BMW finance program aims to boost owner loyalty
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."