[11] Bmw Loyalty Program In This Week Talks

German ski legend Rosi Mittermaier passed on racing tips at Austria’s Zillertal resort last winter to a group of 10 students who all had one thing in common: they owned a BMW 7 Series sedan.

BMW, the world’s biggest maker of premium cars, last year began offering perks that money can’t buy to owners of its flagship model in a bid to keep its most profitable clients loyal. Mercedes-Benz quickly followed suit with a similar program of its own. Both were responding to down-market shifts by the more exclusive Maserati and Jaguar brands as competition for elite buyers intensifies.

The BMW and Mercedes preferred-customer programs represent an effort to strengthen relations directly with customers who can afford any car they want. The initiatives also reflect the tightening race as BMW and Mercedes vie to be the world’s leader in upscale cars.

The BMW Excellence Club was started in 2012.

The BMW Excellence Club, which started in July 2012, is currently only offered in Germany and comes automatically when a person buys a 7 Series. The program entitles members to attend exclusive events like skiing with two-time Olympic ski gold medalist Mittermaier, a private golf tournament ahead of the BMW International Open and an evening at silversmith Robbe & Berking hosted by German television celebrity Thomas Gottschalk and catered by Michelin-star chefs.

“The aim is to retain these customers, and we think we have an attractive package that encourages them to stay,” said Stephanie Boeckler, project manager for the BMW Excellence Club in Germany. “It’s important to be in contact” with buyers of the brand’s flagship model.

There’s a lot at stake. Mercedes has vowed to surpass BMW in sales and profit by the end of the decade, and a strong presence at the top end of the segment is key. Luxury sedans and coupes generate profit of about 15 per cent of the sales price, compared with average margins of roughly 9 per cent across the premium segment. The vehicles also add cache to higher volume models like smaller sedans, wagons and compacts.

“Above and beyond the profit impact, the luxury segment has a strong halo effect on the brands,” said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler. “That’s especially the case for Mercedes,” which is the traditional leader in sales for top-of-the-line luxury cars.

The Mercedes-Benz Circle of Excellence holds events for members and offers preferred status at elite hotels.

Germany’s upscale brands are also stepping up the pitch for high rollers as Maserati and Jaguar roll out models aimed at a less-exclusive audience. While the German brands currently outsell their Italian and British rivals by more than 20 to one, Maserati has started selling the US$65,600 Ghibli targeting buyers of the BMW 5 Series and Mercedes E-Class, and Jaguar plans to go after similar customers with a mid-sized sedan in 2015.

Mercedes has traditionally dominated the upper end of the luxury market with models such as the S-Class sedan, US$106,700 SL roadster and US$116,600 CL coupe. It’s seen the lead narrow after BMW added the US$77,600 6 Series Gran Coupe in 2012.

Five years ago, Mercedes sold 129,100 autos starting at more than US$75,000, double BMW’s deliveries. That lead over BMW will likely shrink to 56 per cent in 2013, according to estimates from IHS Automotive.

The No. 3 in upscale cars countered BMW’s club in February by starting the Mercedes-Benz Circle of Excellence, which also holds events for members and offers preferred status at elite hotels such as Hotel du Cap-Eden-Roc on the French Riviera.

Around that time, Mittermaier, who competed in the 1976 winter Olympic games, and her husband — World Cup alpine ski racer Christian Neureuther — were escorting BMW drivers down the slopes of Kaltenbach, Austria, including a group lunch at the gourmet Wedelhuette mountain chalet. The trip included three nights at the four-star Hotel Woescherhof in Uderns.

While BMW’s effort is just focused for now on Germany and the 7 Series, the Mercedes program is active in 25 countries and open to frequent customers and owners of select models such as certain AMG high-performance vehicles and Maybach ultra-luxury cars. Membership itself is free in both cases.

In the BMW program, members can attend one event a year without extra cost. They also get driver coaching, a Diamond customer card at car-rental company Sixt SE, and a BMW Carbon American Express card. Participating in Mercedes’ events — such as winter driving on the frozen terrain of Arjeplog, Sweden — costs extra.

The offering is “a response to the increasing requirement for individualization and differentiation,” said Andreas von Wallfeld, head of face-to-face customer communication at the Stuttgart, Germany-based carmaker.

Events, including entrance to Formula One races, art exhibitions and fashion shows, are experiences that “cannot be purchased in this form and are usually only accessible thanks to Mercedes-Benz,” he said, adding that demand for the more than 20 events this year has exceeded capacity.

The program is flanked by an overhaul of the S-Class sedan to add touches like a rear seat with a hot-stone massage function.

Mercedes also plans to widen the number of the model’s variants to six, including the stretched Pullman version.

The pampering of these buyers isn’t free from self promotion. At BMW’s event at Robbe & Berking in Flensburg, Germany, the carmaker presented the BMW 760Li Sterling, a prototype decked out with 12 kilograms of silver.

The model was aimed at showing off the BMW Individual customization offering, which has made flourishes such as a rear-seat leather dog basket for a designer’s pooch, salmon-skin accents for the interior of a fish manufacturer’s car, and an in-vehicle safe for a Russian investor.

As demand for personalization grows, the BMW unit has increased its offerings, including special wheels, wood trim and seat fabrics, to 32,695 products, almost double the range three years ago.

The unique 7 Series model included dashboard elements in hand-hammered silver, a technique known as martelé. The car would cost about 320,000 euros, more than double the 147,000-euro list price. Customers don’t seem to object to the enticements that are part of the package.

“We’re very happy with the response so far” to the program, said BMW’s Boeckler. “All of our events have been fully booked.”