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6 Steps to Develop a Beneficial Rewards Program

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Rewards and Referral Programs

Cindy Hunter and her husband, Doug, owner of Hunter’s Garage in Hyde, Pa., found that their otherwise loyal customer base often performed their own oil services, and certain customers only came in for their annual check-ups.

Due to that maintenance neglect, Cindy and Doug found these customers often ended up with all kinds of repairs needed to pass their state’s inspection.

“We were wondering, how could we make this a less painful experience, and also be able to monitor their vehicle and give them a check-up on a more regular basis?” Cindy, the office manager at Hunter’s Garage, says.

The solution for the Hunters came through a rewards program, implemented in early 2018. It’s called the VIP Gold Maintenance program, and it offers $5 off every oil change, and an additional 10 percent off select maintenance services, like four-wheel alignments, tire rotations, transmission flushes, and new wiper blades. After implementing the program in January, which has over 80 members so far, Hunter says customers were much more willing to stop in for routine repairs.

In an effort to boost customer retention, and get more quality referrals, Matt Lachowitzer out of Fargo, N.D.-based Matt’s Automotive Service Center started a rewards program with similar customer retention goals. His was a loyalty card that puts 3 percent of any customer’s repair services back onto their card, which can be redeemed at any time. When referring a customer, the referrer will get $20 put onto their card, as well.

From creating materials to planning your discounts, the two detail how to construct a robust rewards program that keep customers coming back.

 

1. Pinpoint your main goal.

For Hunter and her rewards program, she had to plan it out for six months before it went into action. She assessed the type of vehicles that came into the shop, and what the shop needed to do to increase car count, and address services and repairs customers were neglecting.

Hunter’s Garage was in a rural area, many customers were doing their own oil changes, or getting them done at cheaper quick lube shops. Hunter wanted to create an incentive for those customers to come in, get those oil changes, and get other routine maintenance like tire rotations and brake flushes.

For Lachowitzer, the main goal was to reward loyal customers for coming back, and give them an added incentive to bring in new quality customers. He first started with a punch card system, which shifted into an inexpensive gift card, and then the branded loyalty card. After implementing this program, he’s given out over 1,500 cards, and has had 12–15 referrals per month since its implementation.

“The key is to start simple, and don’t overthink it,” Lachowitzer says.

 

2. Be smart about your investment.

Both shop owners say it should be a small investment to create your cards, decals, or whatever items you’re creating in a program like this, and it’s important to be resourceful. Lachowitzer produces about 500 branded cards per year, which cost around $500. Lachowitzer says it’s important for his cards to be branded in full shop colors, but for a company looking into this, the cost could be around $200–$300 for 500 cards.

Hunter already had a vinyl cutting machine to create shop sweatshirts, which cost $500, and was taken out of the shop’s marketing budget. She then pays just $2 for sheets of vinyl to create the VIP decals that go on each member’s back window. Hunter wasn't sure how effective the program would be starting out, so she makes the decals as they’re needed.

 

3. Plan out your discount.

Initially, Hunter was wary about doing a discount rewards program, as she didn’t want to attract customers wanting the cheapest services. But she had confidence in her customer base, and eventually decided that discounts like these would be the best ways to get customers through the door.  

“There are three factors that limit people’s abilities to do this on vehicles,” Hunter says. “Convenience, cost, and lack of knowledge. If I can get them in the door, we can offer them that discount, we can help them better take care of vehicles so that they’re happier, and we can educate them on status of vehicles on a regular basis.”

It’s already seen a return for Hunter so far, as she’s seeing members coming back for oil services and finding more repairs that need to be done through digital vehicle inspections.

For Lachowitzer, planning the discount was a matter of doing simple math on what it costs to keep a customer.

“It was just a matter of playing with how much it costs to get a new customers through advertising,” Lachowitzer says. “We just kept tweaking it until we found the balance.”

 

4. Make sure staff is on the same page.

Both Hunter and Lachowitzer say there should be some training required for the staff to be on the same page about programs like this.

Hunter got input from the techs and owners to make sure the benefits of the program reflected the benefits that would most help customers. When it was installed, she made sure that all technicians and service advisors were on board with what the program was, how they can program VIP customers into their digital vehicle inspections, and what discounts they should be expecting.

Lachowitzer says one of the biggest keys to the success of this program is to make sure service advisors are aware of how the program works. If the shop goes a month without seeing a lot of referrals, he makes sure to mention it to his service advisors to make sure they’re bringing the program up to customers.

 

5. Plan to promote it.

When initially starting the program, Hunter promoted it to customers through flyers, given out after a repair is completed. She also distributed these flyers to local businesses, including the ones Hunter’s Garage has as fleet customers.

It also was promoted on the shop’s Facebook page, and Google ad posts. She soon found customers calling the shop, and specifically asking to be signed up for the VIP program.

To be a part of the program, each customer must put a Hunter’s Garage sticker on their back window, which works as its own form of moving promotion.

 

6. Be willing to evolve and change.

As Lachowitzer has learned in the six years of his program, as it has evolved from a punch card into the loyalty card program the shop has now, he’s realized the importance of being able to evolve.

Over the years, Lachowitzer has realized the cards were kind of an awkward item for customers to carry around, and many of them would lose them and lose their entire balance along with it. So starting at the end of the year, Matt’s Automotive will be ditching the cards, and putting the reward’s program on each customer’s account.

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