Crafting a successful loyalty program in the automotive industry presents a formidable challenge. This endeavor is further complicated by the infrequent contact customers have with the industry, and the inherent conflicts of interest between individual dealers and the automotive manufacturers.
Furthermore, fostering B2C customer loyalty from purchasing new cars proves far from straightforward, often transcending mere brand loyalty. Customers' decisions to switch car brands are driven by diverse factors, such as economic considerations, emerging technologies, vehicle aesthetics, utility, ecological aspects, and more.
Hence, a multitude of variables influence customer purchasing choices within this industry, reinforced by a plethora of marketing initiatives capable of influencing these decisions, even in the eleventh hour.
In the fierce competition for customers, an increasing array of elements is deployed, contributing to the complex landscape of decision-making factors. Nonetheless, it is prudent to consider one particularly potent factor—the implementation of a customer loyalty program. Such a program possesses the potential to tip the scales in favor of a particular brand, ultimately leading to the acquisition of a vehicle from the brand it supports.
Irrespective of whether we are discussing loyalty programs tailored for car manufacturers, their dealers, and service centers, leasing or rental companies, tire manufacturers, or suppliers of oil and tools for service centers, the ultimate objective remains consistent: enhancing the long-term value of customers, spanning both B2B and B2C realms. The paramount considerations include:
What will you learn from the article?
- How is the automotive retail market evolving?
- Why is a loyalty program the key for car brands?
- What are the best automotive loyalty programs that are doing it right?
- What to bear in mind when implementing successful automobile loyalty programs?
Key takeawaysÂ
- The program mechanics should be straightforward, offering a reason for customers to return to the service or sales department, thereby creating opportunities to reap benefits.
- The more enticing offers from different automotive sectors within the program that allow for the swift accumulation of points, the more appealing the project becomes for customers.
- To complement the rapid accumulation of points, it is essential to provide an attractive array of rewards.
- Consider implementing a referral program with the primary aim of not just to enhance customer retention, but also acquiring new ones.
- In B2B programs, the long-term nature of the program, coupled with periodic changes and additions to the redemption options, becomes a crucial factor. This ensures that the most loyal customers always have a diverse selection of rewards to choose from.
How is the automotive retail market changing?
The automotive market experienced a significant slowdown during the pandemic, with approximately 80 million new cars sold globally last year. This data underscores the enduring value of the market, despite the pandemic's impact, and the projections for 2023 are even more promising. Consequently, every automotive company is actively seeking to capture as many customers as possible who are in the market for a vehicle. Below, you will find the list of the top 10 best-selling cars worldwide in 2022:
- Toyota Corolla – 1.12 million units
- Toyota Rav 4 – 871.2 thousand units
- Ford F series – 786.3 thousand units
- Tesla Model 3 – 785.5 thousand units
- Toyota Camry – 676.8 thousand units
- Honda CR-V – 602.7 thousand units
- Chevrolet Silverado – 591.6 thousand units
- Hyundai Tucson – 565.1 thousand units
It's essential to underscore that the automotive market has been undergoing rapid transformation in recent years, which is primarily driven by the increasing significance of ecological concerns, both for individual consumers and global sustainability efforts. Major car companies are acutely aware of their environmental impact and are actively working towards achieving carbon neutrality by 2050.Â
The market has witnessed the introduction of a myriad of new technologies aimed at enhancing safety, travel comfort, and efficiency, while simultaneously reducing emissions from conventional engines. Additionally, the growing availability of electric and even hydrogen-powered vehicles provides customers with a diverse range of options to choose from, aligning with their specific needs and preferences.
Despite the introduction of convenient solutions in both financing options and automotive services, the automotive industry faces the challenge of low purchase frequency. This issue results in a lack of sufficient "contact points" with customers and subsequently limits the acquisition of valuable customer data, which, in turn, hinders the ability to influence customer behavior effectively.
To combat this challenge, automotive companies are turning to dedicated smartphone applications designed to simplify vehicle usage and access support services for drivers. These apps also serve as a means to gather valuable customer data, including behavioral information. The adoption of such apps can notably boost the number of customers opting for authorized service centers, even those with vehicles beyond their warranty period. This approach holds promise for the industry.
Furthermore, retaining customers who choose authorized car service centers can be a formidable task due to the intense competition posed by these non-authorized workshops. Many of these alternative workshops specialize in repairing specific vehicle brands, making them a compelling choice for car owners.
Why is a loyalty program the key for car producers?
Purchasing a car hasn’t changed much in the past few years, and in most cases, potential clients still visit stationary car salons operated by dealers. However, these car dealers tend to be strongly supported by IT tools and, of course, strong marketing techniques, which are implemented by the company's headquarters.
While a new vehicle purchase is a relatively rare event in the B2C market, customer loyalty to automotive brands is still an important factor. This is because loyal customers are more likely to repurchase a vehicle from the same brand, which can lead to increased sales and profitability for automotive companies.
A recent study by J.D. Power found that Toyota had the highest customer loyalty rate among mass market car brands in the United States in 2022, followed by Subaru and Ford in the truck category. These brands are all known for their high-quality vehicles and excellent customer service.
Automotive companies can improve customer loyalty by focusing on providing high-quality vehicles, excellent customer service, and competitive pricing. By doing so, they can create a loyal customer base that will continue to purchase their products and services for years to come
Highest ranking brands in terms of customer loyalty:
- Porsche ranks highest among premium car brands with a 57.4% loyalty rate. Genesis (54.6%) ranks second.
- BMW ranks highest among premium SUV brands with a 58.6% loyalty rate. Lexus (56.4%) ranks second.Â
- Toyota ranks highest among mass market car brands with a 62.2% loyalty rate. Kia (54.1%) ranks second.
- Toyota ranks highest among mass market SUV brands with a 63.6% loyalty rate. Subaru (62.6%) ranks second.
- Ford ranks highest among truck brands with a 63.8% loyalty rate, the highest loyalty rate in the study. Toyota (58.7%) ranks second.
Automotive corporations, independent service groups, and individual car dealers recognize the necessity of acquiring and subsequently cultivating relationships with customers, be they individual consumers or businesses. Building loyalty is often executed through conventional means, such as warranties and their extensions (for an additional fee), various financial services like loans, leasing, and rentals, as well as consistent discounts on vehicle purchases and servicing, tailored to fleet size or purchase value, and discounts for loyal B2C customers. However, it becomes evident that these efforts alone may not suffice, given the competitive landscape, which compels additional actions to stand out in the market.
Car loyalty programs serve as prime examples of such highly effective strategies. They can take the form of smaller, more personalized initiatives or broader, global undertakings involving numerous partners collaborating with vehicle manufacturers, such as tire producers, fuel companies, and insurers (both auto-related and otherwise). These programs naturally extend to both B2C and B2B domains, including specialized B2B actions aimed at fostering loyalty between vehicle service centers and oil or tire brands.
Establishing and maintaining regular and meaningful contact with customers is crucial. This is achieved by offering well-thought-out promotions tailored to their expectations and needs, thus building trust and loyalty. To implement such strategies, it's imperative for customers to provide their contact information, a task for which a dedicated loyalty program application (or a brand-specific app) serves as the ideal tool.
Continuity of customer engagement is vital, with points (or other rewards) accruing for future purchases. This approach serves the dual purpose of providing customers with a financial incentive to return and creating a value proposition significant enough for them to remember.
A customer must not be disappointed, as maintaining a strong connection significantly enhances the likelihood of repeat vehicle purchases from the same brand, be it new or used. This bond also extends to retaining their vehicle's servicing at authorized service centers and cross-selling even high-margin services and products. In such instances, dedicating a portion of the high margin to reinforce loyalty (e.g., double points for exceptional customers) pays off in the future. The customer not only returns for repeat purchases but also accumulates points for their next visit. This action ensures that the customer always holds value, encouraging their return to the brand.
Ideally, the brand-customer relationship transforms the customer into an inadvertent brand ambassador. A satisfied customer willingly recommends the brand to their acquaintances, sharing their positive experiences.
However, individual car dealerships may not possess the capacity to independently develop, launch, and effectively manage a loyalty program. It would be more suitable for such a rewards program to be organized centrally, as it can better align with the brand's objectives and provide a consistent offering nationwide. Furthermore, a centrally organized rewards program can undoubtedly receive more effective promotion and reach a significantly larger customer base. It's worth noting that when such a program is executed in collaboration with non-competing brands, such as fuel companies, tire manufacturers, banks, or insurers, it can become a potent tool in the battle for customers. Leveraging the business synergies of all participating companies, this approach facilitates the rapid expansion of the customer base.
What are good examples of automotive loyalty programs that are doing it right?
Here are several of our favorite loyalty programs from the car industry that managed to achieve spectacular results for their brands over the last years:
Toyota’s Owners Club ties partners closer to drivers
Toyota Motor Corporation is a Japanese multinational automotive manufacturer headquartered in Toyota, Aichi, Japan. It was founded by Kiichiro Toyoda and incorporated on August 28, 1937. Toyota is one of the largest automobile manufacturers in the world, producing about 10 million vehicles per year.
Toyota is a major player in the global automotive industry. It has manufacturing plants in over 30 countries and sells its vehicles in over 170 countries. Toyota is also a major employer, with over 370,000 employees worldwide.
To join the Toyota Owners Club, you can create an account on the Toyota Owners website or through the Toyota Owners app. Once you have created an account, you will be able to start earning Toyota Rewards Points on your Toyota purchases and service appointments.
To earn Toyota Rewards Points, simply present your Toyota Owners Club membership card at the time of purchase or service. You will earn points based on the amount you spend. For example, you will earn 1 point for every $1 you spend on Toyota parts and accessories.
What is an example of an effective loyalty campaign used in the program?
The Toyota Owners program offers a variety of loyalty campaigns, including special offers on parts and services, personalized recommendations, and access to exclusive events. One example of an effective loyalty campaign is the Clean Assist program, which provides Toyota owners with discounts on EV charging.
The Clean Assist program is a great way for Toyota to encourage owners of electric vehicles (EVs) to use public charging stations. The program offers discounts on charging at participating stations, which can help to offset the cost of owning and operating an EV. In addition to providing discounts, the Clean Assist program also provides EV owners with access to a variety of resources, such as information on charging station locations and tips for EV ownership.
The Clean Assist program is a valuable benefit for Toyota owners who are considering purchasing or leasing an EV. The program can help to make EV ownership more affordable and convenient, which can encourage more people to switch to electric vehicles.
What makes Toyota Owners Club successful and what do you like about it?
The Toyota Owners Club is successful because it offers a compelling value proposition that resonates with Toyota owners. The program provides a tangible way for members to save money on their Toyota purchases and service appointments, which is a major incentive for car owners. Additionally, the program offers a variety of exclusive benefits that are not available to non-members, such as extended warranties, roadside assistance, and trip interruption coverage. These benefits make the program even more appealing to Toyota owners.
I like the Toyota Owners Club program because it is a well-designed and comprehensive program that offers a wide range of benefits to members. The program is also easy to use and understand, which makes it a hassle-free way for Toyota owners to save money and gain access to exclusive benefits. Additionally, Toyota is constantly adding new benefits to the program, which keeps it fresh and engaging for members.
FordPass Rewards Visa: a combined loyalty and payment card
Another interesting commitment-based loyalty program in the United States is FordPass Rewards Visa, operated by the Ford Motor Company, an American automaker that produces passenger cars, sports cars, commercial vehicles, and trucks (headquartered in Dearborn, founded in 1903). This concept is similar to Toyota's and allows for significant benefits for active use of the Visa card.
Ford has launched an app-driven loyalty program to express appreciation for devoted drivers in various ways. Through the FordPass Rewards Visa Card, customers can accrue FordPass Rewards Points with every card purchase. These earned Points can then be used to obtain discounts on various Ford offerings, including your future Ford vehicle, Ford servicing and maintenance, and Ford parts.
- Customers have the opportunity to accumulate points by making purchases at Ford, which they can then exchange for discounts at authorized dealerships.
- Gathering 42,000 points grants access to versatile complimentary maintenance services.
- Through the FordPass app, drivers can promptly request 24/7 roadside assistance.
- Dealership loyalty program members enjoy early access to upcoming events.
- Using the app, members can seamlessly connect to their vehicle and exercise control over various features, including scheduling remote vehicle starts, among other functionalities.
What is an example of an effective loyalty campaign used in the program?
The campaign offering 3% Back in Points on gas, auto insurance, tolls, parking, and dining, and 1% Back in Points on all other purchases is very effective for the program and its customers. It is clear that the program organizers understand how important it is to keep their customers engaged on a daily basis, and the above examples of offers address this challenge.Â
Motorized customers can successfully use these offers during their trips, whether they are daily or long-distance. Well-designed campaigns that are easy to understand and beneficial to the customer make offers that are used much less frequently, such as purchases and service at Ford dealerships, more attractive to the customer.
What makes FordPass Rewards successful and why do you like the program?
A very important element of the program is the co-branded Visa card, which makes the program open to offers from program partners, or even business areas, that are beneficial to the organizers and desired by customers. In this case, the offer emphasizes the importance of several areas of direct interest to drivers, while giving them significantly more benefits for purchases made using the card. Of course, other purchases are also rewarded, but with only a 1% bonus. The ease of using the program with the co-branded Visa card and the obvious benefits for the customer in each case of its use are a major advantage of this program over other loyalty programs. An additional value for the organizer is the ability to collect and analyze significantly more data about the behavior of program customers.
Nissan One to One Rewards - cashback for future purchases at Nissan dealers Â
A few words about the brand and the program.
Nissan, a Japanese car company, has launched a loyalty program in the US to reward customers for their loyalty. Nissan One to One Rewards program is simple: customers earn cashback for their purchases and service at Nissan dealerships in the US.
The rules of this project are very simple: customers earn points for purchases and service at Nissan dealerships in the United States, which they can then use to offset future purchases and service costs at Nissan dealerships. The details of the program mechanics are as follows:
- Purchase of a vehicle: Customers earn $250 that can be used towards the purchase of a future vehicle.
- Service work: Customers earn 5% of all service-related expenses (parts and labor) that can be used towards the purchase of future services, parts, or accessories.
- Parts and accessories: Customers receive a 5% discount on all parts and accessories purchases that can be used towards the purchase of future services, parts, or accessories.
You can check your member points balance at any Nissan loyalty point scanning terminal or on the website.
What is an example of an effective loyalty campaign used in the program?
There isn't a high level of customer engagement in this program since cashback rewards are given for expenses like repair and parts costs or accessory purchases, which are relatively infrequent events. Even rarer are the cashback rewards of $250 for a new car purchase. As a result, the program may not appear particularly enticing, but it is certainly more appealing than traditional discount promotions. In this program, existing customers who utilize the funds accumulated from previous purchases are rewarded, as opposed to every customer, who might receive a discount even during their first visit.
What makes the Nissan One to One Rewards successful and why do you like the program?
The Nissan One to One Rewards program is successful because it offers Nissan owners valuable rewards that are relevant to their interests, is easy to understand and participate in, and is promoted regularly to remind members about the benefits of participation.
Members can redeem their points for a variety of rewards, such as discounts on future service and parts purchases, free oil changes, and gift cards to popular retailers. This gives members the flexibility to choose rewards that are most valuable to them.
In addition to the above, I also like the Nissan One to One Rewards program because it is focused on building relationships with customers. The program offers members personalized service and support, and it regularly promotes special events and promotions that are designed to engage customers and keep them coming back to Nissan dealerships.