Bill Housholder is fixed operations director of Ganley Management Co. in suburban Cleveland, which oversees the 29-dealership Ganley Auto Group. He says he also opposes discounts, and sees most loyalty rewards programs as a form of discounting.
"I don't think they drive loyalty [among dealership customers] the way a lot of people think they do," Housholder says. "Customers aren't going to come in more often when they only need an oil change once a year, just because we have a loyalty program."
The only Ganley dealerships that have loyalty programs, he adds, are its Nissan stores that belong to the automaker's One to One Rewards plan, which is tied to other factory initiatives.
Ganley's Ford and Lincoln dealerships dropped out of those brands' loyalty programs, Housholder says, because they cost the stores money without noticeably improving service business or customer loyalty.
Ford's plan, he says, forces dealerships to engage in "discounting discounts. If you keep cutting your margins, that is less money you have to do the things you need to drive your business."
Ford Motor Co. spokeswoman Sherrice Gilsbach says the automaker's Owner Advantage Rewards program enables dealerships to compare the costs of future discounts with those of discounts at the time of service.
"Often, dealers say the earned discounts are too expensive, only to truly find out that their own unmeasured discounts are even more costly and do not drive repeat business," Gilsbach says.
She adds that more than 1,800 Ford and Lincoln dealers and 4.7 million vehicle owners are enrolled in the program. Members visit participating service departments 37 percent more often than nonmembers, spend 21 percent more and spend $31 for every dollar they redeem, she says.
But Housholder asserts loyalty programs create different classes of customers, and can lead to resentment among those who don't get the lowest prices or the most perks.
"We just need to continue providing better service than anyone else in the marketplace," he says. "Customers have told us that when someone does a good job, most of those customers will not leave you for a couple of dollars to get a better price."
A loyalty program, Housholder adds, won't persuade customers who have gotten lousy service to come back: "The key is to not allow them to have a bad experience."