Automotive service managers are always trying to find the right combination of marketing tools and successful business practices to maximize profits. A dealership that has made a lot of wrong marketing and customer service decisions can be a challenge to turn around. Word gets out. So, how can a historically underperforming service department with a bad reputation be transformed into a champion?
One answer can be found in a success story that occurred recently in a southeastern U.S. market. There were two dealerships in close competition in the same metropolitan area. They had very different business philosophies and marketing plans that produced starkly contrasting results.
One dealership was an established business that valued the long-time relationships that had been built with their customers. They had a well-executed marketing plan that included mailers and reminder letters. They created value by consulting with customers and up-selling only services needed without regard to monthly sales goals. They knew that when their customers’ vehicles needed other services, those customers would be back. Their customer relations were as good as gold, and the repeat business was like money in the bank.
The second dealership was not as accommodating to customers. Their predatory up-selling offended the customer base, and most customers never came back. In fact, a customer database analysis revealed that 95% of the customers only serviced their vehicles one time in 12 months. The other 5% came in twice with almost no one returning more than that. The economic downturn, a poor marketing plan and the lack of attention to customer service all contributed to the sale of the dealership in 2009.
Our first dealership example went on to buy the failed dealership. They set out to win the loyalty of the other dealership’s previous customers by repeating behaviors that had made them successful at their original dealership. They sent a postcard to announce the change of management, accentuating customer service. The purchasing dealership knew that it had been pulling customers from over 30 miles away from the other dealership before it was sold. Customers could now trust the new, improved dealership for the customer service they expected—coupled with the added benefit of not having to drive as far for service.
The postcard was just part of the well-organized marketing strategy patterned after the one employed effectively at the first dealership. The current campaign included reminder letters, promotional mailers and e-mail campaigns. All were consistently branded with verbiage that promised their dedication to customer satisfaction.
After nine months, trending reports showed the success of using consistent marketing to attract and retain an untrusting customer base. In this case, the one-time visitor rate to the newly bought dealership decreased from 95% to 59%. Subsequently, second and third time visits grew to 26% and 11% respectively. The original dealership’s annual one- time visit percentage is an extremely low 50%. While that dealership lost some of their customers to their newly acquired dealership, they were both owned by the same group, and the real goal was to grow the whole market—which is what occurred.
Tags: Best Practices, customer satisfaction, Marketing Plan, service marketing
