Designing Promotions for Your BHPH Dealership - Part 2

Part 2 - Collections Promotions


As I said in the first part of this series here, properly designed promotions are more fun than advertising. Promotions should involve your employees, your customers, friends, family, neighbors, etc. All promotions should be done in a festive atmosphere. Plan the promotions so that as many customers as possible are included. Try to avoid promotions that have just one winner. It is very difficult to get people excited about one grand prize. People are more likely to participate if they think their chance of winning is better. Use promotions to set your dealership apart from your competition. Promotions are an important factor in helping you retain existing customers by making their experience with your dealership a pleasant one and reminding them why they chose to do business with you in the first place.  Make sure you take plenty of pictures and post them at your dealership, on your Facebook page and on your website to show customers who chose not to participate all the fun they missed.

As discussed in the first post in this series, promotions may be designed to serve several different purposes. Some promotions will be designed to assist you in attracting new business by offering prizes or contests for prospects. Some promotions will be designed to attract new business by rewarding current customers for referring new prospects to you. Some promotions will be designed to reward customers for paying their accounts in a timely manner. And some promotions are designed to address certain collection issues you know your dealership will face, such as collecting payments during the holiday season.

Let me repeat something I said in the first part of this series; some types of promotions are regulated by state law. Some promotions are considered raffles if a customer must purchase something (like a car) in order to participate and, in some states, that means they are forbidden, in others require a license and in some are absolutely OK. You need to consult your legal counsel on any promotion to make sure you are not violating any state law or local ordinance. In this part, we’ll take a look at promotions designed for aiding in collections.

 

Reward Paying As Agreed

These promotions are designed to reward your customers who make their payments on time and as agreed. Yes, their contract requires them to do so but we all know that this is often not the case. The more customers you have paying as they promised to pay; the lower your collection expense and the amount of time you have to spend doing collections.

These promotions usually take the form of some small prize for making a specific number of on time payments in a row. For example, I know one dealer who made a wheel to spin and put various prizes, ranging from free oil changes to $50 cash, in the sections of the wheel. Every time a customer makes 8 payments in a row on time, they get to spin the wheel. You could do the same thing by putting envelopes with prizes in them in a drawing box and letting customers draw from the box when they have made the required number of as-agreed payments in a row.

 

Address Specific Collection Issues

If you have been in the BHPH business for a year or more, you know there are times of the year when it is harder to get your customers to pay when they are due. These promotions are designed to address that issue and make it more attractive for your customer to pay as promised during those times.

One of the best examples of this problem is collecting payments over the holidays. BHPH delinquencies climb beginning around the 1st of November and continue through the end of the year. One of the best ways I have seen to address this is to run a longer term promotion spanning that time for several larger prizes. When the promotion begins (usually Oct. 1 or so), every customer is “in the pot” for the drawing. However, if they make a late payment for any reason, there name is removed from eligibility for the drawing. The final drawing is usually held the Saturday before Christmas and, by the end of that 10 week period, only those who have made on time payments for the full 2 ½ months are eligible to win. When the prize is more valuable in your customer’s eyes than whatever else they were going to spend your payment money on, they will make their car payments.

  

These are just a few of the successful promotions I have seen used in these areas. The secret is to be creative. Think outside the box. The more you make the experience at your dealership unique, the more customers will want to do business with you and make their payments on time. Promotions are a great tool for making that happen.

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Comment by Aaron Hershey on April 15, 2013 at 5:25pm

We sometimes run a holiday time promotion that encourages customers to pay their account ahead in Sept, Oct and Nov, so that they don't have to make a car payment during the holidays. For every $20 extra (over and above regular payments) that a customer makes Sept- Nov, they get a raffle ticket. The week of Christmas we draw winning tickets. We usually have 10-20 prize so we have many winners. Prizes usually range from $25 gas cards up to flat screen TV's and $200 walmart giftcards Etc.

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