Browsing articles tagged with " loyalty programs"

How Opt-in E-mail Truly Delivers ‘Exclusive Member’ Loyalty Values

By Mike Gorun at Performance Loyalty Group  //  2013, March  //  Comments Off on How Opt-in E-mail Truly Delivers ‘Exclusive Member’ Loyalty Values

Dealer Magazine | By: Mike Gorun | March 2013, Vol. 20, No. 3

How Opt-in E-mail Truly Delivers ‘Exclusive Member’ Loyalty ValuesTo build loyal customers, ensure all communications, solicitations and offers you send treat them as “exclusive members,” and not as just another one of the retail herd.

The herd is homogenous and impersonal. An exclusive member is an individual who feels they are receiving some form of special treatment. Recently, I received three different $50.00 gift certificates from Nordstrom, Frontgate and Pottery Barn.

While the certificates were designed to drive incremental sales for these retailers, they were accompanied by personal letters that made me feel my past purchases were being recognized; that I was receiving ‘VIP” treatment. I am confident not all customers received these certificates.

For most dealerships, the herd simply drives and services vehicles. Dealerships that employ membership programs that recognize their most profitable customers on a more personal level know details such as “this customer drives a red 2011 Ford Fusion with 13,342 miles and is due for an oil service next month”. They know the last time this customer was in for service; and they know what services the customer is pre-disposed to purchasing.

 E-mail marketing results depend on whether you’re blasting to the herd or targeting exclusive members who’ve already invited you to do so and enjoy that occasional recognition. Is your service marketing chasing the herd or are your exclusive members looking forward to it because its value is focused clearly on them and their vehicle service and maintenance needs?

This kind of special treatment is increasingly in need in a market where customers are becoming “fatigued” by the constant barrage of bland, non-personal service marketing that has become the norm.

Deliver value

Most retail customers participate in their “favorite” loyalty programs. It’s a proven marketing and retention tool for retailers – a tool that adds continuous profits to the bottom line.

Why are customers responding positively to these personal types of loyalty based communications? Loyalty member communication is often perceived to be of higher value because it’s personally tailored to the customer that has opted-in to receive it.

Most customers no longer perceive much value in general service and sales marketing communications. Numerous, non-segmented e-mail campaigns compound this perception. Make it a priority to create a loyalty initiative that stands out from the rest. Ensure your customers will perceive it as valuable.

One effective way to convey this value is through opt-in e-mail marketing as customers “invite” the dealership to send it to them. Don’t spam your members. These are your best customers who have entrusted you with their e-mail addresses. Be sure to only send selective, segmented, relevant e-mails. It may be more work to segment your members or customers into groups with specific preferences, but it will pay off.

Superior response rates

Because opt-in loyalty program customers have provided their accurate e-address, and will continue to do so should it change, their contact information and the dealership database is up-to-date and more productive.

Bounce rates for this type of e-mail are extremely low – as little as 7/10th of 1%. Opt-in e-mails are not being blocked by e-mail filters, dumped into spam or intercepted by overzealous service providers.

This type of opt-in marketing, used by both domestic and import dealerships, generates open rates of 24.58%, on average. Customers open and read them! The industry average for automotive related e-mails can be as low as 4% and seldom exceeds 12%.

At Berge Ford, Mesa, AZ, a repeating, precisely targeted oil-service mailer is bringing approximately 40 customers per month, many who also get additional customer-pay parts and labor work performed.

Because these e-mail messages are generated automatically based on pre-set parameters in the loyalty program, neither the dealer nor staff spend much time preparing and managing these important loyalty campaigns.

A loyal customer’s value

Statistical service and sales transaction data verifies that dealership customers who are enrolled in specially designed rewards-based loyalty programs improve dealership service and sales performance.

In a multi-year industry study, customers who have become active members in an automotive loyalty program visit their dealership every 4.26 months compared to every 6.82 months for those customers who are not participating in the program.

  • This represents an increase in visit frequency of 60% annually.
  • Members’ annual spend mirrors the increase in visitation, with a 97% increase in overall retail spend.
  • Dealerships using loyalty programs have an average retention rate of 56.98% for active members.

Customer engagement review

Customers receiving opt-in e-mail tend to engage with the dealership long-term, spending their dollars with your dealership versus another dealership or the aftermarket. This loyal customer engagement marketing works so well because:

  1. It targets customers already loyal to the dealership but encourages their more frequent engagement, increasing opportunity for the dealership to provide value and retain customers’ business.
  2. It is permission-based: recipients have accepted your invitation to engage them on a recurring basis, so open rates are high.
  3. It’s specific and targeted to individuals and their specific vehicle needs so there is a greater value for both the customer and dealership
  4. Higher-than-average e-mail open rates leads to more customers taking advantage of the offer. This return rate means more vehicles on your service lifts being inspected and more opportunities to up-sell in the service department.

Remember those $50 gift certificates? I used all of them while spending an additional $600! A little bit of recognition and incentive can go a long way to driving sales you may not even know are out there waiting just for your store.

What type of e-mails are you sending customers to build loyalty?

Are you currently using a loyalty program? Why or why not?


Identify & Remove the Obstacles to Customer Loyalty

By Mike Gorun at Performance Loyalty Group  //  2013, February  //  Comments Off on Identify & Remove the Obstacles to Customer Loyalty

Identify & Remove the Obstacles to Customer LoyaltyA recent article in Direct Marketing News offers an in-depth analysis of the typical obstacles that companies must overcome to build customer loyalty. If your business is not getting the most out of its customer loyalty program, it’s probably due to one of the following four reasons:

 1.   Difficulty in measuring and using data

 Loyalty programs cannot be measured in traditional ways. In fact, three of the top five reported challenges are measurement related. Measurement needs to focus on these three metrics:

1. Specific changes in the customer value equation

2. Shifts in consumer value

3. Customer engagement and advocacy

Each metric needs a clear definition of success for now and the future. Measurement then becomes part of continuous loyalty loop, in which customer intelligence creates customer insights, which feed into the loyalty program and creates more customer data to start the loop again

 2. Picking the right mix of rewards and benefits

 Most loyalty rewards involve discounts, but this becomes difficult to execute as everyone has the same offerings and retailers have trained consumers to look for nothing but discounts. This is a delicate tightrope act: give rewards that are too expensive or popular and the budget gets blown. Starbucks, Virgin Airlines and National Car Rental offer just a few of the programs that earn rave reviews with customers, without breaking the bank to do it. The key to success is activating “soft benefits” that have high perceived value.

 3.  Programs lack true innovation

 The average customer is a member of more than 10 loyalty programs. As more and more retailers launch programs, making a splash with a new program isn’t easy. Before loyalty programs, customers would stay with their favorite retailers based primarily on price or location. Loyalty broke this inertia, giving customers a reason to shop at another retailer. If faced with a choice between companies, loyalty broke the tie.

But, as more companies start programs, a new inertia has formed. Nearly 60% of consumers state they only participate in a few loyalty programs. Meanwhile, customers feel they are getting less out of programs. About 30% of consumers feel that there is little or no value in joining a program.

Offering differentiated benefits gives customers a reason to engage. Assess the competition and do customer research to find these benefits. Carefully test to pick the winners.

 4. Marketing and operations are not on the same page

 Customers can receive years of good interaction with a brand and program only to have it all ruined by one negative experience. Executing a program happens on two levels: systems to identify the customer and present them with the right reward/recognition, and store operations to carry out the needed tactics. System issues are frustrating but easy to explain, while in-store issues cause more frustration.

 Soft benefits are ideal because customer benefit outweighs cost. Failed execution means customers will not trust the company in the future; operations need to deliver on marketing promises.

How is your business measuring customer loyalty?

What rewards and benefits can you offer your customers to stay innovative?

How can you train your employees to execute your loyalty program to your customers?


How Big Data and Customer Analytics Can Boost Customer Retention

By Mike Gorun at Performance Loyalty Group  //  2013, January  //  Comments Off on How Big Data and Customer Analytics Can Boost Customer Retention

How Big Data and Customer Analytics Can Boost Customer RetentionTechWeb, a division of United Business Media (UBM Tech) recently released a comprehensive white paper sponsored by IBM, titled, “The State of Customer Analytics: Taking a Proactive Approach to Loyalty & Retention”. The white paper explores how customer analytics can increase customer retention and minimize defections through optimally timed, personalized retention offers while significantly improving a company’s bottom line.

Most companies have vast amounts of data about their customers, but have trouble sorting through it all to make meaningful decisions. New analytic tools are becoming available that make it possible to do this.

By using customer analytics to create 360-degree consumer portraits, and then personalizing communications, companies can up-sell and cross-sell to those clients to maximize profitability and increase customer lifetime value. Businesses doing this are not only increasing revenue, but maintaining and developing crucial relationships with their customers.

Customer loyalty & retention analysis enables companies to calculate customer value and to determine whether the retention effort for that specific client is worth the investment. Loyalty is not only concerned about rewarding customers with personalized offers through loyalty programs, but also with turning satisfied customers into successful brand advocates. Techniques such as social network analysis enable businesses to identify those customers with a significant sphere of influence among their peers. As customers’ trust in traditional marketing messages has been steadily decreasing, the ability to leverage peer recommendations by capitalizing on those active in social media is a powerful way to enforce brand loyalty.

Retention analysis allows companies to identify early warning signs of defection. Companies can proactively approach the best customer to target based on their likelihood to accept an offer to stay and not stray to a competitor.

An emerging area, social media analytics, unlocks the value of customer sentiment. It functions both as a listening tool and as a means for predicting consumer behavior and improving customer satisfaction. As business professionals assess the critical infrastructure necessary to cope with the Big Data onslaught, one component is key—comprehensive customer analytics adoption. From accessing rich social media data to increasing customer loyalty & retention, businesses today have a number of goals to focus on at once. A key question remains: How are business leaders viewing the role of technology in assisting them to accomplish their loyalty and retention tasks?

By implementing proactive loyalty and retention initiatives, they can better understand who their satisfied customers are and turn those customers into successful brand advocates.

MediaTrac has released several ebooks demonstrating how dealerships can boost sales with customer loyalty and retention programs. They are available to download for free at

How does your business sort through all of your customer data?

Is your company tracking social media analytics? If yes, how are you doing this?

Are you currently using a customer loyalty and/or retention program? Why or why not?


Do You Really Know What Your Customers Think of You?

By Mike Gorun at Performance Loyalty Group  //  2012, December  //  Comments Off on Do You Really Know What Your Customers Think of You?

Do You Really Know What Your Customers Think of You?How is your company’s customer service? Pretty good? Sure about that? According to statistics provided by Bain & Co., 80% of companies surveyed said that they offer a superior customer service experience, but only 8% of their customers agreed with them. Ouch.

 Okay, so you’re not sure about your customer service. But you think it’s pretty good because your online reputation is good and you have five thousand followers on Facebook. Well, think again. In another customer relationship study conducted by IBM in 2011, companies were surveyed as to the reasons why their customers followed them on social media sites. The companies listed discounts among the least important reasons, but when the customers themselves were surveyed, they listed discounts as a major reason for following a company on a social site.

 For a majority of businesses, there is clearly a disconnect as to how they believe they are viewed by their customers and how their customers actually view them. One reason for this is because so many dealerships are focused on pushing out marketing messages—whether it’s via e-mails, snail mail or other advertising channels. Even with social media, which offers an opportunity to engage with customers, many businesses fall short because they are focused more on responding to criticisms or coming up with witty or engaging content—than what the customers are saying. In short, most businesses aren’t really listening to their customers.

 In today’s competitive environment, simply having a great product or service and providing a good customer experience isn’t enough. Customers now want a fantastic experience—they want to feel appreciated for their business. You may roll your eyes at that, but if you do, you will be overlooking profits. In return for a fantastic experience, customers reward you with their loyalty. We’ve all heard the statistics:

  •  A 5% increase in customer retention can increase a company’s profitability by 75% (Bain & Co.)
  •  80% of your company’s future revenue will come from just 20% of your existing customers (Gartner Group)
  •  Attracting new customers costs your company five times more than keeping an existing customer (Lee Resource International, Inc.)

 A CRM may give you a response rate and ROI on dollars spent on this month’s campaign, but it gives you no indicator of what tomorrow’s campaign may do, or how customer perception will affect your revenue next year. A loyalty program, on the other hand, gives you the ability to answer the questions, ‘what do your best customers care about most?’ and ‘why are they doing business with me?’ With a loyalty program, you can easily identify, track and promote to individuals who are most likely to become loyal, long-term sources of revenue.

 How do your customers view your business?

How do you track how your customers think of your business?

What are other benefits with using a loyalty program?


A Case for Dealer-Branded Service Retention Programs

By Mike Gorun at Performance Loyalty Group  //  2012, December  //  Comments Off on A Case for Dealer-Branded Service Retention Programs

A Case for Dealer-Branded Service Retention ProgramsDealers using loyalty programs or prepaid maintenance (PPM) programs designed specifically for their dealership’s client demographics and geographic location enjoy significantly higher levels of customer retention and service up-sell. In addition to an increased program ROI, dealerships that utilize a personal dealer-branded PPM see continual increases in vehicle repurchase intent.

 In fact, because these plans are captive service plans – meaning the customer is required to return to your store for service — they retain far more customers than similar non-captive OEM-branded plans and are significantly better than NADA retention averages in general.  

 Consider how dealer-branded or dealer-centric maintenance programs differ from OEM branded programs:

  1. They brand your dealership: OEM programs brand the OEM. Most dealers consider the first objective the more important of the two.
  2. Promote captive service: Customers that purchased a dealer-branded program must return to the dealership where the plan was purchased to redeem the service. Conversely, the OEM branded programs allows your customer to service at any like branded dealership, and in many cases it may be your nearest friendly competitor.
  3. They reach a larger customer base: Generally OEM programs limit the sale of their PPMs to new and certified pre-owned vehicles only. The biggest difference is that a dealer-branded program will reach a much wider customer base by allowing the sale of the plan in the service lane (selling to existing service customers) and on competitive-make used product. It is not unusual to see a metropolitan service department selling 300-400 plans a month to their existing customers.
  4. They deliver more ROI to the dealership: OEM programs contain predetermined plan components and generally pre-established suggested retail pricing. Therefore, the dealership’s gross profit is determined by the OEM. With a dealer designed program, the plan elements, service reimbursement rates and retail selling price are all determined by the dealer, thus allowing the store to design in whatever profit they choose.
  5. They lower administration fees and higher revenue recognition:  Dealer-branded programs bypass many of the administrative fees associated with OEM and some third party programs while recognizing all of the plan forfeiture and maintaining the reserve accounts internally.

PPM or Loyalty Program?

There are other types of retention solutions on the market that utilize customer incentive cards and numerous marketing programs that seek to influence retention through email and print ads, but none of them have the lasting shelf life and growing customer acceptance that PPM and loyalty programs offer.

  • Loyalty programs: Like airline mileage programs, they reward customers for their loyalty to the business. They earn rewards, cash or dealership discount points that can be redeemed only at the issuing dealership.   
  • PPM plans: Bundled services such as LOF changes, tire rotations and other routine vehicle service needs designed to encourage the plan holder to return for service more frequently while remaining loyal to the dealership.

Dealer brands can be more powerful then OEM brands

The first automotive loyalty programs were utilized by dealers in 2002. At this time more than half of all the US dealerships employ some type of loyalty initiative. Many through the OEM sponsored programs of Ford, GM and Nissan.  But what about the dealerships with multiple brands where the OEM programs could do more harm to the remaining dealer brand than the good they provide to the other?  Multi-brand dealership groups need a solution that will allow cross-selling and reward redemption between all of their brands. OEMs simply can’t provide that type of solution, nor are they expected to.  Think of the brand Starwood Hotels and Resorts. We all know them as The Westin, Sheraton, The W, Le Meridian and others. Starwood wants to encourage their loyalty members to utilize all of their different brands but under one common moniker. Dealership groups that have multiple brands may very well benefit from this practice as well and start realizing the benefits it provides to them in cross-brand marketing, (not to mention the vast amount of customer purchase data and analytics it provides).

The evidence for dealer-branded retention programs is strong. This proof emerges from a recent 72-dealership study by LoyaltyTrac, which examined 1.7 million repair order transactions over a period of more than two years at dealerships that engaged in a dealer-branded loyalty rewards program.

According to the study, retention of members – those customers who voluntarily opted to use the program — is 56.98%, compared to the NADA average of 20%. OEM loyalty programs that seek to brand the OEM rather than the individual dealerships have hoped to increase retention to 55% with an array of less effective incentives, internal OEM branded loyalty programs and market saturation advertising.

A recent survey by DME Automotive revealed similar results. “Both prepaid and OEM-provided maintenance plans have a powerful impact on dealer service retention,” DME said. In fact, the automotive marketing company noted these plans drive retention to as much as 60% versus typical post-warranty rates of 22% to 40%.

The LoyaltyTrac study also found that those customers that were engaged and joined a dealership branded loyalty-rewards program:

•           Visited their service department more often, every 2.87 months compared to every 5.95 months for customers who did not join the program.

•           Spent $982.34 in retail service annually compared to $384.55 for non-loyalty members.

•           Spent on average $235.01 on a customer-pay RO compared to $191.32 for non-loyalty members.

The evidence seems clear: Loyalty and prepaid maintenance (PPM) programs improve overall service business, drive the customer back more frequently, provide a new source of service lane revenue and ultimately influence vehicle repurchase intent.

Read this article in Fixed Ops Magazine.

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