Category Archives: News

A Viewpoint on Loyalty

You are thinking that you need a retention program to move your business model to the next plateau but you are not sure of what to expect?  I have been training and installing retention programs for dealers for close to 10 years and here is what I know.

A Golden Rule in the creation of a Loyalty Program is to never start a retention program unless you are 100% committed to it.  What I mean is that you are going into it with realistic expectations, you are looking at it as a long-term program and that you will work to ensure it becomes a culture in your business.  When you open the doors each day it will be a priority and the way you conduct your business!

Let’s talk about the realistic expectations.  There are immediate short-term gains, but you must be patient to realize the long-term success of your program.  I will break down into 3 categories what you should be looking for.  These categories are Sales, Service and Repeat Buyers.

Sales: Immediately, you will be offering a greater value-add to your customer in the buying experience which, if properly implemented, should result in higher front-end gross profits, added sales volume, higher CSI scores, more referrals and additional tools to make it easier to close more deals.  You want to think of the benefits you offer as a “Why buy here instead of from my competition?” Most importantly, it will set you apart from your competition.  They simply will not be able to compete with you on VALUE.  Some common components that make up the benefits that you could offer each sales customer are Engine Guarantee, oil changes, tire rotations and car washes.  These each have a high perceived value and help to overcome price objections. You couple these benefits with what you already are providing, such as Gourmet Coffee and Snacks, Children’s play area, shuttle service, pick-up and delivery service, etc. and you have just moved to a new plateau in how you value your customer. It is like the verse in the bible, Luke 6:38,and I am paraphrasing, “Give and you shall receive”.

Service:  If you are like most Dealers you probably fall somewhere in the range of 30 to 40% retention currently (as measured only by NEW vehicle sales and reported by your OEM based on 2 service visits within the first year after purchase).  A properly designed, value-add, retention program will double your current percentage of sales customers that are using your service department.  Rewarding your customer each time he services with you gives you a great opportunity to up-sale at the next visit through “found money”.  It is a more honest way of conducting business in that the customer begins to feel that you have a vested interest in taking care of them by keeping them safe and operational.  Each visit is an opportunity to prepare for the next visit and set realistic expectations on what services will be needed.  You can expect your absorption rate to move closer to the gold standard of 100%, an increase in the number of repair orders daily and more customer dollars spent per RO.  In every case where we have conducted an audit of who spends more, we find that the customer that is a member of your retention program spends anywhere from $12 to $226 more per visit than a non-member customer.  An increase in repair orders results in more labor hours and more parts being sold.

Repeat Buyers:  A customer that bought from you and serviced with you during their ownership cycle will return to you for their next vehicle approximately 86% of the time vs. a customer you sold and who never serviced with you returns to repurchase less than 25% of the time. It is a reality that it is much easier to resale a vehicle that you originally sold new and serviced.  You want this trade-in as it is much more valuable than an auction vehicle!  The typical time this type vehicle stays on your lot is approximately 2 weeks.  By installing a well thought out retention program you are guaranteeing that you will increase your % of resales and receive a highly valuable trade-in as a part of the deal.  You have created a “Pre-Owned Vehicle Factory”.

It’s All About The Customer

I’m reading a book called the Everything Store. It’s about how Amazon started and I recommend it highly. The idea behind the Everything Store was to develop an e commerce business that would sell everything, and they did. My main take away from the book was not how great Amazon is as a company although I think that question was answered years ago, it was the underlying concern of developing for the customer, what they needed at any cost. The old adage, the customer is always right, came to mind often.  Many of the programs they developed started with:  “What does the customer need?”  and “How do we develop it?”.

This got me thinking about some of the meetings I had last week with three service managers. The first one was with a service manager who didn’t want to do prepaid maintenance. The F&I department wanted it, the General Manager wanted it, and the F&I manager said they had customers requesting it. The service manager said, I don’t want it and I don’t need it. Good example of the tail wagging the dog.

The second meeting was with a large group who had developed an app for their customers and it had totally flopped. The main problem they said was no one signed up for it and no one used it if they did. After a few questions it became apparent that the reason it wasn’t what they had hoped it would be was because it was designed to promote things the dealership was interested in and not anything the customer was interested in.

The third meeting was with a service manager who had a customer first attitude. He had developed a great rewards program to thank every customer who used his service drive. His retention numbers were some of the highest in the zone. He was constantly surveying his customers to see what their needs were and developed programs to cater to those needs. His latest resource was a customer app for every customer in his data base. It offered a history of their car, any recall notices on the vehicle, how many points they had on their rewards card, every coupon and every special that was available to them. The app could remind them when they needed a service like an oil change or 30K checkup. He had even gone so far as to add a valet service so if the customer didn’t have time for a service visit they could use their app to have the car picked up and delivered back to them.  He wasn’t done there, he was working on a way the customer could redeem their points off the app and actually pay for their service using their app.

To say which meeting I was the most excited about would be too obvious. Customers have longed been overlooked by many businesses. The brick and mortar companies for too long took their customers for granted. As e commerce continues to develop, the old attitude of, I’m not doing that I can’t make any money on it, will no longer be the right answer.

The factory seems much more in tuned to what the customer wants. They are trying to develop rewards programs, subscription marketing, CSI to improve the facilities and customer surveys.  However, we can’t depend on the factory to do our job. E commerce is moving too fast. It’s not always just about price. How much do you think free delivery cost for each order? Or and unlimited return policy? Ask a customer if he would rather buy something on Amazon Prime or purchase something in your service department? We need to create the same type of environment in our stores that wows the customer every time they come to do business with us. We need to constantly be working on our branding message. What separates us from the pack? Forever and ever we heard that the customer is always right. We have heard it so many times that it’s become just lip service to many.

Develop programs based around the customer. So many times we ask ourselves how much money can I make on this or on that. When we should be putting ourselves in the customer’s shoes and looking at how we do business through their eyes. Toy r Us, Kodak, Sears, and hundreds of other companies couldn’t figure out how to make their customers remain loyal. Go above and beyond his expectations is a good place to start.

Factory Rewards Programs Versus Dealer-Owned Rewards Programs

Customers like to be rewarded and the more you reward them, the more loyal they become.

One of the OEMs has an new loyalty program in which their dealers will soon need to decide whether or not to sign up for it. I commend the OEM for recognizing how important it is to design this program for their dealers. Their reason for starting it was to “incentivize customers to spend more money, more frequently.”

A friend of mine asked me to look at the program and compare it to the dealer-owned program he is currently using. Here’s how they stack up.

How easy is it to join?
OEM: Every customer is not automatically enrolled. They have to sign up and join the program.

Dealer Owned: Every customer (new and used) is enrolled in the program as soon as they buy a car or come in for a service visit.

Is there a cost to the program?
OEM: Yes, some dealers will pay $1,000 a year, and all will pay 2 percent of every repair order of a member. This money will be used toward the rewards points and the OEM will match at 1 percent. After five years the points will expire, and the dealer will not participate in the reserve.

Dealer Owned: The dealer decides how much he wants his points to be worth, and how much he wants to spend to administer the program. The two biggest differences seem to be the money for the points reserved stays in house and all of the reserve belongs to the dealer.

How do members earn points?
OEM: Customers can earn points in a variety of ways. Enrollment, CPO purchase, vehicle purchase, customer pay service and the in-vehicle safety and security service, to name a few. They earn a different voucher for each component.

Dealer Owned: The dealer designs how he wants the points to be used, when he wants them to expire and how to combine them to be the most effective.

How do members redeem points?
OEM: The member has to download a voucher, which has an expiration date on it, bring it to the service drive, present it to the service writer, who then looks it up and redeems it. This voucher then needs to be submitted to the OEM for redemption before it expires. If it expires, the dealer has to pay for the points again.

Dealer Owned: The customer comes in, redeems his points on his app in front of the service writer.

Can I customize the program?
OEM: No, dealer-specific enhancements are not available at launch.

Dealer Owned: Yes, the rewards program can be tied into your digital marketing and your app with the intent to drive customer behavior. You can also enhance the program by adding other features like prepaid maintenance or bundling products to the rewards card.

Is Training Offered?
OEM: Training will be available only on a special website.

Dealer Owned: In-house monthly training for all service and sales staff.

So, as I see the breakdown, there are benefits to both. The good thing is the customer will win in the end no matter which program you use.

One word of caution, if you decide to go with a factory program, since the dealer does not participate in the reserve, you might want to ask an administrator to keep track of the points you are giving out to your customers. The breakdown is two to one, dealer cost versus the OEM. You need to make sure your customers are redeeming at least 66 percent of their points or you will be losing some serious money.

In the pilot program, only 20-some percent of the points were redeemed. Another benefit of having an independent administrator overlooking your program is, unlike a dealer-owned program, every dealer in town will have the same rewards program. You can greatly enhance your branding opportunity by not only tracking point usage but also adding other features to your factory rewards card to separate you from the pack. The cost to administer this is a fraction of what the benefits will be.

Creating loyalty to your business is not always easy. As you can see, there are a variety of ways to accomplish it. One person wants to have their own branding message and control over that message. The other person wants a more traditional footprint in their marketplace. The important thing is, we are now building our business on repeat customers who appreciate our service.

 – Jack Garrity

Understanding Rewards

In the Feb. 12, 2018, issue of USA Today, there was an article about how people respond to rewards. It covered a lot of ground, but the main thing I took away from it was that if people felt engaged in an activity they reacted in a much more positive way. The article was written by Jeff Stibel, who happens to be a brain scientist. Far be it from me to put an old car guy in the same paragraph as a brain scientist, but it did get me thinking about how little people understand about the concept of rewards to the retail customer. Stibel said, among other things, that rewards were “psychological tricks.” He also stated that “…paradoxically, people will pay more money and perceive a higher value if they have to do something to ‘earn’ a product or service.”

So, I wanted to apply some of this thinking to the car business and see how rewards shake out. First off, a “psychological trick”? As it pertains to his study, it was probably true but is that really how rewards work? Customers will see right through a bogus program. Many retail rewards programs aren’t very strong. A solid rewards program is not trying to trick the customer into doing business but thank them for their business in a meaningful way. Secondly, I couldn’t agree more that people perceive a higher value in a reward if they have to do something to earn it.

Coupons are a classic example of how this works. If you use coupons to drive your service business, there is really no customer involvement. Let’s say you charge $49.95 for an oil change and a tire rotation. You send out a coupon for $9.95 oil change to drive some traffic to your service drive. First off, you lost $40 on the coupon. Secondly, I guarantee that 80 percent of the customers are coming in just for the coupon. This will bring no extra business and you will probably never see them again. They didn’t earn it, so it is not very rewarding.

Now, let’s look at it from the rewards side. Same scenario, but instead of a coupon, the customer gets $40 in rewards points. Now the customer did something to earn it. He came in, spent $49.95 for the oil change and, in return, he received reward points he can use later. He earned them. An added benefit is the service department gets two visits instead of one.

Reward programs seem firmly rooted in the hotel and airline business but not very well received in the auto industry. I had lunch with a service manager recently and we were discussing reward cards for the service drive. He said he didn’t need them because he already had the customer in his service drive. Why should he send money if they are already here? I pointed out that I had used the same service department for all of my service work for the last four years and when I needed tires, I went back there to spend the $118 in rewards that I had earned during those last four years on a new set of tires. I also explained it was the first set of tires I had ever purchased at a car dealership and not a discount tire center. He said, “Well, maybe in some cases….” This perception is prevalent in the auto industry.

In another case, a dealer with a large chain of stores dropped his rewards program. He said he had more than $5 million in rewards points out on the street. He asked me what would happen if everyone redeems them at the same time? I think his exact words were, “If that happens, I’ll go broke.” Once again, this is a classic case of someone not grasping the concept of rewards. I explained to him his customers were redeeming points at less than 3 percent per year for the last four years, and I asked him how much service had he received off his program if the $5 million in points represented just 5 percent of all the service business he had written during that time.

People tend to have many different notions of what rewards are and how they work. In his article, Stibel said that “shopper rewards programs aren’t rewards at all.” Many in the auto industry look on them as just an unneeded expense. Used properly, however, they are a tremendous asset to any retail business. It is one of the key ways to keep your customer engaged in your business — and coming back — for a long time.

Jack Garrity

How to Build a Public Relations Position to Grow Customer Retention

“How would you create a ‘wow’ buying experience for the customer after they purchased their car? How would you set up a brand new profit center by developing a public relations manager?”

I have had a few calls from people about last month’s article about using the “Apple Experience” in your dealership’s service drive to retain customers. The main question that kept coming up was how to set up this type of program. This month, I will try to outline the steps I would take to develop this experience in a dealership.

One of the things I suggested was to get more Millennial and newly graduated college students into our business. How would you create a “wow” buying experience for the customer after they purchased their car? How would you set up a brand new profit center by developing a public relations manager? How would you get better penetration on F&I products? And, finally, how would you pay for it all? Let’s drill down on some of these things in a little more depth.

The first step is to advertise for recent college graduates. Let them know this is a manager-training program. You may want to hire more than one as the program grows. I would start their salary at $600 per week, plus commission. In order to offset this cost, I would have the company I buy my F&I products from contribute part of this expense. I’m sure they will have no problem with this because this person will be selling their products full time and the penetration should go through the roof. If you have an agent or customer retention company or, really, any other company doing business in your store, they can contribute as well. All of these people will benefit in the long run and what’s wrong with someone paying the dealer to do business in their store? Think about it: If that cost is split three ways, you are hiring a college grad in a management position for $200 per week. If it is split with more vendors, it will be even less. As this person gains more experience, they can be worked into other departments, and now your management program is up and running.

The second step is setting up the program. Everything we want sold should be laid out on an iPad. When the customer comes in for service, we pull them up, we have the date they bought their car and what they purchased in F&I at the time. We will know when they go out of warranty, or when their service contract expires. Did they purchase a prepaid maintenance package or other products, such as key fob coverage, wheel and tire coverage or ding and dent? The public relations manager can review the benefits of each product with the customer, even showing a short video on the value add for any of these products. If the customer doesn’t have time for a review, we can email a feature benefit presentation to them so they can look at it at their convenience. Think of a business development center for your F&I products. The public relations manager will make a commission off of each product he or she sells. We could also wrap it with an equity-mining tool and he or she could be commissioned on car sales, as well.

The third step would be the sale of accessories. Everyone wants to sell more aftermarket products. Tires, batteries and wiper blades could be advertised in a targeted marketing campaign. Sell bed liners to truck customers, and wheels, rain guards and window tint to customers on the anniversary of their purchase. The PR manager could get all the op code declines and develop a coupon campaign that could go out nightly. With all the information from the DMS at their fingertips, they can easily spot when a customer is ready for an upgrade. All of this marketing could be done on-line with just a little help from a graphics department.

Even the question of who manages and trains the public relations/manager trainee can be answered using one of your vendors. Any vendor who is currently in your DMS could easily work with your F&I provider to develop this program. They could hire, train and supervise and then, when you decide to promote them to another department, they could do it again. It really is a low-risk, high-rewards proposition for any dealership.

The last step is truly the public relations part of the program. This person will be the liaison between the service department and all the other departments in the store. If you have a rewards program, a customer Website, a customer app, weekly coupons, and a lifetime engine or powertrain component, all of this can be reviewed and sorted out either in person or through email communication. This person’s success will be based on their ability to develop a good relationship with the entire database and develop your store into the customer’s dealership for life.

Jack Garrity

Loyalty Versus Retention

Every business wants a loyal customer. Who doesn’t want a customer who is unswerving in their dedication to your business? Who doesn’t want to do business with someone who is as faithful to you as a customer that they would never think of purchasing something from anyone else? If only our customers were like our dogs, loyal to the end regardless of the circumstances. Well, we are never going to find customers as faithful as our dogs, but you get the point. Creating devoted customers does not happen overnight, nor does it always last a lifetime, but staunch allies can grow our business faster than any other factor we have. Their steadfast devotion to us is not only good for our business but they become advocates in the community that extends our message far better than any advertising campaign.

The question then becomes, how do you create loyalty? Here is where the quandary comes in. Before you can have any degree of loyalty, you need to design something that will keep the person engaged until they become a strong supporter of your business. What type of retention tools are you developing to create a steadfast customer whose loyalty will be contagious in your community? These tools are where retention comes into play.

In the automotive business, you see many different programs popping up designed to create retention. Unfortunately, not all of these are designed to create loyalty. Loyalty comes from a great customer experience. This customer experience needs to occur over and over again. Let me give you a few examples. One dealer gives away the first two oil changes free and one has lifetime oil changes. Which retention program creates more loyalty? One dealer gives a free tire rotation when you purchase a vehicle, and another gives you a rewards card that earns point toward free service for the life of the car.

Starting to get the picture?

Customers become loyal when they think you have gone the extra mile. The days of saying, “We’ll treat them right and they’ll come back” are pretty much over. Everyonetreats their customers right in this market.

Retention programs are not the answer to the problem but the tool for solving the problem. Picking the correct method of retention can go a long way toward developing a strong loyal following. The branding message that develops your loyal customer will, in time, create that raving customer.

Keep in mind that choosing your retention method is not a one-size-fits-all decision. A good CRM program is not necessarily a good retention tool — unless it combines a series of messages throughout your business. A factory rewards card isn’t branding you as someone different in the market place; every dealer has the same program. You don’t necessarily want loyalty to the brand — you want loyalty to your business. What is your message? How do you communicate that message to your customer? A combination of retention tools designed to deliver a unique message that your customer sees value in is always the best step.

That fact that loyalty is not created overnight can be perplexing to the average business. We all want instant gratification and, when we spend money, we want to see it go immediately to the bottom line. That’s why the rush to just grab the first thing that comes down the line is so enticing. That is also why it usually doesn’t work, and we wind up throwing good money after bad. Think of the things you are most loyal to — your school, your church, your favorite sports team, etc. Did it happen overnight? They all provided you with a great experience, a great memory and, over time, a dedication that is hard to shake.

So, where should we focus our retention efforts? In my experience, when trying to develop loyalty and retain your customers, it’s best to focus first on the service drive.

I see a lot of stores offering lifetime powertrain and they are calling it a retention program. Yes, there might be some form of retention in having the customer call to get an authorization number for service, but overall most of these programs will let the customer go anywhere for their oil changes and maintenance. The problem with this is retention begins and ends in the service lane. Lifetime powertrain as a stand-alone retention tool is not enough. It mostly helps us sell more cars — that’s not a bad thing, but to have people talking about our business like they do Amazon Prime it’s going to take a lot more than this to move your numbers to the next level.

To start the process of developing loyal customers for your business, you need to lay out a comprehensive plan that is ongoing and develops a branding message that separates you from your competition. It might not be one retention tool but several. Lay out the plan in advance and make sure you have total buy in from your management team. Look at each department and see what type of retention tool you are using to create loyalty. It is very important to have a way to measure your results, but the best measurement is say to yourself, “If I was the customer, is this program so special that I can’t imagine ever wanting to shop any place else for my automotive needs?”

Jack Garrity

INSANITY

Insanity: Doing the same things and expecting different results.
 
Over the years there has been a slow evolution of how we do business in the Automobile Industry.  Essentially, not much changes and if it does it is so slow that it is imperceptible.  The good news that comes from this phenomenon is that we know what works and what doesn’t.  In some cases, we keep doing the same things just because our competition does it and we go along thinking that we will suffer if we don’t follow along.
 
I will use a common practice to demonstrate what I am talking about and that is direct mail.  We hire a direct mail company with the intent of driving business to our doors.  They acquire ‘lists’ that are generally geographical or demographical and prepare an offer (incentive) and they use the United States Postal Service to reach out to these potential customers.  What happens next is that the mail hits the mailbox and the potential customers might respond to the offer.  The truth is that Consumers are opposed to this type of marketing and for the majority, they simply discard the offer as “junk mail.”  The small percentage of customers that do respond amounts to less than 3%.  So, let’s break this down.  A Direct Mail company will charge a fee per consumer including mail costs.  A typical mailing could easily include 20,000 pieces. The offer is generally a below cost service that the dealer will lose money on, with the hope of being able to up-sell the customer when they respond.  Industry results tell us that you might get a 1.5% response, so you can readily see that this is not cost-effective.  Add to this the loss you are taking on whatever incentive you have put together and you end up with a net cost that just doesn’t make sense (INSANITY). These customers are not advocates of your brand.  History tells us that only about 10% of those responding will buy the up-sell.  Here is the sad part of this form of marketing, you just spent all your advertising dollars to get a customer to come in for the loss leader incentive, and they typically do not return for a second visit unless you send them another mailing!
 
Now let’s contrast that with a simple rewards program that gives your customers an incentive to return to you to cash in rewards that they earned on their last visit.  A simple rewards program that awards points for dollars spent that can then be redeemed upon the next visit is both cost-effective and results in multiple visits to your store.  The big difference is that you have a program that keeps your customers involved by rebating a small percentage of what they have already spent with you, and they keep coming back!  These programs generally cost you nothing, as the return-on-investment greatly overrides any expense.  The beauty of this concept is that your customer will respond to the up-sell at a higher percentage because they have “found money” they can apply to these services. Additionally, they keep returning because they know you appreciate their business and you keep rewarding them.
 
There are additional benefits to your business with this marketing approach in that you can award points for events that you now spend dollars for.  Examples are referral programs, compensation for a mistake, motivating your customer to like you on social media, respond to an offer to purchase whatever you are selling.
 
A rewards program does not have to be complex or hard to administer.  If you partner with an established rewards company, they will make the process so simple that your staff will not be encumbered by having to add to their workload.
 
Rewards programs have been around for a while and customers are familiar with them and generally respond positively to the incentives at a much higher percentage.  The one notable point in this comparison is that one marketing concept creates a one-time event at a high cost and the latter creates a lifetime of loyalty creating additional profits.  In putting together your marketing budget you must always consider return-on-investment and, as you can readily see, one is astronomically expensive while the other is cost-effective.
 
Take the time to explore this more effective marketing and profit generating program by contacting a professional company that can make it all very simple.
 
Stop the INSANITY!

– Jack Garrity

Focus on How Your Customer Can Get More, Not How They Can Pay Less

Is it even possible for customer to get more and not pay less? I’m not talking about the services most dealerships offer to their customers, such as shuttle service, complementary beverages, Wi-Fi and snacks. I’m talking about offering something unique — something that stands out and that every vehicle owner needs. Having all the right people, processes and training has always been an essential part of creating a successful business; today, though, that has become the base expectation of every business. We’ve always focused on creating a great customer experience. Great customer experiences, however, are defined by the individual.

A New Direction

Nine years ago, I accepted a service director position at a dealership in Maryland. This dealership had been in business 40 years, was family owned and well-established in the community. During my research, I had discovered the fixed operations department was operating at what we might call ”Industry standards.” With the staff of three service advisors and 12 technicians, it produced an average 40 repair orders per day at 1.6 hours per RO. The average gross profit in a month was just over $90,000, and sales to service new car retention was at a “comfortable” 30 percent. Used car retention was not measured other than by brand; the industry standard at that time was between 18 to 25 percent.

Three months prior to my coming on board, upper management had decided to move in the direction of branding the company through a loyalty program that would benefit all customers who purchased from the dealer. This program offered an array of benefits to the customers. When they revealed these benefits to me, I found them to be quite aggressive. They included complimentary oil changes, tire rotations, multi-point inspections, car washes and a lifetime engine guarantee (on the condition the customer performed all recommended preventative maintenance at our store). This was all included with the complimentary services already supplied, such as shuttle service and towing. The program also offered rewards points for purchases. When this program was explained to me, several things came to mind, mainly cost and manageability.

Train the Staff, Educate the Customer

With this program, we were building our own brand, and creating a culture of who we were and what we would do for our customers. It was a unique culture because we were providing services in such a way that others were not.

This required the staff to fully understand the value customers would receive from our brand, and utilizing word tracks and proper body language to deliver the same message to every customer is critical.

My daily activities as a director quickly shifted from mostly office work and minding numbers to actively listening to and guiding service lane staff. It was managing from the sidelines versus the locker room. Based on the services offered complementary to all customers who purchased a vehicle, growth of fixed operations happened very quickly. With the number of cars we were selling per month, I knew I had to think ahead on how I would handle the volume in three months, in six months and even a year into the future.

The next step was to help my staff understand that customers spent three to five hours with the sales staff purchasing that vehicle, and they would spend the next three to seven years as a service customer. In transforming them from sales customer to service customer, it was now the service staff’s responsibility to fully explain the way we did business through our value-added loyalty program. Every employee had to learn and explain the program in the exact same way to every customer. Once again, training and listening everyday was the key to the successful building our brand. Our training sessions were held bi-weekly as a group and based on the events and numbers generated during that time. That training was continuous.

One Year Later…

Our sales to service retention had climbed from 30 percent to 85 percent with an overall customer service retention of 74 percent. Email capture rates had increased dramatically because this is how we were now marketing ourselves. Outside advertising expenses had dropped more than 80 percent. CSI scores were rising fast due to happy customers feeling good about how we were “investing” in them. And where last year CSI average score was 78, we were now tracking in the mid 90s.

Word of mouth was on the move throughout the community about our new way of doing business — and business was much better.

Our average hours per RO was now trending at 2.2. We now had four service advisors and three more techs. Repair order count climbed to an average 65 per day.

In planning for future increased service business, we were installing an express service team along with changing to a synthetic blend oil to spread out the rapidly increasing demand of oil change services that lead to heavy maintenance services. The service department added and retained an additional 1,350 customers over the past year — now that’s called growing the business.

By the third year, more change was needed because of the increase in traffic and change in workflow. While maintenance work was climbing, warranty work was decreasing and heavy repair customer pay work stayed flat. It was time to re-evaluate technician pay plans due to the changing world of service.

The selling of maintenance-related services had nearly doubled over the past year. Before we started the program, the store was generating a bit more than 30 percent in maintenance-related up-sold services. By year two, it had climbed to just  over 52 percent. Our brand and new culture was now at full speed! It was now time for our organization to prospect “the garage” by inviting our retained customers’ family and friends to become part of our “Family Plan.” This invitation granted these new customers half-price oil changes, tire rotations and car washes along with points accumulation with money spent in the service department. Talk about driving retention.

The Progress of Retention

This dealership started a branded loyalty program that made an investment in their customers. This meant investing in a “loss leader” that every vehicle owner needs and building relationships with people in the community who had absolutely no reason to take their business elsewhere. The investment paid off big for branding the dealership and produced a culture within the dealership and the community.

Think about investing in your customer — for life. Make certain that your investment is something every vehicle owner needs, and then build a relationship off of that investment. Utilize the loyalty program that will brand your company, set you apart from the rest and perform turn-key results in every aspect of marketing, customer and dealer phone apps, follow up, customer reminders, full ongoing service and sales training, along with reports custom designed to track all progress.

There are quite a few companies that can provide some or most of the elements needed to produce results — make sure to utilize the company that can do it all. Super-boost your retention and, more important, capitalize from it.

Jack Garrity

Retention 101

Every dealership in the United States wants to have greater retention. It is no secret that the car
business is easier, more profitable and a heck of a lot less stressful when working with repeat
customers.
 
There are really only two things a dealership needs to have a successful retention program; benefits and rewards. To get the customers involved you will need a brand and a means to deliver your message. And finally, you will need ongoing training and accountability. Sound too simple? It really can be broken down into these simple steps.
 
First the benefits. Benefits are something that the customer receives just for doing business with you. This can be lifetime engine or powertrain, oil changes, tire rotations, key replacement, car washes or any combination of these and more. The Program term can be anywhere from 1 month/1,000 miles to 10 year/250,000 miles. You decide on the Package of benefits you want to offer and for how long you want to offer them. Next the rewards. Rewards are what the customer receives for continuing to do business with you. It’s simple… the customer earns rewards when they spend money with you. The more they spend the greater their reward.
 
To get the customers involved and on-board with your program you will need a brand and a means to deliver this brand’s message. Decide on what you want customers to associate you with to start developing your brand. Do you want to be the Powertrain for Life store, the Oil Changes for Life store, or both? Your brand can include a slogan or just a story about who you are and what you do in the community and how you assist your customers with their automotive needs. Building a strong brand is an art form, and you may want to enlist the help of some professionals if you do not feel that you are able to absolutely nail this part. How you are perceived by your market goes a long way to success with your program.
 
How do you deliver your brand message? This is the fun part. There really is no wrong way other than not going all in. Be creative! Dealerships have had success with brochures, custom log-in and landing pages, desk mats, banners, posters, web graphics, addendums, service drive cards, custom email blasts, personalized enrollment mailers, direct mail, stickers, flyers, frisbees, postcards, glovebox enrollment cards, mobile apps…. The sky is the limit. If reaching out with your brand works when you do it timidly, imagine how well it will work when you are aggressive with it!
 
Your brand is who you are and you must include it in everything you do. Now for the training and accountability. There are dealerships that have done this internally and had some success. There are far more who have tried, failed, and abandoned the idea of a retention program. It’s not typically due to a lack of talent or knowledge; it normally just comes down to time. Very few people reading this article right now have the time to train and mentor every employee in the dealership through the metamorphosis that is required to have success with retention. Every customer interaction with every employee has to drive retention. Every phone call answered, every service appointment made, every sales follow-up call, every desked deal, and every service bill paid will have the whole interaction designed to drive retention.
 
Once you have trained everyone on everything, now you have to mentor and make sure it sticks. Sales managers have tried to get everyone up to date for decades, but how is that going? This is the place where the right partner can really help.
 
If you decide to look for a partner to help you achieve your retention goals, look for a company that is about process and not just product. Every company out there will offer some level of training. But remember; bad training is worse than no training at all. The company might lose you as a customer after a year. Think about how many customers you will lose during that year. Look for a partner that will stay with you and your people, and will help you every step of the way. You need someone that will not only set you up but also help you straighten things up when you start to go off track… before you derail. Ask any potential partners for references that you can speak with; furthermore, ask those references not only about successes but also about a time when things got tough and how the potential partner handled it. True character is shown in times of trouble. Good luck in undertaking your journey to retention.

Jack Garrity

Rewards, Rewards, Rewards!

I was waiting in the airport at Jacksonville, FL for a plane the other day and several passengers
were in a passionate discussion about various reward programs that they were members of.
One was discussing free lodging, another a free flight, another merchandise. One even got an
entire weeks vacation using their points. This conversation went on for at least half an hour! It
made me think about the importance consumers place on rewards programs and how it has
proliferated our retail environment. I am old enough to remember the early versions of
rewards. I used to stick the stamps my grandmother earned by shopping at our local A & P.
They were called S & H Green Stamps. Stores sold detergent in boxes that contained dishes and other Prizes. Gas stations used to have pyramids of dishes that they gave away with a fill-up. It was exciting to shop with my Mom and pick out the cereal I wanted just because It contained a free toy. There were others that I can’t remember because I am getting old. For a very long time, retailers have recognized the value of rewarding customers for their business and it continues today. Today’s version of rewards generally takes the form of assigning a point value based on how much a customer spends. You see this in almost every sector of the economy. I travel a lot so, I belong to Airline, Hotel and Rental Car Programs, which is a nice perk for the amount of travel I do for work. I can tell you that my loyalty to certain brands runs deep and I try to find ways to do business with the companies that reward me the most.

What can we in the Automobile Industry learn from these reward programs and what would be
the positive aspects of having a rewards program for our customers? The main objective of any
rewards program is to create repeat business and that is certainly what we struggle to do as
Dealers. Just providing “great service”, whether it is in Sales, Service or Parts, is just not good
enough to create a lifetime relationship with our customer. Let’s face the truth…everyone in
business thinks they are the best, so what we have is a level playing field. You are no different
than your competitors and that is a fact!

A well thought-out and professionally executed rewards program will give you the edge against
your completion. You are thinking that it is difficult to administer and that it is going to cost
you a lot of money. Let me assure you that you would be wrong on both counts! Let’s discuss
the administration. It is probably the easiest motivational program you could possibly install,
requiring very little hands-on by your staff. The key to making it easy is to have an
administrator that has both software and data exchange with your DMS. The rest is simple and
customer/employee friendly. But, what about the cost? Your customers only earn rewards
when they spend money with you. Isn’t that what you try to get them to do every day you
open your doors? The beauty and magic in any rewards program is that the customer can only
redeem them at your store, and only to buy more stuff from you! You can even set the value of
the redemption to your tolerance level. Most dealers I see are fully agreeable to set it at about
a 5% rebate on dollars your customer has already spent with you. The only cost is a miniscule
administration fee from your rewards partner.

Side benefits of a points type rewards program is that you can use the points to motivate your
customers to do the things you want them to. Offering points for purchases is just one way.
How about if you offer them for events like attending your New Owner Clinic, liking you on
Social Media, giving you a review on Dealer Rater, a surprise gift on their birthday, returning your on-line surveys, coming in on an “off” day in service just to receive bonus points, thanking them for community service such as military, fireman, policeman, paramedic, etc. Most Dealers pay cash for a customer referral purchase which the receiving customer most likely spend somewhere else. How about if you reward them with points instead of cash so they can only redeem them with you to buy something you are selling?

So, if you are serious about creating lifetime customers, motivating those customers to do what
you want them to do, and therefore creating more sales, then you need to consider installing
and providing a rewards program that has value to your customers.

– Roy Olive