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.

Read Full Post »

Challenge

It is harder than ever to generate the same revenue from parts and service customers. Vehicle quality has consistently increased over the last decade, and preventive maintenance needed for these models has been reduced. Even oil changes have become less frequent—with the introduction of synthetic oil blends. The bottom line is that it is difficult to identify the right marketing plan to increase your service department’s gross profits and year-to-year sales. Where can we find a market opportunity to drive in customers?

Approach

Over the years, dealerships have emphasized new car sales and service. Some have forgotten the older model vehicles. What would be the result if we specifically targeted those older-year models, and how would that affect the dealer’s profitability? Perhaps service managers should rethink the paradigm of their primary market being the servicing of new vehicles. This shift in focus could boost the dealership’s profitability during more difficult economic times.

By increasing the scope of your promotion to include older models, you could bring in vehicles needing more service than vehicles half their age. Also, these older cars will need parts that are more expensive and require higher labor charges. This combination will increase the average amount of the dealership’s repair orders—making the dealership more profitable.

Read Full Post »

Challenge

According to a recent study by the Automotive Aftermarket Industry Association (AAIA), vehicle repairs cost an average of 34% more at a new car dealership than at independent repair shops. They argue that this is leading to 11.7 billion dollars of excessive costs annually to consumers.

A large import dealer located in the southern United States decided to address the issue of being cost-competitive­—without sacrificing profitability. The first part of his challenge was to utilize a cost-efficient means of keeping his name in front of customers and enticing them back into the dealership, despite perceived higher cost.

The second part of the challenge was to retain new customers. Being cost-competitive is great, but really showing the value of the dealership is the key to turning one-time customers into regular customers. What value proposition could the dealer create that would justify perceived higher cost?

Approach

The dealer sent a mailer offering a $19.95 oil change. The shop is the number one store (of that particular manufacture) in that region in paid-customer work. On subsequent mailers, the dealer continued to offer the $19.95 oil changes. To sweeten the deal, he chose the rock-bottom price of $9.95 to put on a lost customer postcard, which was mailed at the same time as a regular mailer that featured the $19.95 oil change.

(Customers are considered to be lost when they have not visited the dealership in 24 to 36 months.)

To overcome the second part of our challenge, the difficulty in retaining customers, the dealer turned his focus to branding his dealership as having great value and strong personal interaction. This dealer has eight technicians, most of whom are master technicians. Each technician performs an oil change and a multi-point inspection. If he sees a problem, he assumes the role of a consultant and shows the customer. He will either take the part up front or pull the car around. Allowing the customer the courtesy of a visual inspection and presentation of damaged parts/systems fosters credibility. If the technician can tie the work to performance or safety concerns, he will further increase the likelihood of an upsell.

Read Full Post »

Challenge

The challenge was to create a larger and more unified market presence for multiple dealerships, all located in the same city in the northern United States. The group wanted to build manufacturer brand loyalty while maintaining strong individual dealership identities.

The ultimate goal was to grow each dealer’s market share and market penetration. This increase would also lead to more frequency in customer visits and eventually lead to more brand loyalty for increased vehicle sales.

Approach

All service customer repair order (RO) records and prospect lists for each participating dealer were merged into one master group comparison list for the purpose of removing duplication of mailings and allowing prospective customers the opportunity to choose between seven dealers, rather than receiving a message from a dealer to which they have no loyalty. A colorful, powerful postcard was designed that encompassed all seven dealers, who picked their own price points and offers. Individual dealership mailers were also designed that featured a variable discount offer and a premium.

Read Full Post »

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.

Read Full Post »

Challenge

The challenge is to address a common dealer’s question: Could a dealership take their e-mail customers’ names out of their direct mail list to save money? We wanted to see the response from customers who received e-mailed promotions instead of direct mail promotions.

Approach

We decided to look at several dealerships and track whether those who opened and clicked on an e-mail promotion in one month would continue to open and click on e-mails over the next six months, suggesting a heightened level of interest due to the interaction with the marketing piece. If a large enough grouping of customers could be shown to interact with the e-mails each month, it could be suggested that a dealership could exclusively send e-mail promotions.

Read Full Post »

Challenge

According to a recent study by the Automotive Aftermarket Industry Association (AAIA), vehicle repairs cost an average of 34% more at a new car dealership than at independent repair shops. They argue that this is leading to 11.7 billion dollars of excessive costs annually to consumers.

One of our dealers, a large import dealer located in the southern United States, decided to address the issue of being cost competitive, without sacrificing profitability. The first part of his challenge was to utilize a cost-efficient means of keeping his name in front of customers and enticing them back into the dealership, despite perceived higher cost.

The second part of the challenge was to retain new customers. Being cost-competitive is great, but really showing the value of the dealership is the key to turning one-time customers into regular customers. What value proposition could the dealer create that would justify perceived higher cost?

Read Full Post »

Challenge

To increase customer frequency through a cost-effective direct marketing program for a medium-size import dealer in the Midwest. On average, just over 18% of a dealership’s customer base comes in three or more times a year. The dealership needed to increase customer frequency in order to increase profits and retain clients more effectively.

Approach

We suggested the dealership begin running our service reminder program, which signals customers to come in by: reminding them of upcoming mileage and time-interval scheduled maintenance and/or reminding them of declined recommended maintenance from a previous service visit. The approach was unique to what they had been doing because the letters were personalized to customers’ specific vehicle needs, contained dealership pictures and represented the dealer’s brand and logos. The dealership included this program along with their other direct mail initiatives in order to build their brand using the familiarity of the staff and facilities to drive in customers.

Read Full Post »