaltyprogram that offers for digital options over paper. After all, 95% of auto drivers surveyed did not desire a physical card as part of an auto loyalty program. Look for programs that, upon dealer implementation, automatically enroll customers. Customers can begin to earn rewards on their first visit without dealing with any additional store processes.
Clearly communicate the benefits of the program to high-value customers. Make sure that you’re loud and clear when explaining your fantastic loyalty program to your high-spend customers. Train dealership personnel on the high-level elements of the program, as well as its the finer points.
Reward your best customers with discounts on parts, service, and vehicle purchases. Give your customers incentives to keep coming back to earn points. Our research shows that the top rewards dealer customers want include: oil changes (55%), vehicle detailing (41%), car washes (40%), a 10% discount (38%), and tire rotations (36%).
Allow customers to share their rewards with their household. Our research shows that of customers with a household-based loyalty program, nearly 20% of redemptions are used on a household’s second vehicle, increasing a dealer’s share of the vehicles serviced.
Go mobile. Look for loyalty programs that can be optimized for mobile. Customers are becoming more beholden to their smartphones, which means if your business isn’t there in the form of a mobile-optimized program, you’re missing out on the opportunity to be where your competitors aren’t.

The stakes have never been higher in the race to plug the revenue leak and drive customer engagement in the service lane. So create the game, provide the rules, and give your best customers a reason to come out and play.

Mike Martinez is chief marketing officer of DMEautomotive, the industry leader in science-based, results-driven automotive marketing that provides a range of marketing services to the biggest and most innovative automotive organizations in the industry. For more information, email [email protected].