Loyalty in the Automotive Industry: Challenges, Features, and Program Examples

Purchasing a car typically takes quite a while (frankly – it is a matter of months, if not years) before anybody decides on their next ride. As a result, the automotive industry faces low purchase frequency. Consequently, creating a customer retention plan, as well as up-keeping consistent engagement can be challenging in the car industry. Nevertheless, customer retention is not an impossible task as a tailored automotive loyalty program can certainly help.

In this article, I will go over the definition of an automotive loyalty program, go through unique challenges faced by the industry, and explore how loyalty programs can boost customer retention in the low purchase frequency environment.

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What is an automotive loyalty program?

An automotive loyalty program is a unique customer retention tool designed for members of the automotive industry which comprises a variety of companies and organizations associated with designing, producing, selling, repairing and renting vehicles.

The primary objective of loyalty programs in the automotive industry is to enhance customer lifetime value and drive customer retention. Each type of a designated loyalty program can be customized to meet the specific KPIs of a particular brand in order to reach the most satisfying results.

Unique challenges for loyalty in the automotive industry

Without doubt, carrying out an automotive loyalty program can be demanding due to three major pain points:

• Difficulty of personalization – as vehicles are high-value items, a significant amount of time passes before a customer makes another car purchase. According to a report carried out by Beehive, only 34% of people owning a car for at least 12 years would buy a vehicle from the same brand again. Accordingly, it is difficult to keep in touch with consumers and learn about their needs, preferences, and driving habits in order to tailor offers to their liking.
• Limited time window of consistent customer engagement – as most of customer interactions are currently digital due to the internet's influence on car-buying and ownerships, dealerships are the last step on the way of making a vehicle purchase. As many as 79% of customers research vehicles online prior to purchase and are well-informed when coming to the car dealership – so few touchpoints with customers are available. Hence, there is not very much time to introduce customers to a particular brand, foster brand loyalty, and influence customer behavior.
• Increasing competition among car manufacturers – due to the expansion of the automotive industry, more car ranges, types, and models across various car brands have appeared. Consequently, the decisive factors for remaining loyal to a designated car brand have been minimized as the general quality, safety, and reliability of vehicles has greatly improved across all brands.

Nevertheless, some of the biggest customer retention challenges can be overcome by implementing modern solutions – for instance – connected car technology which, among other things, allows vehicles' drivers to access the internet, check the available infrastructure which enables intelligent parking, and even connect with other drivers via a wireless network. Being connected to a vehicle will then guarantee a more intensive engagement on the part of the customer as they will most likely be using an automotive brand's smartphone app frequently in order to access all the features of the vehicle. Importantly, the customer data will be constantly available and allow for tailoring offers.

Learn more: What is zero-party data and how loyalty program can help you collect it?

Key features and program types for automotive loyalty programs

The main focus of each automotive loyalty program should be customer retention. Without a doubt, as cars belong to the group of high value purchases, clients do not come back to shop for vehicles frequently. Taking into consideration the availability of information about car brands and pricing on the internet as well as the rising competition among car companies, customers need to feel a need and a reason to turn back to the car seller.

Accordingly, implementing a loyalty program at your automotive business will allow you to nurture customers and make them feel appreciated. Moreover, the loyalty program will also provide this special time for you to educate buyers about your brand, as well as allow you to access and collect reliable data – for example, when customers log into one of your dedicated smartphone apps.

Among the most popular automotive loyalty programs are:

• Commitment based loyalty program – members of this type of a loyalty program receive discounts on car purchases and in exchange commit to using the company's services (car maintenance) and networks (mobile app).
• Point-based loyalty program – this type of program assumes customers logging into an app and collecting points while having their vehicle serviced at authorized dealerships or renting a car at particular places. The points then can be redeemed for discounted future services.
• Membership based loyalty program – within this type of a loyalty program customers are not necessarily offered any special rewards in exchange for points, but their membership itself allows for access to exclusive content and, for example, priority service.
• Coalition based program – this type of a loyalty program connects various brands which cooperate together in creating the best experience for their customers. The points can be earned while purchasing services from different connected brands – car services, car rentals, etc. and redeemed at all of the partners stores and locations as well.

Learn more: Explore different types of loyalty programs across industries

You may wonder what sort of incentives can be offered within an automotive loyalty program as rewards or other means of appreciation, but the possibilities are endless.

If you are running a car dealership, you may incentivize your customers with:

• Personalized messages – when someone makes a purchase – whether of car parts or any type of service that your dealership provides – send out a quick automated 'thank you' email to remind your customers that you care about them and that you appreciate their brand loyalty. You can also include service reminders and consultancy offers which also can be sent as emails or in-app notifications.
• Free maintenance – this is a great way for your customers to redeem their collected points while still being associated with your brand. Provide great service at a discounted or free price – your customers will surely appreciate your efforts.
• Discounts for extending warranty or buying insurance – having someone to take care of your car at all times is a valuable token. Reward customers with vouchers for such services as they are continuing to stick to your brand. Why would they look for something else?
• Free car wash – everyone loves having their car clean and shiny. Instead of paying for extra maintenance, your customers will be thrilled if they can redeem points for the fact that their car would be looking impeccable!
• Invitations for exclusive brand events – if you are running a tiered-loyalty program, you can offer your exclusive members an invitation to special brand events. Presenting a new model of a car? Invite your most loyal customers so they feel appreciated and really a part of your brand.

If your business falls into a category of car rental services or a car sharing app, your clients may enjoy benefits in the form of:

• Discounts on car fares – as your customers use your application more and more, reward them with discounts on future journeys. This will definitely increase customer lifetime value.
• Free upgrade – running a car rental service, you may offer your customer the possibility to redeem their points for having a better-standard car for a rental without paying an additional fee. They will certainly appreciate the comfort.
• Free rental for a weekend – if your customer rents cars from you frequently, for example, makes 3 rentals within a certain period of time, offer them a free weekend where you will not charge them for renting one of your vehicles.
• Priority service – if you are running a tiered loyalty program, allow your most active customers to have exclusive service – make all the paperwork ready when they arrive at your rental.

Learn more: Discover innovative ideas for B2C and B2B loyalty rewards

5 examples of top automotive loyalty programs

1. Nissan: One-to-One Rewards

Nissan, an automotive company based in Japan, has decided to implement a point-based loyalty program in order to reward existing customers and increase the customer lifetime value.

What are the program benefits?

• After creating a MyNISSAN account, customers earn points for each service visit at Nissan dealerships that participate in the rewards program. The collected points can then be redeemed at a 1:1 ratio (1 point = $1 while redeeming) for supplementary services such as oil changes, tire rotations, and tune ups.
• Additionally, members of the One-to-One Nissan loyalty program can also save on purchasing new vehicles – $250 is initially put on the prepaid card and can be redeemed toward future vehicle purchases along with $10 designated for service costs and buying parts.
• The Nissan membership is complementary – there are no additional costs.

2. FordPass Rewards

Ford Motor Company is a well-known American vehicle brand. Their automotive loyalty program features a mobile app named FordPass which enables earning complimentary maintenance together with other benefits such as reward points, roadside assistance, and connectivity (for example, remote control of the car).

How does the FordPass reward program work?

• After signing up to the FordPass app, customers can earn points while purchasing or leasing vehicles – 42,000 points for gas engines, 75,000 points for diesel engines and 22,000 points plus 250 kWh of complimentary charging for Mustang Mach-E owners. The points can then be redeemed toward maintenance, future service, accessories and more – it’s a customers' choice.
• Moreover, due to the partnership with Visa, members of the FordPass loyalty program can be granted Everyday Special Financing on purchases over $499 (including maintenance, repairs, warranty extensions and down-payments) made at Ford Dealerships.

3. Maruti Suzuki Rewards

Maruti Suzuki is an Indian automobile manufacturer owned by Suzuki Motor Corporation. Their mobile app – Maruti Suzuki Rewards – which is the power engine of the Maruti Suzuki point-based loyalty program has revolutionized the Indian car market together with car-buyers' experiences.

How does the loyalty program work and what are its benefits?

• Customers can earn loyalty points while making transactions with Maruti Suzuki – that is through servicing a vehicle at authorized dealerships, extending warranty, getting Maintenance Cost Plan, claiming badges within the mobile app, or buying car insurance.
• The point to money ratio is 1 point = 1 rupee. However, there can be a maximum of 5 points earned on every 100 rupees spent.
• The earned points can be then exchanged for, among other things, paying for all kinds of vehicle services at authorized dealerships, car accessories, insurance or put towards buying a new car.
• Importantly, the mobile app which enables tracking loyalty points also allows for sophisticated vehicle management – a customer is able to access all necessary service information concerning their car within the app as well as schedule appointments at Maruti Suzuki Arenas.

Due to all the perks associated with sticking to the Suzuki company's services, up-keeping customer loyalty is facilitated.

Importantly, the Maruti Suzuki rewards program is also tier-based which guarantees the most loyal customers the most exclusive benefits and rewards. Customers are incentivized to be closely associated with the brand and spend more money on Suzuki products and services as various tiers await them and each of those has even better benefits to offer.

4. Europcar Privilege Loyalty Program

Europcar is one of the oldest and highly recognisable car rental companies based in Paris, France. The participation in their privileged loyalty program is free of charge and offers some of the greatest benefits in exchange for the customers' repetitive business with the company.

Why is Europcar's loyalty program worth it?

• All members get 10% off our public rate for a car or van rental of 3+ days, with no exclusions.
• After 3 successful rentals, customers are offered a free weekend rental.
• As Europcar's loyalty program is tiered, with the higher level of engagement (progress through the tiers is based on the number of rentals or rental days with Europcar in a 24-month period) come better and better benefits.

5. Lexus Loyalty

Lexus is an automotive company which is a branch of a Japanese automaker Toyota. While their loyalty program is not tiered or point-based, it enables the customer to save a considerable amount of money on their next Lexus vehicle purchase.

As the customer commits to the brand, their loyalty is rewarded when they buy a next product of the same brand: existing Lexus finance customers can benefit from an additional Hybrid Deposit Allowance when renewing a Lexus Connect contract.

Ready to build your own automotive loyalty program?

Voucherify is a headless Promotion Engine which enables effortless integration with multiple different platforms, including mobile apps, which could become a crucial part of your own automotive business’ loyalty campaign. Through a mobile app, you will be able to connect with your clients, get to know their needs, and improve your customer lifetime value which is a crucial challenge for automotive industry businesses.  

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At Voucherify, you can choose from various types of loyalty programs among which are: tiered, point-based, coalition, as well as paid membership programs, and decide on the one that best suits your dealership or your car rental business' needs. With Voucherify, you are also able to set up various loyalty rewards that your customers can redeem with their collected points (including a pay-with-points option). Maybe you partnered with other dealerships or rentals and you want your customers to benefit coalitionally? We offer you the possibility to give out cashback as your rewards too. 

Additionally, you can customize special earning rules (including point expiration) in your loyalty campaign to make the program truly yours and secure it against loyalty fraud. But most importantly, Voucherify lets you be fully in control of your loyalty campaign, by managing and editing it without IT intervention.

Learn more: Explore Voucherify's Open Source Loyalty Accelerator

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