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What has surprised you the most about the findings in the loyalty study? Why?
The overwhelming takeaway is that a one-size-fits-all service marketing approach just doesn’t work. What motivates shoppers to choose a store, and how they want to be communicated with, can vary dramatically by preferred store type, such as auto dealers or independent repair shops, and age.
And, as far as a specific surprising takeaway, we were a little startled to find how great the traction for loyalty programs is across all customer segments. We have always believed that loyalty programs have a critical part to play in retaining a store’s most loyal customers, but we were surprised at the high level of interest from swing loyalists, who are partially committed to a store, as well as disloyalists.
While loyalty programs do rank very high for aftermarket loyalists (their No. 1 indexing attribute is a “frequent shopper” program) and dealer loyalists (rating it among the top 10 most important store attributes), openness to a loyalty program is nearly as robust for service centers’ swing loyalists (those who either visit, or spend most at, a store type, but not both) and disloyalists (who neither visit nor spend most at that store type).
Roughly one-third of dealer and aftermarket chain loyalists report they’re likely to join a loyalty program, but so are nearly the same percentage of dealer swing loyalists. And over 25 percent of dealer and aftermarket swing loyalists (and disloyalists) would jump on board given the option.
And if one imagines that loyalty programs only have traction with older customers in their prime spending years, our data reveals that young dealer customers (aged 18-34) actually value loyalty programs more than any other service shopper.
What do you think are the key lessons for dealers trying to attract younger customers, who as you noted, tend to shop around a lot more?
To capture these younger customers from their aftermarket chain competitors, dealers need to understand where they are going for maintenance information: company websites, social networking sites and online message board/review sites. They also need to understand what kind of communications they prefer: emerging digital communications like text messaging and mobile app notification. Younger consumers “shop the very hardest," performing more online research (at more platforms) before they pull the service decision trigger. To reach/convert them, providers must exploit database mining, social media, online reviews and loyalty programs.
The study also revealed that under-35 customers place a high value on convenience (extended hours, online appointments, etc.), and young dealer and aftermarket customers put a much higher premium on low prices, discounts and coupons versus those aged 35-plus, which means that dealers need to shape their offerings and their message around price and convenience.
And given their interest in loyalty programs, that is a definite marketing must for next-generation shoppers.
A high number of loyalists expect service providers to offer a loyalty program. What are some of the key elements of a successful loyalty program? Does this differ at all between dealers and aftermarket providers?
The key features any automotive loyalty program should offer are discounts on parts and services, special savings events and the ability to earn reward points. Discounts and savings events can be delivered through direct marketing communications or storewide promotions. Other important features that customers desire from a loyalty program include providing priority service and financial rewards. The level of importance of each attribute was fairly consistent across dealers and aftermarket chains for loyalists. The key takeaway for dealers and aftermarket service centers is, at a minimum, you need a program that allows customers to earn points and receive discounts and savings on parts and services. Since loyalists care about loyalty programs, you will risk losing your best customers if your competitor has one and you don’t.
Our study also busted the myth that customers want a physical membership card when they join a loyalty program; the fact is they don’t really care. Of the 12 common loyalty program features evaluated by DMEa, a physical membership card ranks last in importance for customers. Only 5 percent of all automotive consumers considered a membership card important. Membership cards are an unnecessary expense for most loyalty programs and they create a barrier for customers that will only lower participation.
