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Integrated Strategies (Spring 2009)

By William Keenan Jr.

It’s always a pleasure working on a project that comes together smoothly, with all parties – incentive provider, agencies and client – working closely together on the goal of putting out a great promotion in a limited timeframe and seeing it succeed.

And that’s pretty much what happened with a consumer sales promotion for Subaru Canada’s Impreza WRX STI brand in 2006-2007. To make it even more impressive, turnaround time for the program – from approval to implementation – was a mere 30 days, an amazing achievement for a promotion of this magnitude.

“At the time,” says Carlton Group President Ron Benegbi, “the Canadian dollar was very strong, and there was a lot of migration of Canadian consumers going into the U.S. to buy vehicles.” Subaru Canada wanted to stem that flow by creating a compelling value proposition that would drive customers back to a Subaru Canada dealership, while at the same time laying the groundwork for future loyalty.

To do so, Subaru needed an incentive product that would appeal to a target audience of past Impreza owners – young to middle-aged affluent males who appreciate power and performance and who are passionate about their vehicles. Carlton Group worked with America Express Incentive Services (AEIS) to use AEIS’s DirectSpend merchant acceptance process to create a co-branded $2,500 STI Club Card – good for accessories, service, extended warranty and Subaru merchandise and apparel at any Subaru Canada dealer – that would be awarded when a vehicle was purchased.

Still, putting the program together wouldn’t be easy, as Gaetana Surdi, AEIS Director of Channel Development, points out: “We had 30 days to get Subaru Canada corporate to put together a marketing plan with its agency, work with Carlton on the card conception and create a co-branded card, a custom card carrier and envelope,” she says.

On top of that, the program was conceived and launched during AEIS’s peak holiday gifting season, and not all Subaru Canada dealerships were set up to accept American Express. “We had to work with our program manager and Amex Canada to get something like 32 dealerships signed up in 30 days,” Surdi adds. “But all of the parties worked together diligently and efficiently to get the program launched.”

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A $2,500 Payback

The card worked effectively to meet the two primary goals of the promotion: 1) to increase sales of the STI by targeting previous owners; and 2) to “create loyalty back to the dealerships, to get them back for oil changes, new tires and other products that would help develop a relationship with their ‘home dealership,’” Surdi explains.

Directing the “spend” for the card back to the Subaru dealerships was one of the program’s premier selling points. “If you could take that money, let’s say, and go to BestBuy to buy a TV, that wouldn’t really be meeting the program’s secondary objective,” Benegbi says. “We wanted to drive that customer back to into the store after the transaction was complete. We wanted that customer coming back over the next year or two by encouraging what we called ‘home dealership loyalty.’”

Ingrid Gulliver, Vice President of Canadian Sales for AEIS, adds, “It also creates a revenue stream. Aside from selling the Subaru vehicle, it also drives the person to come back and get their service, the extended warranty, some new wheel rims and other bells and whistles that they might not normally have thought about purchasing. And in doing so, it creates that behavior and loyalty with the dealership.”

The $2,500 value for the card – while seemingly high – “was decided upon after running it through a lot of economic modeling and different ROI calculators,” says Benegbi. “The first objective was to increase sales by 10%, and they believed the offer needed to be very compelling. Certainly, you aren’t thinking about spending that $2,500 on repair and maintenance when you buy a new car, but there are things you could do in terms of increasing performance – and Subaru is all about performance as a part of the brand.”

In addition, he says, “The drivers within this demographic profile are very proud to own the vehicle – it’s sort of a reflection of who they are as individuals. So tying in Subaru apparel and WRX-type imagery and letting them redeem for that made a lot of sense.” Couple that with the key value proposition of getting buyers to go back to the dealer to spend that money, and the $2,500 “price point” looks like a sound investment.

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A Direct Mail Centerpiece

The promotion was supported by an ambitious direct mail piece that went to 4,300 past owners of Impreza vehicles. The package – designed to break through mailbox clutter – included a brown paper bag with a belly band that invited drivers to “Inhale. Exhale,” and to look inside the bag for instructions.

“It was a tongue-in-cheek approach,” says Edessa Dakji, Carlton Group Client Service Manager. “Inside the bag was a set of instructions on how to use the bag when you hyperventilate in response to this outstanding offer. And it explained that current and present owners were personally invited to their home dealership to test drive the Impreza STI – and that they would receive the $2,500 STI Club Card on purchase.”

Dealers also had the direct mail piece on hand in their dealerships to offer to walk-in customers who hadn’t received the mailing. In addition, the program was further reinforced by a website and supported by banner ads on Yahoo and elsewhere, as well as keyword searches.

The direct mail piece alone had a 20% response rate, says Benagbi, “which is beyond what anyone would have expected to achieve and is essentially unheard of in direct mail.” All told, 218 vehicles were sold, “translating to a 28% lift in sales, considerably exceeding the 10% target,” Benagbi says. “But what’s even more impressive was the longevity of the program. Initially it was only supposed to run for three or four months, but it kept getting extended.”

The net result was a 14-month promotion, says Benagbi, adding that “Nobody ever sets out to run a 14-month promo. You can’t keep yourself engaged that long, let alone customers. But it kept getting extended, and the end result was a 28% sales lift over a 14-month window, which is incredible. I think that’s why the program has won awards from both the Canadian Marketing Association and the Incentive Marketing Association.”

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Co-Branding Makes a Difference

Another big factor in the success of the program, in addition to the “smooth synergy” of all parties involved, according to Benagbi, was the co-branding with American Express.

“If it wasn’t American Express – if it was the ABC Company or whatever – I don’t think Subaru would have gotten as excited about it,” he says. “It was like the last piece of a puzzle; the fact that the offer could be so compelling, could be driven through a card and could be used only at Subaru locations. Then with the tie-in to American Express, it was exactly what was going to help us to meet our goals.”

Surdi suggest that the successful results of the program show that “you can push things through in 30 days, but it has to be manageable and you have to have buy-in from everyone. In this case it worked because everyone bought into it, everyone worked on it with the right amount of excitement and time. It’s kind of a template on how to execute future programs because it was so successful. We learned that co-branding works and direct marketing still works.”

Some STI purchasers are still redeeming their Club Cards, so final data on how they used the cards and just how successful the promotion was in sending buyers back to their “home dealers” hasn’t been tabulated yet. But overall, with a 28% sales increase and anecdotal evidence of a boost in customer loyalty, Subaru Canada is certainly satisfied.

Geoff Craig, Director of Advertising for Subaru Canada, sums it up this way: “At a time when competition was fierce, the STI Club Card program cut through the clutter delivered positive results and maintained positive brand momentum. Subaru is delighted with the response from consumers based on dealer feedback, and on redemption of the prepaid reward cards.”

Sounds like a winner.

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