How to Start a Car Dealership Referral Program [+Tools]

Starting a car dealership referral program can be an excellent way to grow your customer base and increase profits. A referral program encourages customers to refer their friends and family to your dealership, resulting in more sales and a higher satisfaction rate among your customers. Establishing clear and achievable goals, and following a proven set of best practices is key to success when starting a car dealership referral program. 

This post explores best practices for starting a car dealership referral program, to help your dealership reach new heights of growth. Take away these tips for your referral program, and watch the growth roll in.

What are car dealership referral programs?

A car dealership referral program (or automotive referral program) is a streamlined, digital program that rewards customers who spread the word about your car dealership to their friends, family members, and coworkers. Whenever a customer refers a friend who purchases a new or pre-owned vehicle from you, you reward the referring customer with a valuable incentive.

Don’t settle for a manual referral program, where referred customers have to mention the name of the person who referred them and you have to keep track on your own. An automated referral program – run with dedicated referral software – is the best way for car dealers to track customer referrals, plus instantly give out referral rewards.

Benefits of dealership programs

By enlisting the support of your customers’ trusted voices, a car dealership referral program can shorten your sales cycle, increase the quality of your prospects, and boost your marketing efforts. In addition, a referral program is typically more cost-effective and easier to launch than other marketing strategies.

According to Nielsen, word-of-mouth advertising increases sales by over 400% since people put a lot of faith in the recommendations of those they know and like.

Here are other key benefits of using an automotive referral program:

• Customers are your finest brand ambassadors – they know the advantages of doing business with you and can speak from personal experience.
• Friends of customers are more likely to purchase a car from you since they trust peer recommendations more than any advertisements your dealership runs.
• By keeping tabs on each referral your consumers make, referral programs reveal whether or not your marketing efforts are paying off. You’ll know exactly how well referrals are promoting your growth.
• Those referred to your dealership are likely to refer their friends, and so on, creating a viral loop of sharing. 
• Research has shown that referred customers have a higher customer lifetime value, as they have a greater retention rate than other customers.
• Referral programs are a cost-effective way to attract new clients. (They are less costly than traditional advertising methods because you only have to pay for successful referrals.)
• It’s easy to identify which clients are your top promoters, thanks to the tracking tools of a referral program. This way, if you like, you can reward your most loyal clients with special VIP bonuses.

Referral software for car dealerships [Free Tools]

These referral tools for car dealerships are a free and easy way to help you start your referral program.

Want a fully automated referral program for your automotive business? Run your referral program with us at Referral Rock. Find out how we can build your program with you (and tailor it to your unique needs)

Will a referral program work for your dealership?

Even though referral programs offer plenty of benefits, not all car dealerships are ready for a referral program.

For a car dealership referral program to work for your business, you’ll need:

• A digital element (a website and/or an online customer portal that customers can access the program through)
  • Referral programs can still work well for some brick-and-mortar dealerships, but only those that have a website or portal where they can collect and manage referrals. 
• A reputation for a high-quality sales and service experience, which sets you apart from other dealerships
• A base of happy customers, who love the car they bought and the experience they’ve had with your dealership
  • Customers need to be happy with their experience to have a reason to recommend you to their friends

Car dealership referral program best practices

Prospective buyers browse for online reviews or seek suggestions from friends and family before purchasing a car. Referrals are crucial since individuals refer dealers they’ve had a great experience with to others who are actively seeking to purchase a car.

Here are some best practices dealerships should follow when developing an automotive referral program. 

Plan to reward the referring customer and the new customer

While giving referral rewards, you must let your new and old customers know you appreciate them. Rewarding both parties increases the likelihood that the advocate (referring customer) will make additional, high-quality referrals, and that the new client will make that crucial car purchase.

Figure out who you’ll invite first

If you’re starting a referral program, the people you first invite to join will significantly impact its success. Who should be part of your referral program’s target audience? 

You may start with your most dedicated advocates by sending them exclusive invitations to be among the first to sign up. For example, you might reach out to those who have provided glowing testimonials, or who have already recommended your company to their friends. But you could also invite everyone who has bought a car from you when you launch the program, all at the same time. 

Select motivating, strategic rewards

Before choosing the rewards you’ll offer in your program, think about things such as: 

• What incentives will motivate current and new clients the most?
• What are you ready to spend to attract each new customer for your dealership?
• Will you give different referral rewards for the purchase of a new vehicle vs. a pre-owned vehicle?

Customers probably won’t buy another automobile from you for a while, so it wouldn’t make sense to give them discounts or credits that they may not use. Instead, offer rewards unrelated to car purchases. Excellent options for rewarding referring consumers include cash back, technology rewards, gift cards to other businesses, and experiential rewards (such as sports tickets).

However, you should offer potential new customers rewards that might encourage them to acquire a car from you. Attractive discounts or credits towards purchasing the vehicle are your best bet for rewarding referred friends.

Know when to ask for referrals

Before you target consumers for referrals, you also need to know if they value your services. Knowing optimum times to ask for referrals – when it’s clear customers are happiest – means customers will be more likely to share with friends. Here are some of the best times and scenarios to ask for referrals. 

• Follow-up with customers who have just bought a car – immediately after, or a few days after, the vehicle purchase.
• Check in with clients who have recently recommended your dealership to friends (on social, in positive reviews, or in person).
• Ask clients when they have given you favorable feedback in the form of a positive comment, review, or in-person interaction.

Make sharing easy and compelling

Make sure your referral program can be easily shared so that people will spread the word. It’s crucial to streamline the process to maximize the likelihood of gaining new customers from each referral. Customers should be able to discover your program and spread the word with minimal effort. Here are some ways to ensure your referral program is easy for customers to share:

• Enable customers to find your program and share in as few clicks or taps as possible.
• Put a catchy headline on your program’s page that makes people want to share.
• Clarify the rewards and other benefits offered by your referral program – both tangible incentives and the opportunity to help friends. 
• Briefly describe how the program works – how to refer friends in 3-4 easy steps. 
• Keep the referral form short and sweet. Don’t ask for too much contact information at once, as long forms can be a turnoff. 
• Clarify the reward guidelines – rewards should be earned when a new dealership customer purchases a car. 
• Provide multiple sharing options (SMS, social media, email, and a referral link that clients can copy and share anywhere).
• Link out to a separate referral FAQ page for referrals to answer any additional questions customers may have. 
• Create a mobile referral program (one that can be easily shared from cell phones, as that’s the most common way customers naturally share valuable things with friends).
• Inspire your clients to spread the word about your dealership by reminding them that a recommendation is the best proof of the dealership’s value.

Promote your program

Even with the best program design, your program won’t get any traction if your customers don’t know about it. So, spread the word about your program frequently, in multiple places – not just at the program launch.

Here are some of the best ways to promote your program:

• Through social media posts.
• In your email signature
• In dedicated emails about your automotive referral program
• In renewal emails, newsletters, or other “normal” car dealership update emails
• Via text messages, if you have a text list
• In a blog post (if your car dealership has a blog)
• With physical signage in your car dealership or on the windows
• In direct discussions with clients (don’t be shy to ask for referrals from customers)
• With flyers (these can be mailed to previous clients or handed to customers when they make a purchase)

Use referral software

Referral software is essential since it simplifies developing your program and facilitates tracking and managing referrals. Some of the benefits of referral software include the following:

• With the help of referral software, you can design a system that works best for your car dealership. 
• Because each client has a different referral link, referral software can accurately track the origin of each referral.
• Successful referrals are instantly rewarded through the referral program.
• Using the data gathered by referral software, you can evaluate the efficacy of your referral program and make adjustments as needed.

With Referral Rock, your car dealership can have a referral program up and running in days (not months) – no coding required. In addition, you can automate your engagement and promotion efforts using Referral Rock, for scalable, low-cost expansion.

Thank customers for referrals

This is more than merely offering incentives for successful referrals. When a customer’s friend or family member buys a car from you, send them personalized, written thank you notes. Another way to show gratitude is publicly recognizing referrers on your website, blog, or social media accounts.

Track and measure your success

Keeping tabs on your referral program’s key performance indicators (KPIs) can help you gauge its progress and identify problem areas. Essential metrics to track for car dealership referral programs include: 

• How many referrals you get over specific periods
• The percentage of customers that make referrals
• The percentage of referred friends that ultimately buy cars

This will help you gauge the success of your referral program. 

Key takeaways

Word of mouth remains the most impactful form of advertising for businesses. To harness the power of word-of-mouth referrals, establish a well-designed referral rewards program for your car dealership. Ensure it has a strong advertising strategy, a rewarding system, and a customer-focused approach. You can boost your referral program by offering incentives and streamlining the process. With a successful referral program in place, you can expect a surge in customer acquisition and a positive impact on your dealership’s reputation.