Growing Number of Loyalty Programs Reward Car Buyers
- Dealerships are rolling out loyalty programs to reward customers and help their profit margins.
- A study shows loyalty-program users visit a dealership's service department almost twice as often and spend twice as much.
- Nissan told Edmunds it is developing a mobile app for its One To One Rewards program.
DETROIT — Dealerships across the country are using customer-loyalty programs similar to those found at stores like Kmart to reward customers and help their profit margins.
The free programs allow car buyers to earn points for every dollar they spend in parts, service or accessories at a dealership. The points accumulate and may be put toward future purchases or to cover the cost of service.
According to a two-year study by Performance Loyalty Group, a California-based marketing technology company, loyalty-program users visit a dealership's service department almost twice as often and spend twice as much — $662.01 annually compared to $336.63.
Furthermore, it sells cars. The study found that, on average, dealerships enrolling customers in these programs sell an additional 15 vehicles a month. These sales are to customers redeeming rewards points/dollars toward those purchases.
One of the largest loyalty programs is Nissan One To One Rewards, with 80 percent of its dealerships participating in the program. It offers $1 for every one reward point. The program is three-and-a-half years old and has 4.2 million members enrolled, many of whom are non-Nissan owners that may have purchased a used car from a Nissan dealership.
"Nissan One To One Rewards delivers a significant increase in customer pay, frequency of visits, service retention, customer satisfaction and dealer profitability," Josh Clifton, a spokesman for Nissan North America Inc., told Edmunds in an email.
The automaker has taken the loyalty program one step further by teaming up with more 300 retailers, which let online customers shop, receive discounts and earn bonus points that can be used on services at their Nissan dealer.
The program has become so successful, Nissan is developing a mobile app for the program, Clifton said.
Rusty Wallis Honda in Dallas has had a loyalty program for a year. While the rewards begin the day a customer buys a car, the dealership makes it easy to accumulate more, even without visiting the service bay.
If you like Rusty Wallis' dealership page on Facebook, for instance, it rewards 150 points. If it's your birthday or you're in the military, you get 250 added on. If you refer a customer, receive 1,000 points. For every 500 points earned, it knocks $25 off the bill, all at no cost to the customer.
"Dealers now have the proof that loyalty programs do retain customers, sell more service and sell more cars," said Mike Gorun, CEO of Performance Loyalty Group, in a statement.
Edmunds says: Car shoppers should ask if their local dealer participates in a loyalty program.