Loyalty is its own Reward at Ken Shaw Lexus Toyota

Family-owned dealership innovates again with one of Canada’s first automotive true loyalty marketing programs

TORONTO (May 11, 2010) – When Ken Shaw opened a small service station on Dundas Street West back in 1958, he said customer service was going to be his focus. Over 50 years later, that is still as true today at Ken Shaw Lexus Toyota, one of Canada’s largest and most respected family-owned dealerships.

Their latest customer-centric effort? The Ken Shaw Rewards and VIP Rewards program created for them by the Minneapolis-based loyalty marketing company re:member group.

“Ken and Paul Shaw have understood the core concept of loyalty marketing and keeping customers for a long time, but theirs has been more of a ‘home-grown initiative’ shall we say,” explains Paul Long, President, re:member group. “It involved – as Ken and Paul will tell you – a lot of beers. Those two would get together after work and just talk constantly about finding ways to service their customers better, knowing fully that creating and caring for a loyal customer is always going to be more profitable than constantly creating new customers.”

In fact, Frederick Reichheld, author of “The Loyalty Effect,” the seminal book on the subject, has research showing that a five-percent increase in customer retention can improve profitability by anywhere from 25 to 85-percent. That obviously gets the attention of business owners, particularly in the beleaguered automotive industry. But as Long explains, it’s not quite that simple of course.

“The problem is many automobile dealers will focus exclusively on that profitability part, not understanding this is more of a values statement than just the latest gimmick or advertising message. Ken Shaw’s competitors look at it as a way to sell a vehicle, but not necessarily a way to sell the next vehicle.”

That’s because of a concept referred to in the loyalty business as “harvesting points.” Let’s use an example from another industry. You’ve heard it said maybe that when health clubs or fitness centers sell you a membership, particularly one at an artificially cheap price, they really don’t want you to use it. Of course if you don’t, you’ll let the membership lapse and they’ll have to find another new customer to replace you. But at Ken Shaw they actually want customers to use the reward points they accrue.

“If I walk into the dealership a sales person is going to ask me if I am a Ken Shaw Rewards member, and if I am, follow that up by checking my points balance,” states Long. “Immediately I’ve got skin in the game, because if I have earned money towards the purchase of my next vehicle, I’m less likely to go to the competition. Now those competitors don’t want their salespeople harvesting points. They don’t want their sales people to even know if their customer is a rewards member. They leave it up to the customer to tell them whether they are a rewards member. They don’t want to give away that piece of it. I think it’s a disservice to the customer.”

Ken Shaw Lexus Toyota looked at it very differently. When told by re:member group it would take about six months for the program to really get off the ground and have customers start earning the points, they said they didn’t want to wait that long. So the dealership took the unprecedented step of going back an entire year and awarding a half million dollars in points to all their customers. Not only that, but for car buyers that purchased a vehicle as far back as January 1 of this year, they grandfathered them into their VIP Rewards program and they get a whole host of additional benefits. Those include not only earning 10-percent of what they spend in service and parts towards the purchase of their next vehicle, but access to savings at over 200,000 merchants in Canada and the U.S., use of a private waiting room at the dealership, free lunches, etc.

The re:member group’s Paul Long says in the Toronto market this is a truly one-of-a-kind program. He recalled that when they were introducing it to the employees at Ken Shaw Lexus Toyota Ken and Paul themselves attended every one of the meetings; seven in all in the space of just two days.

“The difference between them and many other dealerships we have worked with in the past, though, is that instead of this top down, ‘we have another thing we want to talk to you about’ approach, Ken and Paul see this instead as a way to go to market. Adding value to the customer is just at the front and center of everything they do. They even started a partnership with local businesses and also see their vendors or customers who own businesses as partners. They are building their own loyalty initiative that nobody is going to be able to duplicate. They really get it.”