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Have you noticed how Customer Retention is the new Buzzword?

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WOW!  Have you noticed how Customer Retention is the new buzzword?  For many years it was CSI and Manufacturer’s pushed it via incentives.  Dealers quickly complied and after a while realized that improved CSI scores were good for the Manufacturer (why they are willing to pay incentives), great for the customer due to improved processes, cleaner facilities and more amenities, but not a game changer for the Dealer.  The truth is CSI really has not done much to grow the dealer’s business.  Since all Manufacturers have a CSI program, the bar of expectation has been raised and all Dealers have arrived at the same plateau of Customer Service.

 

Lets talk Customer Retention.  A program to retain the customer after the sale makes so much more sense on many levels. However, many Dealers are in denial about this important aspect of their business as most think they are doing a good job of keeping their customers coming back.  They believe all you have to do provide a good experience and they will return. They are led to this belief by past experience of retaining approximately 35% of their sales customers. Now the Manufacturer is getting in the game of retention and has set goals of approximately 50%.  The truth is if you are not retaining a minimum of 75% of your customers your retention program is not working efficiently.

 

I am always amazed by how many Dealers believe a good CRM is all they need.  They believe giving the customer a free oil change will work.  I often hear “We treat them right and they always come back”. The truth is I have not found a single Dealer that does not have a goal of providing great service. This is what I call a 1970’s mentality.  Customer Retention is not doing some things right, it is doing everything right in every department. Start by asking yourself what you are doing for the Customer in each department and is it working.  Do you have a process? You must establish a culture of Customer Retention that encompasses your entire business.

 

Once you have a program do you measure it?  All dealers can tell you daily where they are in Sales, Service, Parts, and Finance.  These results are measured monthly and compared against previous months and years. But do you measure your retention? Most will answer yes to this question and base it on what the Manufacturer tells them it is.  The problem with using this method is you are only measuring approximately 50% of your business.  Isn’t your Pre-Owned Buyer even more important than New?  Gross profit is typically higher and the need for service and maintenance is certainly much greater.  What else should you measure?  How about email and mobile phone capture rates?  These are absolutely essential to be successful in todays’ business environment.  Without the proper tools in place to track these metrics you are flying blind.

 

Most Customers have already shopped you online before entering your business.  Communication with this medium in today’s digital world is a must for your success. Smart phones are now the acceptable norm so you should plan on a mobile application to represent your business and communicate information to your customer. There are many tools you must employ to have a successful Retention Program.  A Benefits and Rewards Program, customer specific Web Sites, Membership cards, standard email communications program, Social Media are but just a few of the components you need.  Whatever program you design should take into consideration all of your customers whether they are paying cash, financing, leasing, servicing or purchasing parts.

 

Hand-in-hand with your retention program should be Dealer Branding.  This should be your program to enhance your business, not the manufacturer. As with any program, training is essential and must me an ongoing endeavor.  Also, reviewing reports that tell you how well your program is working and sharing these results with every manager.

 

As you can readily see, putting a Customer Retention Program together is not just “treating the customer right and providing good service”.  You must have a comprehensive plan that when implemented changes your mindset towards how you conduct your business on a daily basis. I do not mean to imply that it is easy.  It is not!  But, it is worth the effort and will pay off in the long term by returning your customer back to your business for all their automotive needs.

Expectations!

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An expectation is something we think about but maybe we unconsciously take for granted in establishing our dealership’s culture, or the way we conduct business on a daily basis. Do we really take the time to fully understand exactly what this word means? We should, because it is an important key to our success as an automotive retail dealer!

Consider that at birth even a baby has expectations…they expect to be fed, have their diapers changed and to be held and spoken to.  Once starting school the same individual has the expectation of a decent education, a roof over their head and food on the table.  As we become adults we learn to have expectations about life and everyday tasks.  When you go to an airport you expect to get on a plane, leave on time and arrive safely at your destination.  Eating out you expect your waiter to be knowledgeable, considerate and provide you with exceptional service. You expect all businesses to treat you with respect and appreciate your business. If at any time your expectations (real or imagined) are not met.  You find alternatives.  Most often this means you go to another business that meets your expectations.

In the Automobile Retail business it is the same.  Our customers have expectations. Ones we are all familiar with are that they can find the vehicle that suits their needs, get a competitive price, a fair appraisal on their trade, be treated with respect and appreciated.  We know that when any of these expectations are not met you most often miss the opportunity of doing business with this customer. If you are a dealer you know all this and you strive everyday to meet these expectations.  In other words, you are very similar to all other dealers in your market.  Your very existence depends on your employees stepping up every day and doing what is expected to perform in your business culture.

The question is how do you set yourself apart from all the other dealers?  We think about this daily and are always searching for the “next best thing”. The only way to be really different is to exceed expectations!  Accomplishing this task is an ongoing quest for most dealers.  If the dealer down the street puts in a car wash, you have to have one.  If they install a playground for kids, you have to also install one.  This is a constant tit-for-tat that has existed since Henry Ford started building vehicles. The only way to be really different is to exceed their expectations. The solution is very simple and it’s right under your nose.  You have the means to truly stand out among the competition if you look around at the opportunities you have to earn your customer’s business and create more opportunities to increase your existing profit centers.

A simple solution to truly exceed your customer’s expectations and wow them with how different you are is to supply them with a package of benefits that you will provide as a part of obtaining their business that makes their ownership experience a safe, economical, and rewarding one.  These benefits can be as basic as complimentary car washes, oil changes, tire rotations and inspections.  Coupled with an ongoing rewards program that gives your customers a reason to return to you for all their automotive needs is a winning formula and will exceed their expectations.  When you do these things you have moved the customer experience at your business to another level.  A level that truly makes you different and gives your sales customers more reasons to return to your dealership and allow you to provide everything they need during their period of ownership.

Roy Olive – Corporate Training Director