Customer Loyalty in the Automotive Industry: A Roadmap to Success

As a relatively low purchase industry, automotive struggles with building any consumer relations – let alone long-standing ones. In fact, as the market becomes more and more overcrowded with options, automotive brand loyalty keeps on dropping, with companies like Audi and Land Rover reporting around a 10% decrease in returning buyers. What are the main challenges they’re facing? And could automotive loyalty programs be the highway to solve them?

Check out this article, in which we’ll discuss: 

• Why is customer loyalty important in the automotive industry?
• What are the biggest challenges to building loyalty programs in automotive?
• Which brands have the highest customer loyalty?
• How to build a successful automotive loyalty program?
• What are the key features of a good loyalty program in the car industry?

What is Customer Loyalty in the Automotive Industry

Customer loyalty in the automotive industry is a consistent preference to purchase vehicles from the same brand over an extended period of time. It results from positive experiences, effective customer service, trust in the manufacturer’s quality, and strategies, such as loyalty programs that cultivate engagement.

Why is customer loyalty important in the automotive industry?

In this very competitive and fast-changing market, loyalty not only drives repeat sales but also helps brands maintain a stable customer base, which may become invaluable in times of economic turmoil or industry crisis. 

Top benefits of customer loyalty in automotive:

• Boost in profitability: loyal customers simply spend more on their favorite brands –  in terms of car manufacturers, it may not necessarily be vehicles (since that only happens probably once every few years/decades), but rather services and accessories
• Brand advocacy: Loyal customers often recommend the brand to others, driving new sales through word-of-mouth.
• Cost efficiency and increased customer retention: Retaining existing customers is 5x more cost-effective than acquiring new ones.
• Revenue stability: Consistent sales from loyal customers contribute to stable and predictable revenue, which is extremely crucial in an industry with a relatively low purchase frequency.
• Enhanced customer data: Each interaction and purchase from a customer gives brands invaluable insights into their preferences and allows them to upgrade their offers accordingly.

The Biggest Loyalty Challenges in Automotive

Little brand-client interaction

In the automotive industry, interactions between the brand and customers are infrequent, often limited to the initial purchase and occasional servicing.

 According to 2022 research, the average American changes cars only every 12.5 years. That makes the opportunities for engagement with a car manufacturer incredibly scarce, which hinders creating a relationship with a customer.

Without regular touchpoints, brands miss a chance to reinforce loyalty, address concerns, or provide added value, leading to a disconnect that can diminish customer commitment over time.

Customers are doing their research and/or shopping online

Back in the day, when customers wanted to purchase a vehicle, the most common and reasonable route was to head back to the car dealer and go over the details with a trusted professional.

While this way of shopping has not yet become obsolete, more and more customers are turning online for advice.

According to RulerAnalytics (2023), 95% of car shoppers rely on online resources to gather information, bypassing dealerships as their starting point, which makes establishing a bond with a customer that much more difficult.  

Customers are torn between dealership and brand loyalty

Car dealerships often serve as the primary point of contact between customers and automotive brands. However, they may also pose an obstacle in forming a deeper relationship between a customer and the manufacturer they’re buying from. Since much of the interacting is done by the dealer, not the manufacturer itself, consumers may find it difficult to feel loyal to the automotive companies rather than the person who walked them through the buying process. 

High market saturation

U.S. motor vehicle production is projected to reach some 11.7 million units by 2025. The competition is very strong, and many brands on the market offer similar products across various price ranges. This high saturation makes it difficult for any single brand to stand out and retain customer loyalty. With so many options, customers may easily switch brands based on price, features, or trends.

Integration with existing systems and new technology

As automotive brands adopt new technologies, such as connected vehicles, IoT, and AI-driven services, integrating these innovations with existing systems can be complex and resource-intensive. Poor integration can lead to disjointed customer experiences and frustrated users. A lot of manufacturers struggle with updating their legacy systems and/or expanding them with newer, more 2024 user-friendly options.

Best Types of Loyalty Programs in the Automotive Industry

One of the top solutions to address the pain points described above is to invest in a robust customer loyalty program. Though it’s not necessarily an obvious choice for the automotive industry, a rewards program can be a great tool to enhance customer retention by rewarding repeat business and encouraging long-term relationships.

Here are the most common types of loyalty programs in the automotive industry: 

• Tiered loyalty program: tiered loyalty programs offer escalating rewards based on the customer’s level of engagement or spending. An example is FordPass, where members earn points for vehicle purchases, services, and other activities. These points can be redeemed for maintenance services, accessories, or even the purchase of a new vehicle. The higher the tier, the more valuable the rewards.
• Perks program: perks programs provide customers with special privileges or services as a reward for their loyalty. Those often include free maintenance, priority service, or access to exclusive events, as portrayed by BMW’s Inside Edge program, which offers members benefits like complimentary vehicle checks, VIP access to events, and special offers on lifestyle products
• Coalition program: they involve partnerships between various companies within the automotive ecosystem, such as manufacturers, dealerships, and repair shops. These programs allow customers to earn and redeem rewards across multiple businesses. For example, a customer might earn points when purchasing a vehicle from a dealership and then use those points for discounts on future services at partnered repair shops.
• Membership-based loyalty program: subscription programs offer customers ongoing benefits in exchange for a regular fee. A good example is Volvo’s loyalty program, where customers can receive tiered discounts on services and maintenance as their vehicle ages, which encourages them to maintain a long-term relationship with the brand.

7 Key Features of a Successful Automotive Loyalty Program

1. Partnerships & varied rewards

Every loyalty program is built upon a rewards system. Customers always need some incentive to interact – let alone buy – with your brand. 

In automotive, a good way to enhance that rewards system may be pairing up with another company from the vehicle industry, such as a car wash, a fuel station, or an insurance provider. By joining forces, you can offer your members more varied and more encompassing rewards, which will improve their overall experience.

For example, a partnership with a fuel station might offer loyalty members discounts on fuel, while collaboration with an insurance company could provide exclusive rate options.

2. Personalization

In 2024, personalization should be at the forefront of every marketing strategy. Modern customers love to feel like your offer is tailored specifically for them, with 71% claiming they expect personalization from the brands they shop from.

In an automotive loyalty program, this personal touch can take the form of discounts on accessories that match the customer’s vehicle type or customized maintenance reminders based on their specific vehicle model and driving habits.

3. Gamified data collection

While we’re talking personalization – you can’t craft tailored offers and messages without knowing your customer first. And here’s when gamification comes into play.

By enriching your automotive loyalty program with elements of gaming, such as challenges, leaderboards, and rewards, customers are encouraged to share valuable data willingly. This approach not only enriches the database with insights into customer behavior and preferences but also boosts engagement. In fact, according to 2023 findings, gamification can increase customer engagement by as much as 47%.

4. Sustainability and eco-friendly rewards

Sustainability is a big word in the loyalty world – and nowhere does it apply as much as in the automotive industry.

Modern customers are very eco-conscious and want brands to share that sentiment. This is illustrated by the statistics regarding electronic vehicles, the sales of which have risen from 4% in 2020 to 18% in 2023. 

With the growing emphasis on environmental responsibility, automotive loyalty programs should incorporate some sort of sustainability-focused rewards. These can range from discounts on eco-friendly products and services to rewards for participating in green initiatives, such as reducing carbon footprints or supporting reforestation projects.

5. Tiered systems

Tiered-based systems are a special type of loyalty program in which members receive varying benefits depending on their engagement and spending.

In other words – the more you engage with a brand, the better rewards you get.

Tiered loyalty programs aren’t always the best possible idea – but in automotive, where the engagement and purchase frequency are rather low by nature, they can create an aspirational path for customers, motivating them to increase their interactions with the brand to reach higher tiers.

As customers advance through the tiers, they gain access to exclusive perks such as VIP services, special discounts, or early access to new models.

6. Mobile engagement

Mobile engagement is a critical component of modern automotive loyalty programs.

A study by DMEautomotive revealed that vehicle buyers using a branded app were 73% more likely to make a purchase from the dealership. Moreover, after making a purchase, these customers booked 25% more service appointments than those without an app.

Mobile apps offer a convenient platform for customers to access rewards, receive personalized offers, and engage with an automotive company, which is a great way to foster brand loyalty, boost customer lifetime value, and drive future purchases.

7. Connected car technology rewards

Car companies can leverage advanced connected car technology to give their loyalty programs a boost and provide members with exclusive, automotive-focused rewards, such as enhanced driving assistance systems, real-time vehicle health alerts, and convenient over-the-air updates that keep the car’s software current.

Other complimentary offers can include trials of premium features like advanced navigation or automated parking. This strategy can greatly improve the user experience, leading to higher engagement, customer satisfaction, and, somewhere down the road, customer retention.

Top 5 Examples of Automotive Loyalty Programs

With so many challenges and pitfalls to keep an eye on, building customer loyalty in the automotive industry is certainly no easy feat. However, some brands manage to get by just fine. 

Which car brands have the highest customer loyalty? 

According to the 2023 J.D Power’s “US Automotive Brand Loyalty Study”, here are the automotive brands with the most loyal customers:

1. Ford - 64.4% loyalty rate (among truck owners)
2. Subaru - 61.1% loyalty rate (among mass-market SUV owners)
3. Toyota - 60.5% loyalty rate (among mass-market brand car owners)
4. Porsche - 56.8% loyalty rate (among premium brand car owners)
5. Volvo - 56.1% loyalty rate (among premium brand SUV owners)
6. Honda - 55% loyalty rate (among mass-market brand car owners)
7. Mercedes-Benz - 50.5% loyalty rate (among premium brand car owners)

What is these companies’ secret? Let’s dive head-on into the makings of a good automotive loyalty program with some of the best examples from the industry. 

Ford Motor Company: FordPass Rewards

FordPass Rewards is one of the most successful automotive loyalty programs in the world. It’s a tiered loyalty program where points are earned and redeemed for Ford Service, parts, accessories, and more.

• Bronze, silver, and blue tiers.
• 24/7 FordPass app and 24/7 roadside assistance.
• Early access to new events.
• Features include vehicle health alerts, remote start/stop, and rewards for service visits.

Subaru: ownership benefits

While Subaru doesn’t have one single loyalty program in place, it offers a wide range of benefits and exclusive services to Subaru owners. These include:

• Military Discount Program
• Subaru Advantage Insurance
• Guaranteed Trade-In Value Program
• The Subaru Trade Up Advantage® Program
• Subaru Gear

Toyota’s Owners Club

Toyota’s Owner Club is an independent community for Toyota owners with a paid membership option. Why does it work?

• Paid members can enjoy discounts and unrestricted access to the forum upgrades.
• Toyota gives premium members early access to special offers, promotions, and competitions.
• Toyota Owners Club’s members receive an 8% discount in all Halfords retail stores.
• 1-year membership is only about 20£ per year.

Volvo Cars Loyalty Program

Volvo’s loyalty program offers personalized service reminders, exclusive discounts on accessories and services, priority service scheduling, and extended warranties. Members also gain access to special events and offers tailored to their preferences.

• It’s a four-tier loyalty program, with upgrades available after two, three, and four years of membership.
• Members can expect up to 30% discounts on vehicle parts.
• The program offers free tire replacement for all tiers.

Mercedes-Benz Rewards

Mercedes-Benz takes the famous car ownership to a whole new level with its loyalty program, Mercedes-Benz Rewards. It’s a ticket to unforgettable experiences and exclusive offers in a world of premium vehicles.

• Very easy enrollment.
• Latest news and updates from Mercedes-Benz.
• Exclusive access to events such as AMG Driving Academy Training.

Future Trends in the Automotive Loyalty Programs

What will the future be like for brand loyalty in the automotive industry? While the car business will always be a difficult one to build long-standing customer relationships, it’s likely that the advancements in technology will make the roads a little clearer.

Here are some of the trends we can expect to see blowing up in the future:

• Personalization through AI and Big Data: The use of artificial intelligence and big data analytics is set to revolutionize automotive loyalty programs by providing deeper customer insights. These technologies enable the creation of highly personalized rewards and experiences tailored to individual preferences and driving habits.
• Integration with IoT and connected vehicles: IoT and connected vehicle technology will drive loyalty programs forward by using real-time data to offer personalized rewards and notifications. For example, drivers might receive offers for maintenance services when their vehicle’s sensors detect issues or get discounts based on their driving patterns, enhancing the overall customer experience.
• Blockchain for enhanced security and transparency: Blockchain technology will enhance the security and transparency of automotive loyalty programs by ensuring secure transactions and accurate data management. This technology can prevent fraud, protect customer data, and offer transparent tracking of loyalty points and rewards.
• Enhanced mobile experiences: The future will see the integration of augmented reality (AR) and virtual reality (VR) into mobile platforms for loyalty programs. These immersive technologies can provide interactive features, such as virtual showrooms or AR-based service appointments, enriching the customer experience and engagement with the program.
• Omni-channel loyalty programs: To meet the needs of modern consumers, loyalty programs will increasingly offer seamless integration across both physical and digital touchpoints. This means customers can interact with their loyalty programs through a variety of channels—such as mobile apps, websites, and in-dealer systems—ensuring a consistent and convenient experience.

Summary

Building customer loyalty in the automotive industry is not and will probably never be without its challenges. However, the right technology can pave the way for an on-going engagement and commitment from both customers and the car brands. To achieve that, it’s crucial to create a robust loyalty program with all the automotive-focused features in place.

If you need help crafting one, check out the Comarch Loyalty Marketing Platform.