Dealership Loyalty Programs are an Asset

by Staff Editor
2 months ago
216 Views

Are you a dealer whose is leery of dealership loyalty programs simply because there is a perceived cost associated with the rewards and the liability associated with those unredeemed rewards? While the actual rewards themselves may be a small expense your own rewards program actually builds equity in your dealership. A well-run loyalty program should be viewed as an asset as evidenced by corporations leveraging their loyalty programs (the asset) as collateral for significant loans. Most recently Delta Airlines announced it would borrow $6.5 billion of funds using it’s SkyMiles loyalty platform as colleterial. While dealerships do not fall into that category it does illustrate the intrinsic value of having members versus just customers. After all what is more valuable to your store, 40K card carrying dealership members or 40K questionable customers?

Looking at the the rewards component of a dealership rewards program there are ways to offset any booked expense associated with them.

  • Dealers can expire the awards automatically at a certain level of member inactivity, thus decreasing the any program liability to an acceptable level.
  • Charge a nominal admin or registration fee for the program just like Starbucks does.
  • It is a given that members visit more frequently than non-members. Use unique labor op codes for reward redemptions to effectively track exactly what the actual net cost per member is and compare it to the gross profit they generate. Members will pay for themselves with the added visit frequency and increase in spend.
  • Give your Service Department a special membership type to use in place of goodwill funds. This will generate future business despite the customer having a questionable experience.

A dealership rewards program should never be an expense item and when the intangible value is accounted for they are actually quite profitable and move valuable than you may think. To see more on prepaid maintenance programs and how they can benefit your dealership visit https://performanceloyaltygroup.com.

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