September 15th, 2009 | Written By: Chuck Patton
From a marketing perspective, the highest return on investment is from a loyal customer. Our strategy is to continually remind them why your service department is valuable. The goal is less about earning a customer and more about increasing the frequency of or gaining a larger share of customers. Most of this doesn’t surprise service managers, but there are still many details to fill in and not all dealerships have their customer loyalty finely tuned the way they really should.
Who is a loyal client?
How do you measure loyalty? Is it through Customer Satisfaction Index scores? Some manufacturers measure it by the number of customers who come back after the purchase of their vehicle. Some dealerships judge just by feel of things. This means they listen to the customers and look at their monthly numbers. This is actually not a bad idea, but not good enough for a marketing agency that is responsible for growing numbers. You need a good measurement of loyalty before you reward a loyal client. We recommend a very simple measurement that looks at the frequency or potential share of the customer: Is a customer coming to you for all of their scheduled maintenance? Dealerships are shocked at how much potential they have within their customer base. We use our Database Diagnostic ™ to show this potential. Based on the results of our dealers, we estimate that about 65% of most of customers only come in about once a year.
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Posted in: Best Practices, Customer Retention
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August 15th, 2009 | Written By: Chuck Patton
Retention might be the single-most overanalyzed but underachieved goal in the automotive market. We spend thousands of dollars per month to drive in the same customer today who bought from us yesterday. The definition of retention is open for interpretation, as is the approach to address it. But have you ever really drilled down to the core of the word retention and asked why it is important to your business?
The definition of retention, as given by Random House, is simply to keep possession of or to continue to hold or have. The bottom line is to understand that retention is profitable… very profitable. So much so that every automotive dealership should make it priority one. Your goal should be to create a process that earns a larger share of customers over the long –term and not simply a share of the market in the short-term. If you are on pace for the long haul, you will still see a lot of short-term benefits. You must approach one customer at a time and feel confident that they are your customer for life.
The direct marketing business always discusses repetition or frequency as a means to retain a customer. Retention does not just mean you reach out to your customers a lot or mail a lot. It also means you have a consistent, simple brand message that resonates in your market. That message must appeal to your market, and brand your dealership over any other. The predominant message in the automotive world is price, price and price, especially in the service department. However in your business model, you have been constructed to be more focused on value and quality but your marketing may not be conveying that to your customer.
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Posted in: Best Practices, Customer Retention, Direct Mail, Segmented Marketing
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