daVinci Payments study examines what as little as $15 could do for dealers
Instead of dealers walking around with wads of cash in their pockets to give to potential car buyers and service drive customers, findings from a recent study conducted by daVinci Payments described different approaches dealerships could be using.
The study found that customers in the market for a new vehicle can be significantly incentivized to take a test drive or visit the dealership for vehicle service on a continued basis, by pairing these activities with a prepaid monetary reward.
With 49% of individuals surveyed intending to purchase a vehicle in the next 18 months, daVinci Payments explained this study can provide dealerships with insights on how to encourage customers to push past intent to purchase a vehicle, as well as retain those customers after the point of sale for ongoing parts and services transactions.
The study also found that respondents prefer open-loop prepaid rewards to retailer gift cards or repair discounts. This response extends to a preference for receiving a lower-valued prepaid reward over additional dollars off of the vehicle sticker price or monthly lease rate.
Key findings from the study include:
— 92% of intenders (those planning to buy a new vehicle in the next 18 months) said they would use a $25 virtual prepaid reward that was texted to their phone after a test drive.
— 89% of intenders would use a special service offer that accompanies a prepaid reward.
— 53% of intenders would prefer getting a $15 prepaid reward for each scheduled maintenance visit rather than receiving a 10-percent discount on each maintenance appointment.
— 50% of Generation Z and millennials would bring their vehicle to the dealership for prevention maintenance for a $35 prepaid reward upon arrival.
With only 30% of the average dealership’s revenues coming from vehicle sales and the larger portion of annual revenue coming from service contracts and parts and service sales, daVinci’s study highlighted the opportunity to use open-loop prepaid rewards to increase repeat revenue and grow existing customer bases.
For example, dealerships see a 10% increase in closing rates when taking a prospective customer on a test drive, therefore, “a minimal investment in monetary rewards used as an incentive to take a test drive can result in significant vehicle sales that in turn can drive service when offers accompany test drive reward,” daVinci Payments said.
Even Gen Z and millennials, who daVinci Payments said are notoriously difficult to steer towards brick-and-mortar, deem a prepaid reward incentive enough to bring their vehicle in for prevention maintenance.
Rodney Mason, daVinci Payments’ chief revenue officer closed by stressing that, as dealers know, every face-to-face touchpoint with a buyer serves to build the relationship and present new opportunities to upgrade the client’s driving experience.
“It’s difficult to ignore that 92% of those who intend to buy a car in the next 18 months would complete a test drive for as little as $25 on a virtual prepaid card,” Mason said.
“Their propensity to accept and use virtual rewards and special offers that accompany them, provides dealers with much greater flexibility and value in executing incentives versus just a few years ago,” he went onto say.
The complete study completed by daVinci Payments can be downloaded here.