Automotive News - October 16, 2017 - Supplement - S40

40 | OCTOBER 16, 2017
E M I C H V O L K S WA G E N , D E N V E R

Rebates help store build loyalty
Customers can spend
annual vouchers on
parts, service and sales
Printed in Automotive News July 3, 2017

Larry P. Vellequette
lvellequette@crain.com

ENVER - Customer loyalty may
get planted in a dealership's showroom, but it takes root in the service
department.
That's the reasoning behind an annual rewards program run by Emich Volkswagen in
Denver that allows VIP customers to get back
up to $100 of the money they spend annually
in the dealership's service department as a
credit toward future purchases.
The program, which began in 2013, was the result
of a discussion between
Dealer Principal Fred
Emich and two college
marketing interns about
ways to boost service retention.
"We looked around at
Emich: $200,000 some different loyalty programs, but it's essentially
total dividend
modeled after [outdoorgear retailer] REI," which runs an in-house
customer loyalty program that returns 10 percent of annual purchases as a voucher, explained Emich.

How it works
Customers join the VIP Service program
when they buy a new or used vehicle from
Emich Volkswagen, the only VW dealer in the
city of Denver but one of six across the metro
area. To remain in the program, a customer
has to purchase at least one service or repair
order each year, including warranty work.
Each year, Emich VW sends the VIP customer a dividend voucher equal to 10 percent of
the money the customer spent with the dealership in service on an Emich-purchased vehicle the preceding calendar year, up to $100.
Emich said the annual voucher can be
spent in sales, parts or service at the dealership, but it expires at the end of the year it was
sent. Anything purchased with the voucher
doesn't count toward the next year's rebate.
In late June, the dealership was preparing to
distribute its vouchers for the 2016 calendar

Emich Volkswagen's rewards program enables VIP customers to get back up to $100 of the money
they spend annually in the dealership's service department as a credit toward future purchases.

year. The direct mail pieces will go to just
just 30 percent of total service visits occur at
more than 2,500 VIP customers, with the total
dealerships, and just more than half of those
dividend at just more than $200,000, up about
visits are at the same store where the custom$70,000 from the previous year, Emich said.
er purchased the vehicle. Cox estimates the
Of course, not all of the vouchers are retotal annual vehicle service spend nationdeemed. Emich said that, as the program has
wide is $99 billion.
ramped up, "we haven't seen more than
Service reward programs aren't uncom$10,000 [per year] in dividend spend
mon. Ford Motor Co., for example, opat the dealership." But that relaerates the Owner Advantage ReRebates on
tively small amount might be dewards program through its dealerannual service
ceptive; in previous years, the
ships that provides an immediate
purchases are
vast majority of new VW cus$10 enrollment bonus and 5 perintended to help
tomers have had their maintecent credit per dollar spent in serthe dealership
nance costs covered under a
vice toward future work. Ford's
boost customer
previous factory program.
program is also good for all vehiloyalty.
"This year, we'll probably see
cles in a household.
more redemptions because we'll see
So far, Emich's experiment with his
more [customer-pay] business," Emich said.
loyalty voucher program has been limited to
his VW store, which averages about 110 new
and 70 used vehicle sales a month. He hasn't
Relationship building
transferred the program to a Chevrolet dealMaking sure customers regularly visit a
ership he owns, in part because that dealerdealership is critically important to profitship doesn't yet have the information techability, both to ensure a steady supply of cusnology infrastructure required to run the
tomers for fixed operations and as a way to
program. But that still could happen.
enable future vehicle sales through relation"This year's really going to be the make-orship building.
break, to see if it's something worthwhile" for
But many dealerships aren't very good at it. A
the Chevy store as well, Emich said. c
study from Cox Automotive last year found that

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