Successful Dealership Incentive Programs

Boosting your dealership sales across different distributions channels is a common focus of various car dealers. However, for most entrepreneurs, knowing the ideal way to use this recognition and rewards to boost the morale and engagement of their customers and employees may seem too complex. To help you develop a system that will help you increase your employee retention and improve your company’s bottom line, we will help you clarify some of the points that continue to baffle even the experts in creating incentive programs.

What Are the Different Types of Incentive Programs?

Incentives in the car industry were first introduced during the 1970s. As years passed, they understood how effective this strategy was, and car dealers and manufacturers will continue to use it under different names. Most local manufacturers offer the best incentives, while the foreign car manufacturers will be restrained. Let us analyze some of the most popular types of these customer incentive programs.

Cash Back Rebate Program

Perhaps this is one of the most popular car dealer incentive programs. In this program, the car manufacturer will be offering rebates to the consumers when they purchase their car on a specific date. If the dealership is offering a cashback program, it often means that the particular model may not be selling that well compared to their prediction. The cashback may vary and will usually be around $500 and may increase to $5,000. You can redeem this by reducing the car’s buying price rather than getting the car’s actual value. Nonetheless, you should know that some states will still tax you according to the full market price of the vehicle before applying the rebate.

Finance Incentives

Recently, car financing with low rates has been the latest trend. Before, it would be very rare to find a dealership that would offer you 0% financing. Today, they are virtually all over the country. This is typically due to the decreasing interest rates. With financing incentive programs, it will often be offered with another incentive, such as a cash-rebate program. However, you will be required to choose only one since dealerships and car manufacturers will not allow you to enjoy both of these incentivized programs. The financing rate may range from around 0 to 4.9 percent, which will last for 72 months for the buyers. Therefore, you must have the excellent credit standing to qualify for this program.

Lease Deals

According to the latest reports, around 25% of car users will choose to lease the vehicles rather than purchase them. Therefore, it only makes sense that the dealership will offer them a special lease deal that will make things more enticing to them. What the dealership will often do is take the two aforementioned incentive programs and apply them to their car lease. The cash will be used to decrease the capitalized cost or to increase the car’s residual value. These options will make the cost of leasing more affordable to the consumers. Consumers are also free to secure financing car dealership incentive programs that help lower the interest rate.

Loyalty Programs

Loyalty Programs can be applied to both car buyers and employees. This type of bonus will help the consumers slash a couple of hundreds of dollars to the original price. For the employees, loyalty programs can receive special recognition, gifts, or promotion. The car dealership incentive programs will often be awarded to consumers who have owned the same brand before. The manufacturers want the consuming public to know that they value the trust and loyalty of their audience. This will inspire them to continue buying the same car brand. The reward may be in the form of a rebate that may amount to about $500. Conquest Cash is another type of Loyalty program reward for consumers who own a different car brand. You can enjoy this reward if you defect from a rival brand and choose the car manufacturer.

Dealer Incentive Programs

Most dealerships will also receive incentives from the car manufacturer every time they update their inventory. You will be surprised to know that the car dealer incentive programs have been in existence for quite some time; it is even older than the customer programs that started in the 1970s. The cash that they will receive from these manufacturers could shock you. It will not be uncommon for them to get as much as $10,000 for the slow-selling car makes and models. For the popular models, it can rise to thousands of dollars. For this reason, some dealerships can advertise the car at a lower price compared to the invoice. Here are some ways that a dealer can enjoy incentives from the manufacturer.

Dealer Cash

This is the dealer’s version of the cash rebate program for the customers. However, rather than giving it to the car buyers, the rebates will be delivered directly to the pocket of car dealers. This kind of car dealer incentive programs will be more apparent among foreign car manufacturers and luxurious carmakers since they do not want their offerings to appear cheap by opting for a discounted option.

With dealer cash, they are offering their product at a lower quote without putting the car on a special sale. You may think that the dealer can pass this cost to the car buyers, but that is not always the case. You have to be smart so that the dealer will be forced to offer this to you at a lower cost. Dealer Cash can start at $500 and swell up to $60,000. However, the average rebate that a dealer could receive would be about $4,000.

Dealer Rewards

This is related to the monthly sales goal that the dealer needs to meet before being qualified for dealer reward. Other times, this can be given by the manufacturer depending on the level of satisfaction of their customers or further noticeable improvement on the dealer. These kinds of car dealership incentive programs are often hidden, and only the car dealer can inquire about them. The incentive can increase to  $1,000 for every successfully sold vehicle. However, the average reward may range from $100 to $200.

How Can I Find These Incentives?

Most car buyers may have already established a level of a beneficial relationship with their local car dealer. Perhaps you know about their salespeople, or they can be a dealer who provided you with a generally positive car buying experience before. They are the best source of your incentive programs when planning to purchase a new vehicle. Usually, finding the current rebate or discount program can be as easy as checking the dealership’s official website. If not, you can schedule a meeting with them or ask them if they offer any of these dealership incentive programs.

They will then provide you with a list of available deals such as bonus cash, interest reduction, and rebates. Incentives could also be listed on the inventory of the vehicles. Other dealers may also advertise their available incentives on third-party websites such as AutoSalesReviews. Simply search for the profile of your dealer, and you can find a complete list of incentives they are offering to their clients. You can also be more direct with your approach and ask the dealer when purchasing the vehicle.

Is it Worth It?

For most buyers, the offer to save hundreds of cash through car dealer incentive programs can be a significant point of consideration in their purchase. It helps them understand whether this will be worth their investment. With the right amount of discount combined with a great financing deal, the buyers may think that it will help them save a significant amount of cash in the long run. Otherwise, they can easily be turned off by the purchasing price of most new cars.

Nonetheless, the buyers must also be skeptical on some matters. Know that not all car dealership incentive programs are here to offer you an opportunity to save some cash. There are cases where the dealership will offer this to clear an unsold vehicle in their inventory. By providing the old units with a cash rebate or discounted interest rate, they can remove the old model and make space for the new models. There will always be a rational reason why the car dealer will offer the incentivized program. Even if it helps you save money, remember that you are doing business with a dealer, and their ulterior motive is to make a profit from it.

Overcoming Challenges with Incentive Program

The biggest challenge in the dealership industry is retaining customers and employees. The low purchase and high employee turnover rate can be blamed on several factors such as the poor ability of the people to influence the behavior of the customer, poor data gathering, and lack of interactions. With incentives such as loyalty programs, you are arming yourself with a powerful customer and employee retention tool. You can provide them with commitment-based incentive programs wherein they will receive a discount on your purchase but must commit to using your dealership network and service in exchange. You can also provide them with membership-based programs that aim to nurture your customers by offering them exclusive offers.

Incentive programs offer a unique way for consumers and dealers to save some cash on their vehicle purchases. For the employees, it encourages them to stick with the company and have a high level of engagement. While it may appear to be an offer that is hard to resist, you still need to consider various things to determine if this is worth the purchase.