Loyalty Program Trumps Discounting
Many dealers today are viewing their pricing structure as a horror movie: the more slashing, the better. Unfortunately, the industry suffers as the perceived value of its products bleeds away.
Conscientious dealers avoid these deep cuts by providing incentives in other ways. At Heartland Honda, that other way is its growing loyalty program.
V-SEPT supplies the program, which integrates with LightspeedNXT and is actually powered by MoreThanRewards Inc. Customers receive points for every dollar they spend at the dealership. Customers can view online how many points they've earned and see their most recent purchases. They can then print a coupon or gift certificate to redeem at the dealership. Managers can digitally market to customers based on their buying habits.
Heartland Honda used to send customers $25 gift cards on their birthdays. Today, it gives them points. “We’ve tried to go away from gift cards,” Donahoe says. “We try to promote the rewards because the only way to get more rewards is to buy something.”
For a referral, the store gives a thousand points, worth about $70.
Heartland Honda could use V-SEPT to create and mail its loyalty-program-related coupons, but Donahoe prefers to outsource the job to FUSS Inc. He dropped FUSS when he dropped Victory Solutions, thinking he would save money using V-SEPT for everything. He returned to FUSS when he returned to Victory.
“I like FUSS because they’re like clockwork,” Donahoe says, clicking his thumb. “They’re consistent, and whether you lose a salesperson or not, you’re not losing contact with that customer.” Too many customers, Donahoe says, complained about not receiving their coupons when employees were supposed to send them.
“It costs money,” he says of FUSS, “but if you look at the amount of advertising and overall expenses — how much a customer is really worth — the 12 bucks for two years to send customers something is not very costly.”
Donahoe reports that customers will negotiate even on PG&A prices. They sometimes cite an online retailer’s pricing. “Customers will nickel-and-dime you to death,” he says. “They’ll push if you let them push. And that’s the primary reason we implemented our loyalty rewards program: ‘I’m not going to give you a discount, but I’ll give you the awards points, which offsets it.’” (Continued)