Challenge
Increase service revenue as well as increase the core service customer base for a mid-size to large import dealership in the Northeast.
Approach
The first layer of the solution lies in understanding how you communicate with your core business. Separate customers by behavior. It makes sense to approach a recent customer differently than a defecting customer. According to an article by Kate Horstead featured on BusinessWeek.com, “Your old customers can be a valuable source of sales. They already know your business and were once interested in buying from it, so you may be able to persuade them to buy from you again. With new sales leads you have the time and expense of finding customers from scratch. As long as you have kept good records of customers, you will know their buying habits.”
Focus a marketing strategy on that premise: that it is easier and more cost-effective to win back former customers than gain new customers. To win back these defecting and lost customers, the dealership offered much more aggressive coupon offers.
The goal was to build long-term business from these lost customers and bring them back into the cycle of becoming regular customers. After the mailing, a comparison was completed showing the results of the segmented marketing campaign compared to a previous month’s marketing approach that featured less aggressive offers to all segments of the dealership’s database.
Results
By specifically targeting the lost customer base with a deeper discount, the dealership experienced an increased response from this marketing segment. The response rate of this segmentation was compared to a previous non-segmented marketing approach to determine if the deeper discounted offer provided an incentive to visit the dealer.
Summary
The increased revenue supports the marketing segmentation approach. The aggressive offers drove lost customers back to the dealership. At first glance, aggressive couponing may appear to be counter-intuitive in today’s tough economic climate, but if customers never come in, what is the return of that investment? This dealer clearly saw a 105% increase in RO’s with a corresponding 143% service revenue increase by applying a more aggressive marketing strategy targeted to a specific lost-customer segment.
