Challenge
To increase customer frequency and revenue through a cost-effective, targeted marketing program for a group of dealerships in a northern Midwestern metropolitan area.
An average dealership has 63-70% of their customers coming in only one time per year. So out of every 10,000 customers who have serviced with a particular dealership, roughly 7,000 serviced only one time within the past 12 months. Bringing back only 20% of these 7,000 one-time customers a second time could potentially mean $252,000 in additional revenue in a year.*
Since most surveys indicate that keeping an existing customer is five to seven times more profitable than acquiring a new one, it’s obvious that luring back customers who are already familiar with the dealership is a cost-effective way to get more for your marketing dollar.
Solution
Extend an aggressive offer to lost customers in order to entice them back.
Every month in 2009, a group of seven dealers participated in group-focused lost-customer postcard campaigns. The dealers all serviced the same manufactures, so they pooled their resources to win back customers who were no longer getting regular service.
The group-focused postcard campaign drove down production costs for each dealer. The mailers invited customers to redeem cost-competitive coupons at any of the listed dealers. Customers could either find a new dealership nearby or give their original dealership a second try. This created options for the customer, which is helpful in competing with the aftermarket. The main focus of the postcard was to grow the total market. That results in everyone winning—including the customer.
Results
The results showed a higher-than-average response:
| Pieces Mailed | Dealers’ Own Lost Customer Recapture | Total Lost Customer Recapture | % Gain in Group vs. Dealer Data | Lost Customer Response Rate % | |
| February | 37,886 | 1,359 | 2,412 | 77.50% | |
| March | 33,157 | 1,095 | 2,008 | 83.40% | |
| April | 30,396 | 831 | 1,394 | 67.70% | |
| May | 33,761 | 662 | 1,295 | 95.60% | |
| June | 33,793 | 1,042 | 1,485 | 42.50% | |
| July | 36,307 | 661 | 1,118 | 69.10% | |
| August | 38,368 | 775 | 1,265 | 63.20% | |
| September | 38,777 | 918 | 1,323 | 44.10% | |
| October | 39,936 | 1,144 | 1,679 | 46.80% | |
| November | 34,339 | 534 | 836 | 56.60% | |
| December | 14,992 | 339 | 459 | 35.40% | |
| Total | 371,712 | 9,360 | 15,274 | 63.20% | 4.11% |
The group had an average response of 4.11%. Lost-customer postcards typically have, by comparison, a 2-3% response. The average repair order for these returning customers was $182.25—significantly above the average of $150 per RO. Our group grew their market by 1.59%. The combination of brand awareness, cost containment and providing choices for consumers is a winner in the marketplace.
