[Jason]

BMW finance program aims to boost owner loyalty


Via Autonews (subscription required)

Automotive News -- September 20, 2010 - 12:01 am ET
NEW YORK -- A pilot program that courts current BMW retail loan customers who have equity in their vehicles as customers for new BMWs will go national.

On Tuesday, Sept. 21, the captive finance company plans to roll out a program that identifies to BMW dealers their customers who are in good standing and whose vehicles' market value is more than what is owed.

Dealers are to contact those customers and tell them which new BMW vehicles they can buy within the same monthly payment range or a range chosen by the dealer.

Tim Sturm, BMW Group Financial Services general manager of vehicle sales, said BMW Financial retail owner loyalty -- as measured by people who move from one sale or lease into another and stay with BMW Financial -- is around 18 percent. The company believes the program can help almost double that by the end of 2012.

The pilot "dealers that worked the tool did very well with it," said Sturm during at interview at the National Auto Auction Association convention this month. "They were able to show us hard numbers in terms of sales and additional revenue that they gained because of it."

Sturm says BMW Financial and dealers have always courted lease customers before their lease contracts expired, helping bolster the loyalty rate among those customers to more than three times that of retail customers.

But since BMW Financial lease maturities are expected to decline by about 35 percent in 2011 compared with 2010, the company is looking at ways to keep retail customers in the fold. He says dealers are reaching out to customers who purchased new or certified used vehicles. The pilot program started in March with 12 dealers.

Chris Allen, lease portfolio manager at Tischer BMW in Silver Spring, Md., said his dealership participated in the pilot, and he thought the program worked.

For example, Allen had a customer who owned a 2007 3 series with a monthly payment of $650. That customer is now driving a 2011 3 series equipped with a navigation system and satellite radio that the previous car didn't have. The customer qualified for a special finance rate of 0.9 percent and is paying $632 a month on a 60-month contract.

The store sold a new car and took in a vehicle for its used-car inventory.

"We don't have to go to our [customer relationship management] system to pull the customer information," Allen said. "It makes it easier to find everything in one place."

[Crazy Bimmer]

What they forget to mention is that Allen's customer most likely had a rate higher than 4% in 2007 and was close to paying it off. That is until BMW talked him into getting a new car for the same payment for another 5 years.

I dont get how this is any different than someone who never had a BMW walking into the dealer and buying a car for invoice and getting 0.9%. That rate is offered to anyone who is eligible, isnt it? They dont have to be a repeated customer to get it.

http://www.bmwusa.com/Standard/Conte...modelcode=1142

[jayparry]

Well yeah, its not good for the customer who is looking to keep his car for 10 years, thats the point.

Instead of THIS GUY keeping his car for 10 years they got two sales out of him in those 10 years. Or, if he got the new car bug he might have looked elsewhere but they convinced him to come back in with a nav system and lower payment.

The idea is they increased 'owner loyalty' by selling him another car and they know the car they are getting back will have positive equity for the trade in. They still need to grab that other customer off the street, but this method should be like shooting fish in a barrel for them.

[Augu$tu$]

I think it's a "Loyalty" Program which means you must be currently in the BMW Financial portfolio either Financing or Leasing. Hence the 0.9%.

BMW Canada is currently running something similar called a "Pull-Ahead" Program which will pay up to four months of a current Lease expiring in the 2011 spring to try and boost current year end sales. In an essance, BMW Canada is trying to retain its customers and avoid them from looking else where.

[BGM]

but 60 months contract.. holy shit!

i'd be so bored of the car before less than half that :s

[Crazy Bimmer]

Originally Posted by jayparry

Well yeah, its not good for the customer who is looking to keep his car for 10 years, thats the point.

Instead of THIS GUY keeping his car for 10 years they got two sales out of him in those 10 years. Or, if he got the new car bug he might have looked elsewhere but they convinced him to come back in with a nav system and lower payment.

The idea is they increased 'owner loyalty' by selling him another car and they know the car they are getting back will have positive equity for the trade in. They still need to grab that other customer off the street, but this method should be like shooting fish in a barrel for them.

I understand that aspect of it. This marketing tactic isnt anything new though. Its almost exactly like those letters you get in the mail saying a dealer is low on used car inventory and willing to offer you more than market value for yours. It just to get you in the door and get you into another new car.

I guess it really depends how far BMW is willing to put into their trade in programs. Will they really be offering more than market value on the trade in? If so then many will be trading up.

[MDyDinanM]

owner loyalty?

pfsht!

how about focusing on BMW service ?

[hubble bubble]

Originally Posted by mdyaman

owner loyalty?

pfsht!

how about focusing on BMW service ?

+1000!

For dealers and BMW, it is good news. Get customers in, sell a new car before the customer notices the extra cash flow from not having a monthly payment.

BMW Canada has always given better finance rates to existing customers who buy a new car within 6 months of paying off the old one. They shoudl extend that period to 1-2 years.

[e85sbm]

I think it is a great idea to try to invest in additional sales following a deep recession.

HOWEVER, there are disadvantages and the program is not faultless. A year ago, they eliminated their 'loyalty' program which offered a discounted interest rate, now they are trying a new approach...will it work, I am not sure, time will tell.

[masamune]

Here I thought they were actually going to offer some kind of discount to previous owners - silly me!

[ORIGIN M.]

How about the dealer not know the standing I'm in financially...

BMWFS lost me for life, and considering, BMW is lucky that I'm still buying their cars.

Customer satisfaction is worthless, Customer loyalty is priceless!

Originally Posted by mdyaman

owner loyalty?

pfsht!

how about focusing on BMW service ?

[Oregano123]

well my marketing professor did say it was more cost effective to retain/maintain current customer base rather than go for new ones...

[ORIGIN M.]

Well he is right, and BMW paid a company to clue them in on this.

It does not take said customers long to figured out, if need be, then can go elsewhere for funds, if even at all.

Originally Posted by bmwhype

well my marketing professor did say it was more cost effective to retain/maintain current customer base rather than go for new ones...

[Vector Pilot]

It depends where your are in terms of buying a another bimmer. If you're happy with what your driving so be it. However, if BMW offers a better or equal price on car with similar or better features for what I'm paying on my leased 2008 Z4 I'd have to listen to their offer.

[3s-a-charm]

Originally Posted by hubble bubble

+1000!

For dealers and BMW, it is good news. Get customers in, sell a new car before the customer notices the extra cash flow from not having a monthly payment.

BMW Canada has always given better finance rates to existing customers who buy a new car within 6 months of paying off the old one. They shoudl extend that period to 1-2 years.

I think BMWFS Canada has removed the discount rate for existing owners. Last I checked this is the case. Both our current BMWs received discounted rates because we already owned BMWs which was a huge selling feature for us. One is at 0%!

[crackberry]

Originally Posted by mdyaman

owner loyalty?

pfsht!

how about focusing on BMW service ?

i lol'ed.

Originally Posted by red-sauerkraut

How about the dealer not know the standing I'm in financially...

BMWFS lost me for life, and considering, BMW is lucky that I'm still buying their cars.

Customer satisfaction is worthless, Customer loyalty is priceless!

im digging your avatar.

[The J-Man]

Owner Loyalty in this case does not mean that the owner gets any perks for buying a new BMW, it just means they are going to place harassing calls to your home in an attempt to make you loyal. Lame. How about a customer oriented owner loyalty program?

[Patsfan123]

If they can get me in a 1 for my 3 series payment...

[Mr. ///M3 RD]

I was at a Mercedes dealership yesterday, they offer the 0.9% also. Is BMW not just keeping pace with the competition?

What are the incentives for customers that pay cash?

BTW. Mercedes does not put 19 inch wheels with RFT on there fine cars. Just saying This comment might be off topic, however, what I read on the internet in the past 5 weeks since I lost my two rear 19 inch wheels to cracks I am starting to look to other car manufactures to replace my wife's car. Perhaps it will be a Mercedes.

Having driven BMW's for nearly 20 years (my Z is my 4th Bimmer) perhaps it is time to look elsewhere. I just don't understand where the JOY went when a new car needs two new wheels after 18,000 KM.

[Mr. ///M3 RD]

Originally Posted by bmwhype

well my marketing professor did say it was more cost effective to retain/maintain current customer base rather than go for new ones...

And he was so right ... it is easy to loose a Customer, however, so hard to gain the confidence of a new Customer.

[Mr. ///M3 RD]

Originally Posted by mdyaman

owner loyalty?

pfsht!

how about focusing on BMW service ?

My thoughts exactly ++2

For one thing they should make sure that every BMW dealership also has manpower and equipment to change wheels and tires on there fine cars and not send a customer across the street to a tire shop. I was shocked when told "Oh sorry we don't change tires or wheels here this is done in the tire shop across the street". So I followed the BMW fellow behind his truck to the tire shop.

Then watched how they forced my tire off the wheel and damaged my wheel that I had to take back to Canada for warranty refund? (Photos in my garage).

Also this friendly BMW dealership in Idaho said "Sorry this being a Canadian car we cannot deal with the warranty issue our US and Canadian warranty policies are not the same" ,,, and they went on ... "We can only give you two options one being you call Roadside Assistance and they will tow you to the nearest Canadian BMW dealership" right some 700 miles north LOL then they went on "Or you can purchase the new wheel and take it or ship it back to your home for Canadian warranty refund" I got a new wheel of course, what choice did I have. Then I watched that tire shop damage the wheel.

Naturally my wheel at home did not pass the stringent BMW tolerance of 0.300 mm (0.012") TIR total indicator reading.

Talk about service ... I'm telling you all that dealership was able to do is check and adjust my tire pressure and order a new wheel ... oh yes and hand me a bill for the wheel and overnight delivery. LOL

Yes I am angry ... once I too was a loyal customer 20 years in all

Perhaps more focus should be placed on dealer ships making sure they can service the car they sell.

[djspeed_330i]

Seems like most BMW owners have little regard for most stealerships. VW seems to be just as bad, and the domestics are not much better from what I hear.

So the question is, WHO does have the best service?

Martin