According to an article in Automotive News, one dealer in Illinois has come up with a pretty ingenious loyalty rewards program idea – to leverage taxpayer dollars to increase car sales, while also helping to support local businesses.
Glenn Bockwinkel, President of Acura of Libertyville, approached the mayor of his local town and proposed an idea that he pitched as a win-win for the village’s car dealers, local business, consumers and the city — The Shop Libertyville Rewards program.
It works like this: Any customer that shops at a local car dealership is given vouchers which can be exchanged for $200 in gift certificates, redeemable at 86 local retail businesses. Or, the $200 can be used to purchase aftermarket products at the local dealerships themselves. The idea is to keep local customers from purchasing outside the area, which helps the dealers stay in business and provides the city with additional tax revenue. In addition, any local businesses that accepts these certificates can turn them into the city to be reimbursed through tax money set aside for the program.
The dealers in the city also donate $100 for each vehicle sold to one of nine local charities. According to the mayor, “68 cents of every dollar spent in a community stays in that community.” He attributes 60 percent of all sales tax receipts received by Libertyville to auto-related businesses. The city runs the program for just one month each year and budgets $70,000 in tax dollars towards the program.
Customer loyalty programs and incentive-based rewards, such as dealer cash, are certainly a value-add for any dealership customer. This particular dealer expanded his dealer loyalty program by taking a community-based approach. He worked out an amazing deal with the city to promote – and reward – the local purchase of vehicles using tax dollars. It includes cable TV commercials (which they plan to run 1,600 times), along with newspaper and radio ads to promote awareness. It is, quite simply, brilliant! The combination of supporting local businesses and charities, while also increasing tax revenue, all wrapped in one big package, couldn’t be any better.
While I don’t have specific data on how these certificates are actually being used, other than what was included in the article, the option for the consumer to use the certificates for aftermarket accessories at the dealership is also a very smart move. How many times have you closed a deal and, while the customer waited to go into the finance office, threw a hat, shirt or some other item, into the deal for free? With these certificates, you would no longer have to eat the costs in the front end gross, but rather the consumer could use their gift certificates to purchase them.
This dealer’s innovative and outside-of-the-box thinking will almost certainly pay dividends through increased sales and future service work. Hopefully, they’ve trained their sales staff and finance managers to suggest to their customers that they spend their gift certificates on accessories. But even if the customer does not do this, the dealership ends up building a more positive brand image within their community, which can only keep them top-of-mind when a local consumer decides to buy a car.
In a recent press release, Amazon announced that, in celebration of its 20th birthday, July 15 will be “Prime Day” – a day on which Amazon claims it will offer more deals to its loyal Prime members than Black Friday. Amazon promises, “new deals starting as often as every ten minutes,” with the ultimate goal to make this a global shopping event. For non-members, Amazon is offering free 30-day trials of its paid loyalty program.
Amazon has steadily increased the value of its Prime membership by adding movie and music streaming services, in addition to its free 2-day air shipping. And, that’s not all — to increase the buzz and introduce the new Prime Photo service, social media contests are being held, with a rather enticing $10,000 gift card as the prize. The hype surrounding Amazon’s announcement, along with its offer to non-members of free trials, will almost certainly result in a membership enrollment spike.
Well … this is all very interesting, but how does it apply to the auto industry?
Dealers who use loyalty programs gain two valuable assets:
- A customer that enrolls in your loyalty program is telling you that they will be returning. This mental commitment in the customer’s mind increases with each visit, as they progress towards a reward, or use the membership for savings. As long as you consistently provide a good customer experience, the chances of defection by that consumer decrease. In addition, members of loyalty programs tend to visit more often and, on average, spend more when they do, which increases revenue in all departments.
- These programs usually have robust reporting tools. As such, you gain access to valuable data that can be used to market better. You can also identify customers who are likely to defect through such data as time between visits, or decreased spending. Loyalty programs also help identify – and reward – those customers that are the most loyal. These customers are the most likely to refer friends and family, as well as to become brand advocates.
Innovative dealers that think outside-the-box usually trump the competition. Perhaps it’s worth taking a page out of one of the most successful retailers on the planet – Amazon. Consider holding loyalty events, or days similar to the one Amazon is employing. These events don’t have to be costly. It could be something as simple as “Free Member Car Wash Day,” or an additional savings day in service. This could help to keep your loyalty members loyal AND drive in more members.
Amazon’s “Prime Day” sale is likely to be a success. Whether or not it trumps Black Friday in the eyes of consumers is yet to be seen. One thing it will probably accomplish, however, is to add a whole new group of consumers to their membership base, anxiously awaiting the next deal – and there is no business that wouldn’t want that.
A recent article in Automotive News relayed the story of Obi Obeke and how he had sold 39 cars to world-famous boxer Floyd Mayweather. The article explains how Okeke has been willing to do whatever it takes for his client to keep him satisfied. There’s little doubt that Floyd Mayweather probably gets what he wants when he wants it. And Okeke has delivered. Okeke has received phone calls at 3am requesting a brand-new Bugatti delivered to his house within 12 hours – a feat in and of itself in the exotic car business. And he has always delivered, even when it meant jumping on a plane and driving it to the champ’s house himself. According to the article, Mayweather hasn’t been Okeke’s only famous client – his customers have included the likes of Arnold Scwarzenegger, Jessica Simpson, Ellen DeGeneres, and Chris Tucker – to name a few.
The volume of vehicles Mayweather has purchased from Okeke begs the question as to why Mayweather continues to purchase vehicles from Okeke when he could easily seek out the vehicle himself (or have an assistant do it for him.) He could quite easily carry out the transaction with the dealer who has the vehicle, rather than insist on doing business through Okeke. Bugatti Veyrons aren’t discounted. This means that, in order to make a profit, Okeke marks up the vehicle over the asking price of the dealer who has it in inventory. Mayweather could pay less and, more than likely, get the same result: a new Bugatti Veyron in his driveway in 12 hours. Especially if you consider the fact that Okeke’s dealership is in Chatsworth, CA, and Mayweather lives in Las Vegas – about a 4+ hour drive.
Certainly, dealing with celebrities has its benefits. They can purchase expensive cars that typically do not get discounted and can produce pretty good profit. That being said, how many typical car dealers (i.e.: non exotic) would go to these lengths to satisfy a normal customer? I’m not necessarily talking about taking calls at 3am, jumping a plane and driving the vehicle 4 hours to a customer’s house. But more about going above and beyond.
My guess is that Okeke sold a vehicle to one celebrity who then referred him onto another celebrity due to his excellent customer service and willingness to do whatever is needed. Then the referrals snowballed into the celebrity-selling machine he is today. Whether these high-profile clients originated with Mayweather, or whether he was simply a referral somewhere in the chain of celebrity referrals, isn’t really relevant. What’s relevant here is that Okeke built his business of selling to celebrities through 30-years of word-of-mouth.
There’s really no difference between a celebrity and a “normal” customer. Regular customers operate under the same natural principles. Namely, they appreciate great customer service. And, when appropriate, will share their experiences with their network of people and refer them to that dealership.
My advice, treat every customer you have like a celebrity.