GM, Ford turning to reward programs to boost customer loyalty

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Bowsher: most dealers on board

Harvard Business Review says that purchasing a new customer is estimated to cost between five and 25 times more than maintaining an existing customer.

That math starts to click with US car manufacturers.

Because American car sales are slow, they set aside their fixation by conquering new customers to focus more on how they can make their existing ones value and become more valuable.

One way they do that is through loyalty programs that assign points that customers can redeem for discounts on accessories or services. Such programs are not new to the industry, but have traditionally been part of an automaker brand credit card.

Ford Motor Co. said this month that it will launch such a program as part of its FordPass app in 2019 and as part of a broader shift in its marketing approach to retaining loyal customers.

"When we did all the data analysis, it became really clear: a loyal owner is so much easier to do business with than to get someone else's customer," Jim Farley, Ford's president of the world markets, said. dealers during a meeting in Las Vegas. "It was a big 'aha & # 39; moment for us.'

Ford has not provided more details.

The announcement came six months after General Motors quietly launched the loyalty program based on My GM Rewards points.

"We are in time after the record for vehicle sales," said Michelle Krebs, Autotrader executive analyst. "The cake does not grow, it shrinks, so it's crucial for brands to keep their loyal buyers instead of looking for new ones."

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Krebs believes that other car manufacturers can follow. "Everyone has to hold their current customers for sales and service," she said. "It is becoming incredibly important and it supports dealers."

IHS Markit reports For eight consecutive years Ford has led to a general customer loyalty for brands, while GM has shown the highest honor as a company over the last three years.

GM spokesman Jim Cain said the new program was developed to continue that series. He refused to discuss details of the program.

Dealers are at the forefront of the GM program. They are currently registering customers and GM has been sending informative e-mails and sign-in e-mails to customers since May.

Customers participating in GM's program will receive points for promotions such as participation in the program, buying or leasing GM vehicles, and taking vehicles to the dealership for OnStar service and purchasing services.

Points can be redeemed at eligible dealers for discounts on accessories, maintenance services and OnStar telematics subscriptions.

Purchase values ​​range from 2000 points for $ 10 towards service to 100,000 points for a $ 500 surcharge for a new vehicle.

Mike Bowsher, chairman of the National Dealer Council of Chevrolet, said the program has been a runaway hit so far. "It's a great tool to bring traffic back to the stores," he said.

Bowsher, owner of Carl Black Automotive Group from Georgia, said that GM has been working on the program for over a year with its dealer communities. To participate, he said, dealers are charged a "small" percentage of customer turnover.

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"For the most part, dealers like it, especially in terms of service, parts and accessories," Bowsher said. "We will continue to grow this."

The optional GM rewards initiative, launched as part of the Essential Brand Elements program for dealers in the second quarter. At the level of the consumer, the programs are marketed by their individual brands such as My Chevrolet Rewards, My Cadillac Rewards and so on.

The program comes two years after Chevrolet has announced its Truck Legends loyalty program, which has seen the company as very successful.

But Truck Legends differs in that it is exclusively for Chevy truck owners and is more of a community for owners than a point-based incentive program.

Reward loyalty

Clients begin to earn points under GM's new program as soon as they sign up. Points can be earned in some ways:
• 1,000 points each for registering in the program, filling in the membership profile
• 5,000 points for buying a certified second-hand GM vehicle
• 20,000 points for buying or leasing a new GM vehicle
• 6 points per $ 1 spent on service, certain repairs and accessories at participating dealers and the use of an OnStar plan