The year 2020 has most likely signaled a turning point for the automotive industry. With the pandemic heavily curtailing traffic of all sorts, car manufacturers, dealerships, repair shops and even ride-sharing services find themselves in a situation where they have to introduce new, disruptive measures to not only stay ahead of the competition but also to stay afloat. Automotive loyalty programs are one such solution: though previously they weren’t seen as a good fit for this vertical, next-gen car rewards systems are now capable of driving KPIs for such companies.
Table of contents:
Importance of Loyalty
The Best Loyalty Program Features to Help Your Automotive Company Stand Out
What Is an Automotive Loyalty Program?
Automotive loyalty programs are unique customer retention tools geared towards companies in the automotive industry, including but not limited to car manufacturers, third-party dealerships and car rental services.
Even though the overarching goal of all automotive loyalty programs is to increase customer lifetime value for the company, reward system can be tailored to driving the individual KPIs of a brand, such as boosting personalization, raising brand awareness, increasing social media presence and so on.
Here are some examples of how an automotive loyalty program may take shape:
- Commitment-based loyalty program: in this case, members receive a discount on their vehicle purchase, but in exchange, they commit to using the company’s services and network, to installing and using any required apps, as well as activating and using connected car technology to share data.
- Membership-based loyalty program: the aim here is to nurture customers through members-exclusive content, such as exclusive offers and priority service. Anyone can join. but there are no discounts, as the goal is to make sure the brand is the first on customers’ minds when it comes to making a purchase or using a service.
- B2B loyalty program for partners: this type of automotive loyalty program provides special benefits and rewards for partners, suppliers and subcontractors rather than customers, in order to boost the performance of these companies and strengthen the relationship within the partnership network.
- Loyalty program for the auxiliary services: a coalition-based program that covers rentals, car sharing, body shops, car repairs and other supplementary services, allowing customers to earn points from one brand, and then redeem it for a reward with another.
“As the connected car becomes more prevalent it is going to be easier for OEMs to run loyalty schemes. Adding a loyalty program that gives the customer something back will make it more likely that the customer will choose the dealership rather than a third party garage. The location-based element of the connected car also opens up more opportunities. If the OEM has an agreement with a big coffee shop brand (for example) it could drive customers to their preferred brand and continue to earn points or redeem rewards outside of the traditional relationship with an OEM.”
Account Director at Acxiom UK
The Biggest Customer Retention Challenges for the Automotive Industry
In order to understand what type of loyalty program features and technologies make the initial concept more complete, it’s important to understand the needs and challenges of the companies in this vertical.
The automotive industry as a whole faces low purchase frequency, which results in three major pain points:
- Lack of touchpoints with customers
- Lack of customer data
- Lack of ability to influence customer behavior
Because of the high-value purchases associated with buying an automobile or having it repaired and modified, car companies and dealerships have a limited time window to engage with their customers. This makes it difficult to collect reliable data, on vehicles, preferences, driving habits and so on, which makes personalization a challenge. Lastly, having so few touchpoints makes it difficult to educate buyers and foster brand loyalty.
Luckily, there are a number of technologies that are about to revolutionize the industry. Connected car technology, in particular, will allow more sophisticated vehicle management by subscribing to features such as intelligent parking. This not only allows for more consistent engagement with customers but it also prompts customers to use the brand’s smartphone app frequently, which in turn opens up the possibility to send push notifications.
Whether you plan to rely on dedicated smartphone apps or connected car technology, a reward system no doubt enhances the customer retention plan you have in mind by incentivizing any activity you deem useful.
“Personalisation is the real secret to achieving maximum brand loyalty. Why? Because buying a car is not like other consumer goods. The period of time between one purchase and another is very long. So by creating targeted and personalised engagement opportunities with your customers over a period of time, in-turn, you will inspire brand loyalty and drive long-term retention.”
CEO of Hachiko
The Best Loyalty Program Features to Help Your Automotive Company Stand Out
Car loyalty programs are made from a number of building blocks. If you wish to stand out and capture people’s attention, all of these elements must be implemented seamlessly. Here are some of the most relevant features for companies aiming to launch a stellar automotive loyalty program.
An Engaging Membership Page
Companies tend to overlook the importance of a visually striking, easy-to-understand “home” for the program itself. That’s a huge oversight, as the membership page is the primary point of contact people have with the rewards system. Therefore it has to look inviting and fun, plus it needs to clearly and efficiently showcase the benefits of membership. The membership page also features each member’s loyalty ID to allow for in-store identification, as well as a FAQ section that breaks down the rules.
Next-gen Loyalty Engine
The term loyalty engine refers to the whole structure of the loyalty program. For example, you can gear your membership program towards point collection, where members earn loyalty currency based on how much money they spend at your dealership, shop or store (or at a partner store if it’s a coalition program). Then the points can be redeemed for discounts and exclusive offers for future purchases.
Another option is to use a perks system where benefits are available unconditionally to all members. Depending on your choice, membership may require a proven purchase, or simply enrollment. Perk loyalty programs are best if you wish to build a centralized customer base, using the system to collect contact information to engage and educate them.
Coalition loyalty programs unite several brands under one virtual roof. In the automotive industry, this could strengthen the relationship between manufacturers, dealerships, repair or bodywork garages and even forecourts. Unlike simply integrating certain rewards from individual partners, the coalition approach allows customers to earn points at any of the locations, and spend them at another.
Loyalty programs generally follow a free model, because nothing builds a community like complimentary rewards. However, companies like Amazon can break this rule by asking for a monthly subscription fee and still be immensely successful. The key is value: if the loyalty program offers rewards that are highly desirable for members, they will be willing to pay a recurring fee. In the case of the automotive industry, such membership benefits may include priority roadside assistance, free maintenance, vehicle health alerts and so on.
One of the most alluring aspects of a car or dealership loyalty program is the variety of rewards that are available through partners. Loyalty participants can enjoy benefits like a free treat or drink at their favorite forecourt or get a large discount on car parts at a body shop. The reward catalog of a car or dealership loyalty program is all about convenience, so make sure to utilize the partnership network to its full extent.
Gamified Data Collection
One big challenge for automotive companies is the lack of personalization. To remedy the issue, consider creating a survey about people’s driving habits, vehicle preferences, financial status, likes and dislikes regarding partner services or other preferences. Then use the loyalty program to give people an incentive to complete it.
Using an advanced profiling system, you can create customer tags based on the answers to fuel your segmentation process. Or update customer profiles directly based on the answers. Either way, the data you earn will allow you to send out more relevant emails.
Connected Car Tech Rewards
In the future, smart vehicles will be managed through over-the-air tuneups, allowing drivers to manage smart functions for their vehicles on the go. During the early adoption phase, you can help introduce your audience to this technology by giving loyalty program members free trials as a reward. For instance, you can offer enhanced driving assistance for a week to new members, which they can extend by spending loyalty points.
Digital Loyalty Pass
A truly next-gen automotive loyalty program only works if members are able to effortlessly identify themselves at partner stores, forecourts, body shops, and dealerships. Physical cards are out of the question: they’ve become outdated and people tend to leave or forget them at home. Instead, offer digital loyalty cards that are available online, through a loyalty app, mobile pass or just by opening their membership page on mobile.
Speaking of apps, a dedicated loyalty app can act as an engagement hub, drastically increasing the number of touchpoints you have. For one, the app alerts members about the latest deals, offers and news regarding the loyalty program. The app also can be used to manage services, local partner companies, redeem rewards, fill in quizzes and receive weather reports. Besides the loyalty app, consider implementing a Mobile Wallet, which stores the digital loyalty card, alongside event tickets and reward passes.
Learn about app-based engagement and how loyalty features work on mobile from our joint webinar with Mito.
3 Inspiring Loyalty Programs for Automotive Companies
1. Ford Motor Company: FordPass
American multinational car company Ford has been a trailblazer in the industry since the very beginning. An innovative force, Ford has introduced an app-based loyalty program to reward loyal drivers in multiple ways.
- Customers can earn points by spending money at Ford, and redeem them for discounts at participating dealerships
- Earning 42,000 points unlocks flexible complimentary maintenance
- Using the FordPass app, drivers can request 24/7 roadside assistance
- Loyalty program members receive early access to new events
- Members can use the app to connect to and control their car, for example remotely scheduling it to start
2. Nissan: One to One Rewards
Japanese auto company Nissan has dealerships all over the world, and to make the experience even more fulfilling for customers, the company launched a special loyalty program.
- Customers earn points for spending money on vehicles, parts and services.
- Buying a vehicle provides a $250 discount for the next vehicle purchase
- Enrolled members are eligible for a physical loyalty card
3. Fred Beans: AutoRewards program
Fred Beans is a family-owned and operated dealership business that caters to drivers in the greater Philadelphia area. With more than 25 dealerships supplying 18 vehicle brands, the company set out to deliver additional value to customers in the form of a loyalty program.
- The program focuses heavily on discounts, as each loyalty point can be redeemed for a $2 discount (up to a total amount of $2,000)
- Benefits, such as free oil changes are unlocked upon hitting the 350, 500, 750, 1,000-point milestones
- Customers can also earn points for non-transactional activities, such as referring a friend, using the company’s loyalty app or swiping the membership card during checkout
There Are No Speed Limits on the Road to Success
Automotive loyalty programs provide so many opportunities to propel your brand towards success by fostering true customer loyalty. If you’re interested in learning more about loyalty programs and how to implement one, our definitive guide is a worthwhile read. And of course, we are always ready to showcase our sophisticated loyalty solutions and robust API capabilities during your vendor selection process, so feel free to send us your RFP.