Complete Guide to Loyalty in the Automotive Industry

Welcome to the fast lane of automotive loyalty - where shifting trends and fierce competition demand a strategic approach. Here we'll explore the latest insights and innovative strategies for revving up brand loyalty.

Discover why customer loyalty matters in the automotive industry and how it can drive business growth, boost brand advocacy, and enhance customer retention. We'll explore the challenges faced by automotive brands and reveal tech-driven solutions to overcome them. 

Fasten your seatbelts!

Why is customer loyalty important in the automotive industry?

In the automotive industry, customer loyalty is crucial for more than just consistent sales. Building trust and long-term relationships sets brands apart from their competitors. Here’s why loyalty matters:

• Cost Savings: By focusing on retaining customers rather than constantly acquiring new ones, car companies can save on marketing costs. A loyal customer base is less expensive to maintain than continually attracting new buyers.
   
• Positive Word-of-Mouth: Customer loyalty creates a ripple effect of positive word-of-mouth, leading to referrals and sustained success in a constantly evolving market. Happy customers often share their experiences, bringing in new business.

Main challenges of brand loyalty in the automotive industry?

Creating loyalty in the automotive industry isn’t a smooth ride. Automotive brands face the following obstacles: 

1. A complex purchasing journey

When buying a car, customers have a multitude of options. From hybrid hatchbacks to second-hand SUVs, it can be an overwhelming decision. Given the significant financial investment involved, buyers are thorough in their decision-making process.

Buying a car isn't just another shopping trip - it's a rare, high-stakes decision that customers don't make often. With few touchpoints and considerable time between purchases, manufacturers struggle to build lasting relationships.

2. Limited customer data and understanding

In the age of big data, understanding customers should be a breeze, right? Wrong. For car brands, it’s more like putting together a puzzle with missing pieces.

Unlike industries with direct communication channels, automotive companies rely on intermediaries like dealerships, independent garages and online platforms to talk to customers. Consequently, brands struggle to get a comprehensive understanding of their buyers preferences, desires, behaviours and expectations. 

Without a clear understanding of your customers and their needs, tailoring their experiences and building loyalty becomes impossible. It's like driving without a GPS!

3. Low influence over purchase decisions

The decentralised automotive industry weakens brand loyalty, as third parties have more influence over the customer journey. While manufacturers invest in innovation and marketing, final purchasing decisions often slip from their control.

Customers easily shift loyalty due to dealer recommendations, advice from independent garages, online reviews, and word of mouth. To bring customers back to the main brand for purchases and maintenance, strategies are needed to bypass these influences and reinforce loyalty directly.

How can technology help build customer loyalty in the automotive industry?

1 - Personalisation for Precision

Start by leveraging loyalty programs to gather vital customer data. This information fuels personalised experiences, ensuring each interaction resonates with individual preferences. From tailored communications to customised incentives, it's about delivering the right message, to the right people, at the right time.

2 - AI Insights

Integrate AI technology with your loyalty program to unlock deeper customer understanding. Through advanced analytics, AI identifies behavior patterns, predicts churn, and highlights preferences. Armed with these insights, you can proactively address issues and anticipate needs, cementing long-term loyalty.

3 - Rewarding Loyalty, Building Bonds

Rewards shouldn't just be for newcomers. Treat existing customers like VIPs with personalised perks and exclusive offers. By fostering a sense of appreciation and value, you strengthen the bond between customers and your brand, making it more likely that they will return to you.

4 - Seamless Engagement Across Channels

Omnichannel engagement is key to staying connected with customers. Whether through a mobile app or a website, ensure a consistent and convenient experience across all touchpoints.

5 - Location-based loyalty management

White Label Loyalty’s 'venues module' allows car brands to measure and manage loyalty schemes by physical location, such as dealerships.

For instance, if data reveals that a significant portion of customers in the north region do not return to the manufacturer for services or maintenance advice, the 'venues module' can segment rewards to specific venues. 

By delivering personalized incentives based on customer behavior and location, brands can effectively tailor their offerings to meet the unique needs of different regions or customer segments.

Seizing the Opportunity

With almost half of new car buyers uncertain about their next purchase, there's a prime chance to influence their loyalty. Utilising technology-driven loyalty programs can establish your brand as the top choice, turning indecisiveness into commitment.

In essence, technology isn't just a tool; it's your partner in cultivating automotive loyalty. By tailoring experiences, leveraging AI insights, and incentivising behaviour, you can create lasting bonds with your customers, and keep your brand ahead of the competition.

Best practices for loyalty programs in the automotive industry

• Subscription-based loyalty programs

The premise of a membership-based loyalty program (also known as a VIP or paid loyalty program) is that a particular brand is offering rewards so exclusive that customers must pay for them. Members aren't offered rewards in exchange for points, but their membership itself allows for access to exclusive content.
 

While the majority of loyalty programs offer complimentary rewards, a membership-based loyalty program focuses on the value of the rewards offered: if the loyalty program offers something that is highly desirable for members, they will be willing to pay a fee to be a part of the program.

This loyalty program type can be a powerful choice for the automotive industry: membership benefits may include priority roadside assistance, free maintenance, priority service, vehicle health alerts, and many more.

• Varied rewards through partners

This brings us to the second best practice for customer loyalty in the automotive industry: brands should offer a great variety of valuable and effective rewards, also available through partners.

The key is convenience: members of the loyalty program should be able to enjoy benefits like a free treat or drink at their favourite location, get a discount on car parts at a body shop, or even receive a free car wash instead of paying for extra maintenance.
 

• Coalition loyalty programs

Another great type of loyalty program for car brand loyalty is a coalition loyalty program. Uniting several brands under one singular reward scheme can allow manufacturers, dealerships, car rentals, repair or bodywork garages to all work together in creating the best experience for their customers. 

Customers can earn points by purchasing services at any of the locations and from all the connected brands, and can then be spent at all of the partners’ stores and locations too.
 

Using the right loyalty infrastructure, a large number of different sites can easily join one loyalty platform, allowing administrators to manage data and marketing.

• Continuous engagement

Car brands that want to achieve true loyalty should stay in touch with customers through various touchpoints, such as post-purchase follow-ups, incentivising them to have their car services at the branded garage and choosing branded services with personalised rewards.

The right loyalty technology gives you access to first-party data so you can have a closer look at consumer behaviour and preferences, through many different touchpoints.
 

• Personalised incentives

Here are some reward ideas for customer loyalty in the automotive industry:

• Free car wash: redeem points for a free car wash with a business partner.
• Brand events: invitations to exclusive brand events, such as the presentation of a new car model.
• Free maintenance: free (or discounted) maintenance is a great way for your customers to redeem points while still being associated with your brand.
• Discounts for extending warranty or insurance: vouchers for these services are a powerful tool to get customers to stick to your brand. If you're offering valuable rewards, why would they look for something else?
• Priority service: this works especially well if you are running a tiered loyalty program, effectively incentivising customers to choose branded services to climb up the tiers and get exclusive rewards and offers.

• Discounts on car fares: if you're a car rental service, reward your most active customers with discounts on future journeys, effectively increasing customer lifetime value.
• Free trials: use free trials as a reward, for example offering something like enhanced driving assistance for a period to active members.

The top 5 examples of best loyalty programs in the automotive industry

1. Volkswagen

Volkswagen’s BONEO program uses gamification through challenges and loot boxes drop (with experience points, award points, and overall cool items) to increase member interactions even after the first purchase.

The brand’s app encourages regular interaction by providing members with a unique, digital car avatar (aptly named Carvatar) during the first phase.

Members of this loyalty program can engage in challenges and interact with others, once again making sure that customers keep using the app (and go back to the brand!) again and again.

They also get special perks, such as a free car cleaning, hot and cold drinks, VIP tickets to events and a free use of an elite Porsche car, just by driving their car.

2. Nissan

Nissan's loyalty program allows members to earn rewards for actions they would’ve done already, like taking care of their vehicle, and to apply their rewards at their dealership of choice.

Members can earn points not just for buying a new vehicle (but they can earn points by doing so - receiving a whopping $250 discount for the next vehicle purchase), but also for spending money on vehicles, parts and services.

Points can then be redeemed for services of your choice like oil changes and tire rotations, but also exclusive access to special offers and savings on service and new vehicle purchases.

3. Tesla

Tesla’s loyalty program is designed around points, called “earnings”, that can be gathered from Tesla purchases - anything from vehicles to solar features.

These earnings can be redeemed for various valuable Tesla products and services, including supercharging, maintenance, accessories, and even the purchase of a new Tesla car.

One of the key points of this loyalty program is the amazing referral campaign that Tesla offers, which gives customers the opportunity to earn credits for referring new customers to the company.

4. Ford

The Ford loyalty program shows the power of brand partnerships within automotive loyalty.

This app-based program rewards loyal drivers in multiple ways, as they can earn points by spending money at Ford, but can then redeem them for discounts at participating dealerships.

Among the many perks, members can request 24/7 roadside assistance, they get early access to new events and they can unlock rewards such as flexible complimentary maintenance.

By providing early access and VIP treatment, the extra perks reinforce the brand's promise of a good driving experience and strengthen the bond with the consumers, even after the first purchase.

5. Europcar

One of the best car rental loyalty programs is Europcar's hybrid model, combining permanent perks and tiers to reward long-term loyalty.

The loyalty program offers members 4 tier levels based on the number of rentals or rental days with Europcar over a 24 months period.

Top-tier members can get a one-year Priority Pass membership for airport lounges and a double complimentary car upgrade as part of the tiered program.

All members can receive a 10% off the public rate for a car or van rental of 3+ days, priority service and a free one-car category upgrade.

Europcar also has a separate program dedicated to business executives, effectively targeting multiple demographics at once.