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Can customer rewards programs work for dealers?

I don’t know which came first — airline mileage programs or the bank vanity cards. But, there’s little doubt a vast array of businesses, large and small, have followed with their own kind of loyalty programs. That’s because they work!

The average American household belongs to 14 different loyalty programs. That’s the finding of a recent study by Loyalty One, a Canadian marketing and brand consulting firm. Appropriately named loyalty programs or customer rewards plans, it seems like just about everywhere I turn these days someone is offering me free Danish after I buy five coffees or a discount on everything I buy because I’m a preferred customer.

There’s no secret to any of this. Loyalty programs are aimed at accomplishing one thing – keeping the customer coming back and offering an incentive or reward for doing so. It works for everything from credit cards to haircuts, perhaps even boosted by today’s consumers who are extremely value-conscious in this economy. 

Creating a customer rewards program can take many forms. It can be for the best customers, or all customers. It can be based on points earned for dollars spent or require a number of purchases followed by a reward. It can be a cash-back plan or allow customers the option of either reward points or cash-back. How about allowing the customer to craft his own reward plan from a menu of options like free fuel or discounted service or accessory gift cards and so on. In fact, it could also be an exciting time for your staff as they innovate a program, because just about anything they can imagine might be included with only one essential – it must give something that the customer likes.

Growing in popularity is the type of loyalty program that delves into the socially-responsible arena. It’s an altruistic plan in which a donation is made to some admired program, like Make-A-Wish or Red Cross, for every purchase the customer makes. It has strong appeal to people who value businesses that demonstrate philanthropic motives – people see that as having “character” and they like to support that kind of business.

Finally, there’s even the paid-membership type of loyalty program. Starbucks and Barnes & Noble, for example, charge customers an annual fee of $25. The reward is that the “member” gets a 10 percent or higher discount on products every time they make a purchase. For the customer, the card easily pays for itself, and the $25 offsets administrative and promotional costs. In addition, the resulting e-mail or mailing list can be used over and over to promote specials, new products and events where, of course, the cardholder always gets his discount.
Today, when holding on to our current customers is so critical and we need to use every good tool to get it done, a loyalty program could be a winning strategy.


3 comments on “Can customer rewards programs work for dealers?

  1. dave

    Have you ever tried to get something, even as altruistic as a donation to Make-A-Wish, from these programs? I did get harley bucks, but it took at least 6-8 weeks to get them, and then they expire in a few short weeks…forget a real airplane ticket, there are so many restrictions as to make them useless.

    The socially responsible thing has been vetted and in most cases it is better for the charity, to simply write a check to them, as every step along the way to getting to them, someone scrapes a few more dollars from the amount that gets to the charity.

    I have been on both sides of this deal, and see no gain for either side, unless it truly is a loyalty program. “Buying” in at some dollar amount is not loyalty, it is a discount program or membership in the club. More than likely the dealer is not going to have manpower to set up, manage and continue the program, so someone somewhere is going to get a management fee to make this program usable to either the dealer or the customer.

    Perhaps there are good ones out there, but why not just have the dealers do the right thing, the most cost effective thing, on time and do it the first time around. And by the way, that goes for the customer side as well, you can not expect the dealer to give away things to you, or hold your slot when you do not show on time.

    All the best, but this one needs to go away

  2. Wanda Kenton Smith

    As usual, Norm, you are right on the money. I’ve just reprinted this to take to a client meeting. There are too many competitors out there trying to woo away your customers, so you have to find ways to build loyalty and give incentive for earning their business. I’d love to know what some of our marine retailers are doing and what seems to be working well in helping to foster strong relationships AND in stimulating sales. FYI, I am personally a BIG believer in this program myself and carry a half dozen or so VIP cards in my wallet for services or places I frequent and return to often … from airlines, to Barnes & Noble, to my local Regal theatre, to plenty of restaurants and entertainment venues and retail stores. It doesn’t have to be a huge incentive. but in this day and time, every valuable incentive speaks volumes and brings buyers back for more.

  3. rem1473

    Sandusky Harbor Marina in Sandusky Ohio, and Lakefront Marina in Port Clinton, OH both offer a unique loyalty program. If you purchase fuel from either marina, you get a “coupon” in the mail for winter storage. Every dollar you spend on fuel, a certain percentage is refunded towards a winter storage contract.

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