Automakers Should Stop Rewarding Costco Members

Through auto-industry partnerships, warehouse retailer Costco sold 400,000 vehicles in 2014. That’s twice as many as in 2008, Bloomberg reports.

It brings to light not how strong a specific automotive brand is, but how strong the Costco brand is.

I often wonder why auto makers would partner with the Costcos of the world, rewarding Costco members with special prices in lieu of rewarding their own “membership” of car owners who buy their brands.

Automakers sometimes require dealers to implement costly programs, and then turn around and give discount-price loyalty benefits to customers loyal to the likes of Costco.

Manufacturers know the way to keep an owner brand loyal is with a great ownership experience, so why not do more to offer rewards programs through their dealers?

Let’s rethink rewarding people because they buy cars through a big store that also sells TVs, bulk food and tires.

Instead, reward dealership customers with a special price because they have owned three or more of the same-brand vehicles. That is who they should be spending money on, not on someone who joins Costco for $50.

Automakers scramble to keep the customer from defecting to independent service centers, while giving them license to do so at places like Costco.

Meanwhile, auto makers prod dealers to sign up for and invest in express-service operations. I am at a Subaru dealership. The automaker is charging Subaru dealers $25,000 to implement Express Services. Why not take the money that goes to special pricing for Costco members and put it towards driving the customer directly to dealers?

Subaru engaged with Costco on a pilot program that gave consumers who bought new cars through Costco a $500 gift certificate, to spend at Costco, not at Subaru stores. My take is that gives people money to buy tires at Costco.

Bring back the points-earned system on the Subaru credit card. Send cardholders coupons encouraging them to return to the dealership service department.

If the manufacturers want impressive data, look at how many vehicles are serviced at independent service centers. Then provide the dealer body with the same purchasing power on automotive fluids, filters, tires and other parts so the dealer can be just as competitive to keep the customer at the dealership.

Automakers can learn about customer retention from Costco. But don’t spend money to keep Costco members as Costco members. That money instead should go towards keeping car owners loyal to the auto brand they buy.

Christi Smith is the business manager of Royal Subaru in Charleston, WV.