A growing number of automakers are launching customer rewards programs in a bid to instil loyalty in their client base as well as acquire valuable consumer data.
But the auto sector could face an uphill battle replicating the success of such ubiquitous plans as Loblaw Cos.’ Optimum rewards system, given how infrequently people make a vehicle purchase or even take it in for regular maintenance.
“Customers aren’t going to dealerships as often as a drug store,” said Michael Carmichael, CEO of UpAuto, which owns General Motors, Nissan and Subaru dealerships in Stratford, Ont.
“The average customer is coming to a dealership 1.8 times a year maybe, so how valuable is a loyalty program to the customer?”
Creating more frequent contact between the customers and dealers — and capturing customer data — is critical to dealer prosperity, he said.
“The more time between the customer visiting us or even thinking of us, the higher the defection.”
Earlier this year, Ford Motor Co. and Fiat Chrysler Automobiles enacted U.S. customer rewards programs north of the border.
In January, Ford introduced FordPass Rewards to Canada. Based on the FordPass mobile app, it provides reward points to customers who buy or lease a new Ford vehicle or certified pre-owned vehicle or who service their vehicle at a Ford dealership. Points can be used for parts, service or the purchase or lease of a new vehicle at any participating Ford dealership.
“We have seen how successful loyalty programs are in Canada,” said Jason Day, manager of customer experience for FordPass Rewards at Ford of Canada. “They really have become part of our everyday lives and strong drivers of how and where Canadians choose to do business.”
Ford of Canada previously relied on the Owner Advantage Rewards program, which was successful “in driving repeat service business and keeping customers engaged” with the dealer and automaker, Day said.
At the end of February, more than 300,000 Canadian customers had signed up or FordPass Rewards, the automaker said. Dealer takeup has also been high, with virtually every one of Ford’s 433 Canadian dealerships participating, according to the automaker.
‘WHOSE CUSTOMER IS IT?’
FordPass Rewards might rankle some dealers in the network because the automaker controls the customer data and allows owners to use their points at the dealership of their choice. Under the previous plan, customers would have to deal with the retailer at which they earned their points.
Winnipeg-based dealer Steve Chipman, who owns four Ford stores and holds a total of 20 franchises, said he can understand why some dealers are concerned about the changes.
“I have had this debate with a whole bunch of people,” Chipman said. “In my mind, the customer should be able to go where the customer wants to go. The reason he should come back to you for service is because you give him great service and not because he has to.”
The issue of who does and should control buyer data also remains a hot-button issue, said Chipman, CEO of Birchwood Automotive Group. “Whose customer is it? Is it the dealership’s customer? Is it the manufacturer’s customer? That is an ongoing debate.”
Rival Fiat Chrysler Automobiles has taken a more modest step in Canada, offering the benefits of its U.S. Jeep Wave luxury loyalty service only to buyers of the 2021 Jeep Grand Cherokee L. Free perks include up to six oil changes and tire rotations and trip-interruption benefits. The program has been offered in the U.S. since 2015 and has subsequently been expanded to all Jeep vehicles.
The Canadian subsidiary would not comment on plans regarding the program.
SUCCESS DEPENDS ON STAFF
Loyalty programs can acquire data on customers for critical information such as buyer history and when lease terms are ending.
While apps can help automate data capture, the success of a consumer loyalty program for dealerships depends on people on the front lines, said Amanda Gall, director of marketing for Hamilton, Ont.based Ackroo, which operates loyalty and promotional programs for more than 500 auto dealerships in Canada.
“Dealerships want to ensure that their staff members are capturing the right information and keeping customers up to date about the program,” Gall said.
“Dealerships need to show that what customers signed up for matters and the money in their account is a service that benefits them,” Gall said.
Gall sees the value in FordPass Rewards, as well as other marketing team-ups such as Ford with Costco and General Motors of Canada with its Scotiabank Visa program. “I think there is a major value in strategic partnerships to leverage your program. More eyes, more access points equals more brand awareness.”
Expect more automakers and dealerships to follow Ford’s lead and offer apps, platforms and expanded benefits to try to increase their share of the customer’s business.
For dealers, however, it will likely be people, not technology, who win or lose the fight for customer loyalty, said UpAuto’s Carmichael.
“At the end of the day,” he said, “if you have rude people answering the phone or snarling at people when they walk in the showroom, your loyalty program doesn’t matter.”
