1. The Loyalty Management Profit Center
Full Name I Company I Job Title I
The Loyalty Management Profit Center
Full Name I Company I Job Title I

2. Some Facts About Service Lane Sales, Lease Renewal, and Retail Renewal/Retention
It costs five times (500%) more to acquire new customers than it does to keep current ones. (Forrester)
Average dealership with a good service lane retention process will convert between 2% and 4% of their service repair orders to vehicle sales (Automotive News).
Average dealership with a good Database Equity Mining process will convert between 2% and 5% of the eligible monthly opportunities (RTG)
Average dealership with a good Lease Renewal Process will renew 60% to 80% of 24 month leases and 50% to 70% of 36 month leases into a new lease (RTG).
The repeat customer pays the dealer on average $700 (63%) more gross profit than a walk-in customer(Bain).
75% of consumers say they would consider trading-in the current vehicle now if their monthly payment would remain about the same (Dealer Mag)
49% of people surveyed said they were not aware they were able to upgrade their current vehicle before their loan or lease is at the end-of-term. (Automotive News)
63% of people say they would like to get a new vehicle every 2 to 3 years if it was affordable. (Digital Dealer)

3. Facts Continued…
 69% of customers feel it is important for the dealership they purchased from to proactively notify them when they are in a position to upgrade their vehicle if it doesn’t impact their monthly car payment (Automotive News).
The average gross profit from trades generated through the Exchange Process is over $3000 (RTG).
The average reconditioning RO on trades generated and put through the OEM CPO program with the Exchange Process is over $1200 (RTG).
The average closing ratio on a repeat customer who is interested in a new vehicle and visits the dealership showroom is over 70%, the average closing ratio of a new prospect is 5%-20% (that’s up to 14 times more, or 5 on average) (Marketing Metrics).
30% of active customers will give a referral if asked professionally (NADA).
The average closing ratio on a referral customer is over 50% (NADA)
Reducing your customer defection rate by 5% can increase your profitability by 25% to 125% (Destination)
Engaged consumers buy 90% more frequently, spend 60% more per transaction and are five times more likely to indicate it is the only brand they would purchase in the future. All of these factors lead to engaged customers delivering three times the value to the brand over the course of a year (Rosetta)

4. Opportunity Analysis for a Houston Metro Dodge Dealership
Monthly Service Lane Opportunity Evaluation
Current Customer Pay & Warranty Service RO’s Monthly 2300
3% x = sold units per month sales
Average Gross per unit front and back $2,000.00
69 X $2000 = Gross Profit per month $138,000.00
Monthly Equity Mining- Retail & Lease Retention Opportunity Evaluation
Average Monthly Equity Contacts they should be making based
on a 4 month rotation for eligible sold and conquest customers 1500
3% x = sold units per month 45 sales
45 X $2000 = Gross Profit Per Month $90,000.00
Monthly Service Lane and Equity Mining Units Opportunity 114 sales
Monthly Gross Profit Opportunity $

5. Monthly Pre-Owned Sales from Trades Opportunity 57 Sales
Monthly Service Income from Trades Opportunity Evaluation
Estimate: 50% Trades X 114= trades
Ave $1200 reconditioning RO’s X 57= monthly svc gross $68,400.00
Monthly Pre-Owned Sales from Trades Opportunity Evaluation
Monthly Pre-Owned Sales Unit Opportunity sales
Ave Gross Per Pre-Owned Sale from Trades $3000 X 57 = monthly gross $171,000.00
Monthly Pre-Owned Sales from Trades Opportunity 57 Sales
Monthly Service & Pre-Owned Gross Profit Opportunity $239,000.00
Monthly Total New Sales, Service & Trade Sales Opportunity Evaluation
Total Monthly New and Used Unit Opportunity sales
Total Monthly New, Used, and Service Gross Profit Opportunity $467,000.00
I’m using conservative numbers here, but if you don’t buy-in to the numbers, cut them in half. Good process combined with a good equity mining tool will still bring you 85 units and $230, monthly if you only do half the job. If you don’t buy into those numbers, cut it in half again; you are still at 42 additional units monthly and $115, in gross profit.

6. The Four Verticals of the Loyalty Management Profit Center
Vertical One: Service Lane Sales
Customers (Dealership Customers & Conquest Customers) who are currently visiting your service department, or have recently visited your service department, and are at or near an equity position.
Vertical Two: Retail/Lease Retention
Customers in your database that purchased their vehicle from your dealership and are at or near an equity position
Vertical Three: Conquest Conversions
Customers in your database that service their vehicle with your dealership but did not purchase from your dealership and are at or near an equity position
Vertical Four: Lease End Renewals
Customers that leased their vehicle from your dealership and are within six months of their lease expiration

7. Seven Primary Loyalty Management Profit Center Contact Points
1. Customers with Service Appointments- Your Call Center, your BDC, or Loyalty Telephone Specialist will call customers who have service appointments in advance of the appointment to set an Upgrade Presentation.
2. Service Advisors refer customers from the Service Drive: When customers check their car in for service or when the customer is picking their car up from service, the Service Advisor will notify the customer of their eligibility for the program.
3. Loyalty Sales Specialist introduction to customers waiting in the Service Lounge: Loyalty Sales Specialists introduce themselves to the customers waiting in the customer lounge.
4. Customers in Service that dropped their vehicle: Loyalty Sales Specialist (recommended), BDC, or Loyalty Telephone Specialist will call the customers that dropped their vehicle for service (not waiting at the dealership, and will return at a later time to get their vehicle from service). On the call, the Loyalty Specialist will discuss the customers eligibility for the Upgrade Program and recommend they set an appointment for a equity analysis when the customer returns to the dealership to get their vehicle from service.

8. Seven Primary Loyalty Management Profit Center Contact Points Continued..
5. Customers who visited service the previous day and we did not have an opportunity to speak with them about upgrading their vehicle: Loyalty Telephone Specialist and/or a Call Center or BDC should call customers in an equity position (using the Prospect Call to In-Equity Customers script) after a service visit if we did not speak with them during their service visit.
6. Customers in database that are in an equity position: Loyalty Telephone Specialist and/or a Call Center or BDC should call customers in an equity position, both sold customers and conquest customers, using the Prospect Call to In-Equity Customers script.
7. Lease Customers in database that are in within 6 months of lease maturity: Loyalty Telephone Specialist and/or a Call Center or BDC should call customers in near lease end using the Lease End Renewal Call Script.

9. Traditional Process
Optimal Process
Mindsets

10. Getting Started-People, Place, Policy & Procedure, Pay Plans and Protection Policy
Dealership should establish the Loyalty Management Department/Profit Center and have a sales manager and sales representatives (Exchange Sales Specialists) dedicated to the Upgrade Program. If dealership does not have a BDC or use a Call Center, the dealership should also have a dedicated Loyalty Telephone Specialist.
Loyalty Management employees should be proactively organized with a strong focus on customer service.
The team needs to be trained on the Loyalty Management process and tools.
Educate and incentivize the service team so they don’t try to undermine the program.
Establish pay policy for service
Establish referral program
Loyalty Management Sales Specialist Basic Job Responsibilities
They are exclusively dedicated to the Exchange Department/Process. They do not take “up’s” or work the floor, their full time job is selling to customers through the Exchange Process.
Approach and sell to eligible customers waiting for their vehicles to be serviced in the Service Department
Call all eligible customers who dropped their vehicle for service to set an appointment for an Exchange presentation at the time the customer picks up their vehicle. Present the Exchange Program and sell to these customers.
Handle all Retail Retention/Lease Retention/Equity Mining Appointments
Follow-up on all customers assigned to them
Dealership should have a BDC, Loyalty Telephone Specialist, or utilize a Call Center to make calls to Upgrade Eligible Customers in the database.

11. People Continued…
Loyalty Management Telephone Specialist Basic Job Responsibilities
 Call all Upgrade Eligible customers in the dealer database, who have not recently been in for service, to set an appointment for an Upgrade presentation (database equity mining)
Call all Upgrade Eligible customers who have a service appointment in the future to arrange an Upgrade Presentation when they are in for service.
Call all Upgrade Eligible customers who visited service the previous day and did not receive a presentation from an Loyalty Sales Specialist. The purpose of this call will be to set an appointment for the customer to come back to the dealership for an Upgrade presentation.
Loyalty Management Department Sales Manager
Manage Retail Retention, Lease Retention, and Service Lane Sales Process.
Manage Loyalty Campaigns and Marketing Activities
Desk Loyalty deals

12. Place:
Have a Loyalty Management Program Headquarters/Office in close proximity to the service department with prominent signage indicating (Brand) Program Headquarters.
Have a Loyalty Management Program Desk/Podium in the Service Write-Up Area
Policy and Procedure:
Establish Service Pay Plan
Establish Referral Incentive for Service Advisors
Establish procedure for approaching service customers regarding the Loyalty Managemtn Program
Establish protection policy for Sales Staff
Tools:
Equity Mining Technology
Point of Sale Materials
Program Lab Coats for Loyalty Specialists
Program Buttons/Badges for the Service Advisors
Program Board in Service
Process Launch Training and Monthly Continuous Improvement Training

13. Recommended Protection Policy and Pay Plan for Service:
RO Protection
When a vehicle in service is taken as a trade through the Loyalty Program our recommendation is a follows:
Whatever work the customer agreed to will be done and the service department (advisor, technician, and managers will be paid for the work at customer pay/warranty rates (not internal rates). If we choose to send the car to the auction and not do the work, we will still pay the service advisor and managers based on what was written on the RO.
Service Advisor Referral Fee
If the Service Advisor mentions the Exchange program to a customer (that does not already have an appointment with an Exchange Specialist), creates interest, and walks the customer to an Exchange Specialist and makes an introduction; the Service Advisor will receive (the norm is $50 to $100) if the customer purchases a new vehicle.
Recommended Protection Policy for the Sales Department:
Sold Customer Protection
If there is an existing salesperson for an Exchange eligible customer, the salesperson will be protected as long as the salesperson has followed up with the customer according to the dealerships written owner follow-up policy, and that follow-up has been documented in the dealerships CRM.
Process for Upgrade Eligible Customer with Existing Salesperson
The Loyalty specialist will approach the customer in the service lane, or via telephone/ , and make the initial Upgrade Presentation. After receiving the Equity Analysis presentation, if the customer is interested and wants to select a new vehicle, the Loyalty Specialist will turn the customer to the existing salesperson for the selection, presentation, demonstration, and close. The existing salesperson will receive full commission according to the dealerships sales commission plan. The Loyalty Specialist will receive a $200 flat fee if the customer takes delivery of a new vehicle.

14. Sample Point of Sale Merchandising

15. Get Ready
Display Point of Sale materials in Service Drive, Service Waiting Area, Parts Department, Body Shop and Showroom
Record on-hold messaging that explains the Loyalty Program to incoming callers and top 5 vehicles that are needed
Have a Loyalty Program Page on your Dealership Website
Have a Loyalty Program Banner in your Home Page Rotation
Have a Loyalty Program Banner in your Facebook Rotation
Create a Loyalty Program Video and place on all dealership Social sites and the dealership website
Establish your Loyalty Program as a brand differentiator for your dealership in all advertising and marketing
Set a Loyalty Program Direct Mail Monthly budget  
Set up Loyalty Program VIP Board in service
Have cashier attach Loyalty Program RO Jacket to Repair Order for every eligible customer
Leave an Equity Analysis in the passenger seat of every eligible vehicle in service
an Equity analysis to all eligible customers that visited service each day
Hold a Loyalty Event Monthly or Quarterly
Establish a Pre-Owned Showcase Profit Center for your Used Car Department
Establish Program Management Policy and Train your Managers and Train Your Team
Document Your Process
Monitor/Inspect the Process and Hold Your Team Accountable

16. Script Review

17. Q&A

18. Contact Info
Full Name: Darren VanCleave
Company: The Academy
Job Title: Director of Strategic Initiatives