The Green Sheet Online Edition
January 25, 2010 • Issue 10:01:02
Incentivizing the seller
With thousands of salespeople at over 1,400 dealerships nationwide, the cost for Toyota Motor Sales, U.S.A. Inc. of incentivizing its sales force with paper checks was a challenge. Toyota estimated that by producing approximately 150,000 checks per year at a shipping cost of $10 to $12 per batch, the car company annually topped $180,000 in distribution costs alone. In 2004, Warren Keckeisen, Accounts Payable Manager at Toyota, looked at his wife's Starbucks reloadable prepaid card and wondered why Toyota couldn't issue similar cards to its dealerships and their salespeople to reward them for selling certain makes and models of cars.
Kicking the tires
Toyota chose Citi Prepaid Services, a division of Citibank N.A., to transition Toyota from paper-based incentives to open-loop, Visa Inc.-branded, reloadable prepaid cards. Keckeisen said implementation took three months, with the program going live in August 2004.
More than five years later, the program has saved Toyota hundreds of thousands of dollars in printing and shipping costs, according to Keckeisen. Additionally, the electronic solution allows salespeople to receive their incentives in a fraction of the time it took checks to arrive.
"In the past the dealership personnel would receive a check ... several weeks after they sold a car," Keckeisen said. "And they would ask, 'What is this check for? What vehicle?' Now, they probably receive either an e-mail notice or text notice within days [indicating] when they sold that vehicle and when the payment is applied to their card."
Keckeisen pointed out that the program varies from region to region. With different makes and models of Toyota cars sold in different regions, incentives are targeted by region toward the sale of specific makes and models of cars. Incentive amounts loaded onto cards are typically around $100. "I know that the dealership personnel would like to see more dollars put on it," he said.
"But the budgets and the regions all have their own targets and their own sales. And as they meet those, they put enough dollars on there to move the product and hit their sales objectives. ... We want to spend our money wisely on incentives and push those [cars] that really need a little extra help."
Under the hood
Keckeisen reports that the program has experienced no hiccups. In 2009, Citi Prepaid provided Toyota an overview of how the program was working. From January to March 2009, Citi's automated interactive voice response service accounted for 89.5 percent of cardholder queries for such things as password resets and card replacements.
Citi has seen a decrease in the utilization - and the associated overhead costs - of live customer service support because of the effectiveness of the online portal, where salespeople go to view balances and transaction histories, Keckeisen said.
Not only has the program proven to be customer friendly, but it has also helped dealerships retain their best sellers. "I know it's a struggling market," Keckeisen said. "There's less and less people buying cars now, but [the incentive card program] is one way of retaining your good salesmen. When I go to the dealerships I will often talk with the personnel, and I will ask them about the program - they love it."
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