If you own a car wash, tire shop, car service or any other company related to services for automobiles and motor vehicles, you most likely know that retaining current customers is no less important, and in many cases a more significant task, than attracting new ones. To achieve great success, you should think about how to motivate customers to use your services again and again. Loyalty programs can help you with this. If you don't have them yet, then it's time to implement them.
This article will talk about what the meaning of loyalty programs is, what types of loyalty programs are, the pros and cons of each of them are analyzed, and examples of using a cloud service for car wash, tire fitting and Control365 car service are given.
If it’s hard for you to decide which loyalty program to use, the article will help you do this. Also, the article will give some recommendations and tips that will help you configure the rules of the programs in an optimal way and avoid common mistakes.
What is a loyalty program?
Loyalty program is a set of rules governing the conditions of receipt and prices of goods or services, aimed at motivating the client to make new purchases or reuse the services of the enterprise, thereby increasing the sales and income of the company as a whole. An important component of any loyalty program is its compliance with the long-term goals and objectives of the enterprise itself. For example, if the loyalty program is based solely on the provision of discounts, then there are times when it ultimately leads to a negative effect, attracting “freeloaders” and scaring away “marginal” customers. It is not uncommon for such campaigns to form a customer base that buys only cheap goods or is waiting for the next discounts.
Therefore, it is important to organize a loyalty program so that it forms the right audience and builds long-term relationships with it.
Varieties of Loyalty Programs
Temporary discounts on goods or services
This is one of the easiest ways to attract customers. You can call it a loyalty program with great difficulty, but you can still. The thing is how to apply this method.
At a car wash, tire service or car service, this method of attracting customers is usually used in two cases:
- When an enterprise is just opening, temporary discounts on services can be applied in order to lure some customers of other enterprises to itself. The Control365 service allows you to set the time interval when prices for goods or services will be reduced relative to their normal cost or a predetermined discount will be automatically applied to orders. An important point in this case is informing customers that current prices for services are temporary and will be higher in the future. This must be done in order to avoid a negative scenario in the future, when the client arrives next time in the hope of receiving the service at the old price, and will be unpleasantly surprised by its actual cost. A good example of such a strategy is, for example, the free provision of services at a self-service car wash within 3 days after its opening. The purpose of such a campaign is to familiarize customers with the capabilities of the enterprise and overcome the barrier when a potential client wants and is ready to use the services, but refrains for various reasons (he does not know how to use the equipment, he is not sure that this will suit him, etc.).
- When the company is idle due to external factors. A good example is the provision of a 30% discount for car washes for dry cleaning services in the rain. Here it is necessary to note the appearance of additional risk, when the external factor may not come (the weather will be clear), and the administrator will arrange the service at a discount, while taking money from the client for the full cost of the service. That is why it is important to keep track of orders, which will allow you to quickly get access to simple and understandable reporting in order to detect such violations in an automatic or semi-automatic mode. This tool is the Control365 cloud service.
Why do we attribute temporary discounts on goods and services to loyalty programs? The thing is that, if used correctly, these campaigns allow you to create a loyal customer base, even out the flow of customers in time, and also increase sales of services for which a discount is not currently available. You must admit that a rare client will be able to resist the temptation not to wash mats or even the car body when ordering dry cleaning at a discount.
Personal discounts for customers
This is one of the most popular ways to motivate customers to use the services of a particular enterprise. Often, regular customers are simply issued cards upon presentation of which they receive a discount of 5%, 10%, 15%, or even 20% of the total cost of the goods or services.
The advantages of such a campaign include its simplicity, while at the same time it has a lot of minuses:
- Over time, customers begin to perceive the cost of the service at a discount as its usual cost, the positive effect of receiving the service at a reduced cost disappears, and the discount price is compared with the prices of competing enterprises. If in such a competitor also provides a similar discount, then the client will not stop using his services already. In order to avoid this, the Control365 service allows you to set discounts and vary their size depending on several parameters, the most popular is the amount of money spent on company services over the past 6 months. It works as follows, the discount is automatically granted to those customers who have spent over the past six months the amount above a certain threshold, and its size increases when the next threshold level is reached.
- Discount cards can be transferred to other persons, which ultimately can lead to the fact that most of your customers will receive your services at reduced prices. This will reduce the profit of the enterprise from each order, but will not significantly raise their number. To solve this problem, Control365 can attach discounts to a customer’s car number or mobile phone. Also, this solution allows you to solve the problem when the discount card is forgotten or it is simply not convenient for the client to carry it with him. Another positive aspect of maintaining a list of customers who are given a discount in the Control365 program is that the list of such customers and their discounts can be obtained and edited at any time.
- Another disadvantage of the campaign for providing personal discounts is the fact that the benefit for the client comes immediately and there is no particular motivation to come to the company again, unlike, for example, the campaign for accruing bonus points, which can also be launched as part of the Control365 service, and where points can only be spent on the next purchase.
As part of this campaign, the client is credited with a certain percentage of the order value (usually 10%) in the form of bonus points (where one point is equal to one currency unit) to a special bonus account. You can only redeem points on your next visit. It is also often set the percentage of the order, which can be paid with points, often this is not more than 30% of the total.
To implement such a loyalty program, a customer account management service is required, the Control365 cloud system can be a good solution, which allows you to flexibly set the rules for accruing, saving and writing off customer points. The service supports linking bonus accounts to both the car number and the customer’s phone. The interface for scoring and rewarding points is optimized in such a way as to take a minimum of time from the administrator.
Today it is one of the most effective ways to retain customers. An important step in the implementation phase of such a loyalty program is to establish simple and understandable rules for accruing and writing off points for both the client and the administrator. If the client is not able to understand the rules of the loyalty program or misunderstands them, this can contribute to the emergence of conflict situations that can lead to a negative effect on the company. In our opinion, it is important to establish simple accrual rules (for example, 10% of the amount of all orders in which other discounts do not apply or taking into account the amount already with discounts), write-offs (with points you can pay no more than 30% of the order value for which other discounts do not apply) , as well as saving points (points are burned out if the client has not made a single order in the last 12 months).
Control365 allows you to produce unobtrusive mailings about the status of bonus accounts, as well as warnings that they may “burn out”, which well stimulate customers to visit the enterprise.
Also, according to our statistics, not all customers realize accumulated points, therefore the negative effect on the company's profit from providing bonus points is much lower than from discounts. The positive effect is that the presence of a bonus system leads to an increase in the average check.
This loyalty program is practically not applied to a wide audience at car washes, tire shops, car services, as well as other enterprises providing services related to cars or motor vehicles. At its core, it is very similar to the provision of personal discounts. Sometimes there are options when company employees can use the services of the enterprise without payment, and the immediate environment of the owner of the enterprise receive a significant discount (30% or more). In this situation, the Control365 service allows you to set up payroll for contractors in such a way as not to infringe on the rights of workers, who often get piecework wages. For example, set up payroll so that the percentage of piecework pay is calculated from the amount after the discount if the discount on the order is less than 30%, and from the amount after the discount if the discount is 30% or more.
Campaigns when a client receives a bonus for recommendations
This program is based on the fact that the client receives an accrual on the bonus account for recommending the services of the enterprise to his friends and acquaintances. Often, and the one who is recommended also immediately receives an accrual to the bonus account. The Control365 service implements this program using a mechanism for issuing certificates with a specific face value (for example, 250 rubles). Such certificates are flyers with a unique number that is stored as a QR code. When transferring to a client, the administrator scans these certificates with the camera of a mobile phone, thereby tying them to the client, so that in the future the program could understand who should award bonus points for the recommendation.
At the moment when a new client visits the enterprise, he presents the certificates when paying, the administrator scans them, bonus points are credited to the recommender’s account (which he will be notified of), and a bonus is credited to the new client’s account, which he can pay for the current order within allowed percentage.
I would like to note that the issue of physical certificates in the form of flyers with an indication of face value is an important component of success since in most cases, the client perceives it as the equivalent of cash and is ready to throw it away, stores it in a place where he often catches his eye.
Sixth gift service
This service can be almost completely implemented as part of the bonus system, but in contrast to it, it requires the installation of many rules which services count and which do not. These conditions are often quite complicated and difficult to convey to customers, and if they are not described, then conflict situations are inevitable. Therefore, we consider such campaigns poorly applicable for enterprises from the service sector.
How to avoid mistakes when implementing loyalty programs
To summarize, I want to once again list the main points of the implementation and configuration of the loyalty program.
Simple mechanics. If the conditions of your loyalty program are difficult to understand, customers will not want to disassemble and participate in the program. So simplicity and transparency are key to success.
Simple conditions for joining the program. The client does not have to spend a lot of time and effort to connect to the program. Most customers will refuse to fill out a form from many fields or provide any information about themselves. Ideally, if he doesn’t need to do anything to connect to the program, or he just needs to set aside his phone. Therefore, in the Control365 system, joining the loyalty program is possible both by the vehicle number (which is almost always available to the administrator) and by the phone number. Moreover, in cases where a client identified by a car number provides a telephone, the program begins to identify it by both identifiers.
Start with current customers. Regular customers are easier to attract to participate in the loyalty program. They will be the first to participate with pleasure. We recommend testing the program specifically for this audience. Based on the data for these clients, you can make a good forecast about whether the program will be able to interest the audience and how understandable the conditions of the program and mechanics are.
Run loyalty programs in parts. Do not blame all the loyalty programs that you have on the client, select the main one and work with it.
Automate your work. Maintaining a loyalty program should not distract too much time from the staff of your organization. See how they are implemented as part of the Control365 service, we have extensive experience based on many cases of many clients who have implemented and successfully use loyalty programs in their enterprises.
Take care of the customer first. Look at the loyalty program through the eyes of the client. A good offer motivates you to join the program and buy more often. Also, customers always feel if the company is only interested in selling, do not forget about it.
The level of service should be up to par. Do not forget that loyalty programs are an additional tool. First of all, the client evaluates the level of service, if he does not like it, then any loyalty programs would not use the effect.
How to promote a loyalty program
If you have launched the loyalty program, but users do not know about it, consider that you do not have it. The loyalty program needs to be promoted, like any other product of the company. It is necessary to inform the client about its presence every time they contact him, add information to the company’s website, social networks and other channels of communication with the client.
Motivate staff to talk about the loyalty program at any opportunity.
How to measure the effectiveness of a loyalty program
After implementing and working with any loyalty program, it is important to measure its effectiveness. This must be done periodically to understand how the company meets the goals and objectives of the enterprise as a whole. Important indicators include:
- Percentage of customer engagement. This parameter is calculated as the total number of active program participants divided by the total number of active customers of the enterprise multiplied by 100%. If the value of this indicator is low, then perhaps you need to change something in the conditions or revise the ways of promoting the loyalty program.
- Percentage of outflow of users. This parameter is calculated as 100% minus the total number of active participants in the program at the beginning of the reporting period divided by the number of active participants at the end of the period multiplied by 100%. The lower the percentage of user churn, the more effective the loyalty program. If this indicator is growing, then it is urgent to conduct an audit of the program and look for problems in its work.
- Retention rate for old customers. This parameter is calculated by the formula: Retention rate = 100% - ((number of active participants at the end of the reporting period - number of new active participants) / number of participants at the beginning of the period) * 100%
- Certificate utilization percentage. This indicator is typical only for companies where certificates are used and calculated according to the formula (number of certificates used) / (total number of issued certificates) * 100%
But the most important parameter is an indicator of what value the client brings to the company for the entire time of interaction with it. This metric can also show how much money customers brought during the loyalty program.
Client value = income from the client - (costs of rendering services to him + costs of attracting and retaining)
We hope that this article will help you launch an effective loyalty program, and a service for automation of car wash, tire fitting and Control365 car service can serve as an important assistant in this.
If you understand the topic of the article more and are ready to share your experience, write to us at firstname.lastname@example.org