News
Loyalty is in the Cards
LOYALTY IS IN THE CARDS:
'ELECTRONIC COUPON BOOK' KEEPS CUSTOMERS
BILL CHAPIN Special Correspondent
September 6, 1999
Mike Ritchie, Dirk Newsome and Steve Gamaras knew
just what their dealership needed: more sales and loyal customers who
returned for parts and service
Their solution was the "LoyaltyCard," a sort of computerized coupon
book. The card, which looks and works much like a debit or prepaid phone
card, is electronically encoded with discounts on oil changes, parts
or other services with the dealership.
Now the partners have left the dealership and are marketing the card
to other dealers in North and South Carolina. They plan to hire regional
distributors throughout the United States.
Each dealership can create a customized benefits package. For instance,
Vester Honda-Mazda in Wilson, N.C., offers every customer a card with
a $2,950 value, including 14 free oil changes, free state inspections
for five years and an additional $500 on a vehicle trade-in.
To use their discounts, customers insert the cards into a dealer's touch-screen
computer terminal. Each card also stores and displays the service department's
recommended maintenance schedule.
REASON TO RETURN
"In our market, everybody was handing out these benefit packages, but
it didn't have any sex appeal," said Newsome. "We've taken a philosophy
that has been out there for eons and added technology."
The system not only gives customers an incentive to return to the dealership
for service, but it helps with the sales process, Newsome said.
"Most dealerships are in the situation where customers are beating
them to death," Newsome said. "The way to combat that is to give the
customer a reason to buy from you, something they can't get anywhere
else."
Gamaras, Newsome and Ritchie developed the system while they were general
manager, sales manager and finance manager at Sanders Ford in Jacksonville,
N.C. Newsome said that after the dealership started using LoyaltyCard
last March, sales went from 200 vehicles a month to 260 a month.
The current general manager at Sanders Ford concurred, saying sales
during the first month of use climbed to 260. The dealership no longer
uses LoyaltyCard because of hard feelings over the departure of the
three managers. Sales at Sanders have not returned to that level, he
said.
FUNDING THE VENTURE
The three managers left their positions in April and started RiNG Systems Inc. in Charlotte, N.C. Ritchie,
33, is president; Newsome, 31, is vice president and director of sales;
and Gamaras, 34, is vice president in charge of development. George
Hebert of Smart ID Card Ltd. of Mandeville, La., which helped develop
the card-reading system, is now also a full partner in the firm.
To finance their venture, Newsome sold his Mercedes, Ritchie sold his
Rolex and Gamaras used part of his retirement fund.
"And on top of that we still had to go out and borrow money," Newsome
said. He estimates they have spent $500,000 so far.
LoyaltyCard is now being used at 11 dealerships in eastern North Carolina.
Vester Honda-Mazda has used the system for almost four months. General
manager Todd Bishop said that he saw results on the first day.
"It has helped considerably on closing deals," Bishop said.
Some dealers are beginning to see results on the service side as well.
"People are coming back just like clockwork for their services," said
Bob Williams, service director at Vester Nissan in Clinton, N.C., which
has been using LoyaltyCard for three months. "It makes it really easy
to upsell to things other than an oil change."
RiNG Systems sets up a
separate payment plan with each dealership. Weekly payments are based
on the number of vehicles sold, and usually fall between $35 and $40
per customer, Newsome said. Some computer equipment is included at no
additional charge; other equipment can be purchased up front or leased
for a few hundred dollars a month.
Bishop, the dealership general manager, said one of LoyaltyCard's greatest
strengths is that it was designed by three car guys.
Said Bishop: "Anybody who has been in the business ought to know what
a customer's looking for."
