Providers of auto aftermarket products and related services have reason to be excited about 2018.
Using the US Department of Transportation’s miles-driven data as a guide, research firm The NPD Group projects a 2.7 percent market growth rate for the year.1 Factors contributing to the expected continued growth include:
- An increase in the average age of US vehicles of 17% over the last 10 years
- An increase in the average length of ownership for both new and used vehicles of 60% over the last 10 years.2
And while an aging fleet is great news for the auto aftermarket industry, this year’s projected increase in online purchases and online scheduling of maintenance services means additional competition for everyone.
The NPD Group has been tracking the slow but steady increase in online purchases of parts and accessories. Nathan Shipley, the group’s executive director and automotive industry analyst, said, “As the online channel chips away at brick-and-mortar, manufacturers and retailers alike will continue to find new ways to compete in this space, most notably in the buy-online/pick-up-in-store offering for consumers. Identifying and executing on new ways to drive foot traffic, which should be treated as a non-renewable resource, will be critical to long-term success.”1
So, as an aftermarket parts or accessories retailer, what can you do—in addition to offering ecommerce capabilities—to distinguish yourself from the competition, encourage repeat business and drive foot traffic?
New Research: Rebates Are Key
In February of 2018, research firm Leger conducted an online survey on behalf of Hawk Incentives to measure consumer attitudes with regard to promotional incentives.3 Respondents were asked about their shopping habits and reward preferences relative to multiple retail categories, including automotive aftermarket products and services. Here’s what they had to say:
- Regardless of gender, age or income, consumers prefer rebates to other types of savings deals (e.g., coupons or discounts)
- Among men, the number-one retail category for which they prefer to receive rebates was the auto aftermarket category
- While preference for a physical form of rebate fulfillment (e.g., plastic prepaid card or gift card) was generally favored over the digital version (e.g., digital prepaid card or egift), the preference for physical rewards in the auto aftermarket category was notably high among men, beating digital rewards by 10 percentage points
- Boomers and Gen Xers prefer rebates across more spending categories than Millennials, with Gen X showing the highest preference for auto-aftermarket rebates
- Both Boomers and Gen Xers indicated a preference for a physical rebate reward over a digital one, by 10 and 19 percentage points, respectively
Who is this rebate-loving auto aftermarket consumer?
The study asked participants if they a) had made an auto-aftermarket purchase or switched brands/service providers in the previous 12 months, b) plan to make an auto-aftermarket purchase or switch brands/service providers in the next 12 months, or c) neither. 48% of respondents identified with the first statement. When we looked at this group’s demographics, we found them more likely to:
- Be men (55%) than women (42%)
- Be Boomers (58%) than either Gen X or Millennial (43%)
- Make at least $40k/year (54%)
- Have experienced an increase in their purchasing power over the previous year (55%).
36% of respondents indicated that they plan to purchase or switch in the next 12 months. While the demographics revealed different percentages for this group, in the end, the portrait painted of this consumer was about the same as for the group that had made a purchase in the previous 12 months. They are more likely to:
- Be men (41%) than women (31%)
- Make $40k or more (40%)
- Have experienced an increase in their purchasing power over last year (46%)
What moves the auto aftermarket consumer to buy?
To those who told us they had made or were thinking of making a purchase or provider switch in the auto aftermarket category, we presented a range of different promotional options, and asked them to select all the options that sounded appealing. The vast majority (79%) said they would prefer a rebate option, with either a physical or digital reward.
When looking at the demographics of those who selected the rebate option, we learned that they were primarily men (83%), earn a minimum of $40k/year (82%), and would be classified as either Gen X or Boomer (84%).
For companies that provide auto aftermarket goods and/or services, the data in support of rebates as a business generator is compelling. Customers:
- Want rebates more than they want free warranties or free services
- Are willing to provide additional data or product reviews to get a rebate
- Will happily enroll in a loyalty program in order to get a rebate
- Use rebates as a deciding factor when making purchase decisions.
Additionally, the consumers most apt to spend more on auto aftermarket purchases—Gen Xers and Boomers—show the strongest preference for rebates.
The benefits to offering rebates over other types of promotions:
- Rebates help you fill out your customer database.
As part of the rebate process, you can ask for additional customer information or include brief surveys that add detail to your buyer profile.
- Rebates help you make additional sales.
Use the data you gather during the rebate submission process to identify your customers’ preferred methods of contact, and use it to send them additional marketing offers.
- Rebates bring customers back to your store.
When you fulfill your rebate using a branded prepaid card or gift card, you give that customer a reason to come back to your store. Our own data tells us that customers using a gift or prepaid card spend up to 50% above the card’s value. And, as a bonus, since your target market prefers physical rewards over digital, they’re most likely to come into your store to use the card, giving you more highly valuable face time with them.
- Rebates build customer loyalty.
One of our own clients, a national retailer, analyzed their customer data and determined that a customer acquired via a rebate has a greater lifetime value than one acquired through an instant discount.
Find out what rebates can do for you.
If you’re interested in learning more about the practical application of rebates to your industry, get in touch with us here, or give us a call. We can walk you through use cases, provide more details from our research, and give you a clearer picture of how a rebate-based promotion could work for you.