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.
Here is a quick approach to achieving maximum retention in your market.
- Know what your customers think you do wrong, and preach and do the opposite.
- Know what you and your competitors do right, and preach and do the same.
- Create 6 simple messages that will resonate in your market and build the brand you will need to succeed in your market.
- Take your message across all marketing mediums with consistency.
- Sell it to your customers and to your staff face-to-face.
Warning: shameless self promotion below.
Traffic Builders covers all four of the above steps except #5… that is up to you. We have several core communications that cover the behavior cycle of customers:
- Loyal customers receive mailers or service reminder/recommended letters
- Infrequent customers receive mailers, postcards and e-mails with moderately priced coupons
- Defecting/lost customers receive postcards with more aggressive coupons
Our reminder program focuses in on just the retention aspect of building business. We help the dealerships figure out what message needs to be preached and brand that across a program. It repeats the “custom” process and approach on which we were founded. What this means is we are here to sell your dealership and not just the manufacturer or the recommended schedule. Your consistent message must appeal to your market and brand your dealership over any other. Selling the manufacturer or a recommended schedule are appealing loyalty motivations but when the dust settles at the end of the month, your customers are loyal to you, your staff and your brand. Whatever program you choose should take this into account. Put pictures of your staff, your facilities and your logo on your marketing pieces (and not in black and white!). Most importantly repeat the message that about your value. Embrace the stereotype of not being the cheapest and become the “value for your dollar” dealership.
What is the payoff? Most dealers that we begin work with have unbelievable potential for growth. When we perform a database diagnostic at an average dealership, it shows that the number of customers who do business only one time per year is about 63 – 70% of the total databases. So if you have 10,000 names that have serviced with you this means 7,000 serviced with you one time only within the past 12 months. If you are able to bring only 20% of these 7,000 one-time customers in a second time, then this would mean an additional $252,000 of revenue for the year.
Tags: brand consistency, Customer Retention, service reminders
