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Restarting the Engines
September 17, 2009
By Andrea Doyle
This has been a year many in the auto incentive sector would prefer to forget. Chrysler, General Motors, and Toyota all scrapped 2009 incentive trips. Ford kept at least one program, rewarding dealership mechanics who finished master technician training by sending them to the CasaMagna Marriott Cancun Resort in January, according to a USA Today report. Dealers paid for the training, but Ford paid for the trip.
But by August, things didn’t look quite as bleak. Chris Gaia, vice president of marketing for St. Louis, MO-based Maritz Travel, says that last month things started picking up. Several auto manufacturers have requested proposals for incentive travel and meetings programs for their dealer networks, with most anticipated to deploy in 2010 and 2011.
“Although the pulse is weak, we’re encouraged that there is now a pulse,” says Gaia.
Maritz Travel’s incentive travel bookings in the automobile segment for 2010 is up 35 to 40 percent over 2009 but is still less than half of what it was two years ago. Maritz Travel is telling its auto industry clients that if they are considering incentive programs, now is the time to book, as the hospitality industry is still soft and deals are to be had.
“A lot of auto clients had canceled everything, but it looks like the worst [is over],” says Gaia. “The economy is still not great, jobs are still being lost, but it appears the economy and this industry have begun to stabilize. We’re encouraged by what we’re seeing.”
Not Everything Braked to a Halt
BMW North America is one automaker that didn’t tinker with its incentive travel programs for dealers, general managers, and salespeople, because the company believes the programs pay for themselves, Wayne Orchowski, vice president of sales, told USA Today. Orchowski’s division regularly recognizes BMW’s top 10 percent of dealers. They’ve taken exotic trips, such as an African safari and a trek to the Great Wall of China.
It’s not only about recognition, he says, because on the trips, people spend a good deal of time networking and discussing best practices. And they’re exposed to experiences that will help them relate
better to BMW’s well-heeled clients, says Orchowski.
“Times are tough,” Orchowski told the paper. “But you have to be prudent with where you make your cuts. You want to keep cultivating the soil to make sure things keep blossoming.”
Cory Mosley, an auto industry consultant and trainer based in Short Hills, NJ, says manufacturers like BMW and Audi are still awarding trips to high-achieving salespeople and managers. Audi of America recently held a “Mileage Marathon” campaign across America that entailed 14 cities in 14 days, from New York to Santa Monica. The 4,800-mile promotional trek featured the carmaker’s fuel-efficient TDI models.
One stop was an event at Cleveland’s landmark Glidden House, a mansion-turned-hotel. Audi’s event logistics firm, Livonia, MI-based Presentation Works, enlisted a local event design company, HeatherLily, to help with the event’s sophisticated decor. “Typically, we would handle each stop’s event design, but time was of the essence and HeatherLily was highly referred to us as an event design firm that can meet stringent deadlines and achieve the caliber of decor that Audi required,” says Lisa Combs, Presentation Works’ director of special events.
Combs outlined the unique challenge of creating the event at the boutique hotel, whose patio tent reception area didn’t meet Audi’s decor standards. After initial creative consultation between the two firms, the race was on for HeatherLily’s team to pull off the high-profile, two-day event in less than three weeks. HeatherLily was in charge of the execution of the design, from floral arrangements, to lighting, linens, chairs, and, most notably, a clear-span tent, which held approximately 100 guests of the carmaker, plus members of the press.
The two-day Audi event comprised a dinner reception from 7 to 11 p.m., followed by a breakfast from 7 to 11 a.m. the next day. Therefore, the event’s designers had to come up with a complete and literally night-and-day transformation.
From Full Size to Subcompact
Although lavish events like the BMW program have continued to be held, most in the auto industry now are thrilled that the pulse is simply back, as far as travel is concerned.
“What has changed is the amount of people and the qualifying rules to participate,” says Mosley. “However, even before the ‘auto recession,’ things weren’t like they were. For example, Toyota used to host an event known as ‘Cash Bash’ for salespeople and managers where one could literally walk away with thousands of dollars in cash and prizes. They haven’t held that event for many years.”
Similar to what is happening in the entire incentive travel sector, corporate events in the auto industry are being scaled back. “They’re shorter and in less ritzy locations,” says Mosley. “There have been cuts in recognition programs at the dealer level, as well. For example, Ford has taken away its luxury getaway package from recipients of its President’s Award. Now, they just get a lapel pin and a plaque.”
Auto companies are still motivating their salespeople, just in different ways. The industry at the dealership level has long relied on something called “spins,” says Mosley. A spin is simply a variable bonus—or spiff—that can range from an extra $50 to $1,000 payable on each vehicle sale, and it can be subsidized by the vehicle manufacturer.
“For example, Infiniti recently held spins on specific models it wanted [dealers] to move. Once your sale is complete you call into a hotline and essentially ‘spin the wheel’ and receive your bonus payment on a prepaid debit card,” explains Mosley. “Dealerships also do this internally, some with elaborate Price Is Right-style spin boards. Carmakers can offer spins on slow-moving inventory as a motivator.”
Detroit-based Tina Gaccetta, vice president of client services who oversees the automotive segment for Carlson Marketing, and who has been involved with the automotive industry for 20 years, says this year has been devastating. “Manufacturers recognize that they still need their dealers to be engaged in their brands, but their incentive activities have been scaled back,” Gaccetta explains. “The Big Three have been impacted the most and are not doing a lot of travel.”
However, these manufacturers are still looking for other ways to engage dealers. Currently, their recognition and incentives are more focused on awards, merchandise, and running advertisements recognizing dealers in targeted publications such as Automotive News. And Gaccetta says there has been an increase in the use of debit cards as incentives in the auto industry, but the award volume is down due to less car sales.
A ray of light for auto-industry travel is the many new electric and hybrid models making their way into the market, which will create the need for more education. This will drive face-to-face engagement, says Gaccetta. “Eventually, the auto industry will get back to face-to-face to celebrate successes and drive performance,” she adds.
A Group Ramps Up Its Travel Incentive Program
Automotive Parts Associates (APA), an organization in the aftermarket sector, is thriving, according to Caprice Caster, events and promotions director at the Lenexa, KS-based organization. During a time when many are cutting back incentive travel because of the economy and perception issues, the APA, whose members are warehouse distributors, recently announced that its board of directors elected to conduct incentive trips annually instead of every two years, starting in 2011.
“Every single one of these trips has been profitable,” says Caster. “They are not seen as boondoggles; people have earned them. Plus, they build important relationships. Our sponsorships are full steam ahead.”
A group of 800 gathered for APA’s most recent incentive trip, held at the Moon Palace Golf & Spa Resort in Cancun in 2008. It included APA staff members, APA members and their clients who qualified (with their spouses and guests), along with sponsors. No corners were cut for the incentive trip, and, as a matter of fact, at a football playoff party held in the Moon Palace’s ballroom, $10,000 in cash was given away.
Another reason why the organization’s board of directors decided to make its incentive trip yearly was because of the drastic cuts in airlift. “We’re struggling to efficiently get people into Punta Cana, Dominican Republic, for our 2010 trip,” Caster notes. “When we have one trip to the West and another to the East, it gives people a choice,” she explains.
In Punta Cana, the group will be staying at the Moon Palace Casino, Golf & Spa Resort, a luxury, all-inclusive property that features a 96-slot casino, an 18-hole Jack Nicklaus golf course, and a spa with 36 treatment rooms.
This incentive trip allows APA members to motivate their customers. APA arranges the trip, provides all marketing materials for its members, and assists with airline tickets and resort reservations. APA reports that as a result of its 2008 Cancun trip, one of its members saw a large tire shop client bump up purchases by 30 percent. That same member also gained back another shop that had switched over to a competitor. It didn’t lower prices to gain back the shop’s loyalty; it simply motivated with the incentive trip, plus the client made 10 percent more
purchases.
The APA’s 2011 incentive trip will feature a West Coast cruise, while in 2012, the group is considering the Bahamas or Key West.
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