Heise is one example. He says he has been saving about 50 percent on his costs by using the frequent flier miles compared with traditional dollars-off discounts.
Dealer Miles is a privately held company that buys frequent flier miles from Alaska, American, Continental, Delta, Northwest and United airlines and U.S. Airways. The airlines have no ownership stake in Dealer Miles.
The company in turn sells the miles to dealerships. Dealerships must purchase a minimum block of 50,000 miles. They pay $300 for each block of 10,000 miles.
Dealer Miles has contracts with the airlines to process the miles, says Dealer Miles CEO Jim Burness, a former American Honda district sales manager. The company has four employees. It had revenues of about $360,000 in 2002.
Service incentives are effective, depending on the brand, says Lloyd Schiller, president of Dealer Service Corp., a dealership consultant in Boca Raton, Fla.
"If you offered customers of entry-level vehicles frequent flier miles to buy a 30,000-mile service, they would look at you like you were from another planet," he says.
The potential of incentives in retaining service customers is evident in the 2002 Service Usage and Retention Study by J.D. Power and Associates. Although most U.S. dealerships have at least three years of warranty experience to develop relationships with their customers, the majority of consumers visit nondealer service centers for postwarranty service.