The automotive industry, with infrequent purchases, faces unique challenges in building lasting customer relationships. As competition grows and brand loyalty declines — evidenced by a 10% drop in returning buyers for brands like Audi and Land Rover — automakers are exploring new ways to retain customers. For example, loyalty programs could appeal to families searching for the best family SUVs, offering exclusive perks and incentives to keep them coming back. Could this be the solution??
What Is customer loyalty in the automotive industry?
In this sector, customer loyalty means repeatedly choosing a brand over time. This loyalty comes from positive experiences, trust in product quality, reliable service, and efforts like loyalty programs.
Why does customer loyalty matter?
Loyalty is essential in today’s competitive market. It drives repeat business, ensures a steady customer base, and becomes even more crucial during economic uncertainty or industry changes.
Benefits of customer loyalty:
- Higher profits: Loyal customers spend more on vehicles, services, and accessories.
- Brand advocacy: Satisfied customers bring in new business through referrals.
- Cost-efficiency: Retaining customers is cheaper than acquiring new ones.
- Revenue stability: Repeat sales create consistent income.
- Better data insights: Loyal customers provide valuable data to refine offerings.
How loyalty programs can help
Though uncommon for automakers, loyalty programs can be transformative. Rewarding repeat business and fostering engagement helps address key challenges.
Types of automotive loyalty programs:
- Tiered programs: Reward customers based on spending or engagement. Points can be redeemed for services or future purchases.
- Perks programs: Offer benefits like free maintenance or VIP events. For example, BMW’s Inside Edge includes vehicle check-ups and special offers.
- Coalition programs: Partner with businesses like dealerships or repair shops, allowing customers to earn and redeem points across multiple services.
- Membership programs: Charge a subscription fee for ongoing perks, such as Volvo’s discounts for aging vehicles.
7 essential features of a successful automotive loyalty program
A strong loyalty program builds lasting relationships. These features boost engagement, retention, and repeat business.
1. Strategic partnerships & rewards
Strong rewards are key to engagement. Partnering with businesses like car washes, fuel stations, or insurers can expand options. For instance, fuel station partnerships could offer members discounts, while insurer collaborations might provide exclusive rates.
2. Personalization
Modern customers expect tailored experiences, with 71% wanting personalized interactions.
In an automotive program, this could mean offering accessory discounts for specific vehicles or customized maintenance reminders based on driving habits.
3. Gamified data collection
Gamification boosts engagement while gathering insights.
Adding challenges, leaderboards, or rewards encourages customers to interact with your program. Gamified elements can increase engagement by 47%.
4. Eco-friendly rewards
Sustainability is increasingly important.
As EV sales rise from 4% in 2020 to 18% in 2023, consumers value eco-conscious brands. Offer green rewards like reforestation incentives or discounts on sustainable products.
5. Tier-based programs
Tiered loyalty systems reward customers for spending and loyalty, offering better perks at higher levels.
These programs create exclusivity and encourage engagement, with perks like VIP services, special discounts, or early access to new models.
6. Mobile engagement
Mobile apps are essential to modern loyalty programs.
App users are 73% more likely to purchase from a dealership and schedule 25% more service appointments. Apps make it easy to access rewards, offers, and updates, driving repeat business.
7. Rewards through connected car technology
Connected car technology enhances loyalty programs.
Offer rewards like real-time vehicle health alerts, driver assistance tools, or over-the-air updates. Complimentary trials for features like premium navigation or automated parking boost satisfaction and retention.
