It should come as no surprise to read that customers do not become loyal overnight. It is unlikely that an individual will ever walk into your business as a prospective customer and walk away from that very first visit a loyal customer. In fact, becoming a loyal customer is process not unlike the one an acorn goes through to become a giant oak tree. Jill Griffin explains that growing customers “doesn’t happen in a day, a week, a month or even a year; it’s a long, step-by-step progression… The process is accomplished over time, with nurturing and with attention to each stage of growth.”
Griffin identifies in her book , Customer Loyalty: How to Earn It, How to Keep It, seven stages most customers progress through as they “grow” into loyal customers. She explains that as businesses recognize each stage in their own customers, and meet the needs of the customers at each stage, companies will have “a greater chance of converting a buyer into a loyal customer.”
To help you better understand your customers on their individual journeys to loyalty, we’ve included Griffin’s detailed explanation of each step in the process:
Stage 1: Suspect
A suspect is anyone who might possibly buy your product or service. We call them suspects because we believe, or “suspect,” they might buy, but we don’t know enough yet to be sure.
Stage 2: Prospect
A prospect is someone who has a need for your product or service and is able to buy. Although a prospect has not yet purchased from you, she may have heard about you, read about you or had someone recommend you to her. Prospects may know who you are, where you are and what you sell, but they still haven’t bought from you.
Stage 3: Disqualified Prospect
Disqualified prospects are those prospects about whom you have learned enough to know that they do not need, or do not have the ability to buy, your products.
Stage 4: First-Time Customer
A first-time customer is one who has purchased from you one time. This person can be a customer of yours and a customer of your competitor as well.
Stage 5: Repeat Customer
Repeat customers are people who have purchased from you two or more times. They may have bought the same product twice or bought two different products or services on two or more occasions.
Stage 6: Client
A client buys everything you have to sell that he can possibly use. This person purchases regularly. You have a strong, ongoing relationship that makes him immune to the pull of the competition.
Stage 7: Advocate
Like a client, an advocate buys everything you have to sell that she can possibly use and purchases regularly. In addition, however, an advocate encourages other to buy from you. She talks about you, does your marketing for you and brings customers to you.
Lost Customer or Client:
A lost customer or client is someone who was once a customer or client but has not bought from you in at least one normal purchase cycle. When a lost customer or client becomes active again, she is considered a regained customer or client. A customer is considered to be at-risk if there is a high probability of defecting.
Note: Online customers evolve through similar stages: surfer, first-time site visitor, repeat visitor, first-time customer, repeat customer, client, advocate, at-risk customer, lost customer and regained customer.
In thinking about your own customers, can you identify which customers fall into each customer stage? Who are your clients? Your advocates?
What methods have you used to save at-risk customers from leaving to the competition? How have you regained customers who were once lost?
How does identifying customers by their “growth stages” help you change or improve the way you market to them?
Loyalty programs – all but non-existent a decade ago – have become increasingly popular in virtually every business and retail establishment. As the demand for effective and efficient loyalty rewards programs continues to rise, so does the supply of available programs. But even a professional with limited experience in the world of rewards programs can see that not all loyalty programs are created equal.
The following outline contains an objective view into loyalty and retention programs: what makes the best programs successful, features you should look for, ways to implement the program in your own business. This is by no means exhaustive, but simply a springboard to get your thought-process running as you begin the process of implementing a new program or as you evaluate your current one.
1. Loyalty & Repeat Business Are the Cornerstones of Today’s Market Condition
a. How do loyalty and retention programs relate to your business?
b. Has your business adopted proven loyalty and retention principles?
c. Why should you consider a loyalty and retention program?
d. Are you creating cross marketing opportunities with other local businesses?
2. What Features Should a Good Loyalty or Retention Program Include?
a. Ability to use membership levels as a revenue generator
b. Ability to influence – and change – customer purchase behavior
c. Custom-branded marketing and graphic design
d. User-friendly reporting and program measurement
e. Daily member analytics
f. Full database integration
g. Flexibility (structure program based on dynamic customer revenue concentration)
h. Extensive provider experience
i. Personalized client support
3. How Do Loyalty Programs Physically Work In My Business?
a. Top-down employee adoption
b. New member registration
c. Member rewards and redemption
d. Program data collection
4. Integrating Loyalty Programs with Your Existing Marketing
a. Driving repeat purchases: target the right person with the right message at the right time
b. Using non-solicitation marketing to build customer trust
c. Employing “start-up” contact packages
d. Creating a sense of community
e. Using the program to increase customer acquisition
5. How to Build Personal Relationships with Your Customers through Loyalty Programs
a. How do I effectively engage my customers?
b. How do I make it easy for customers to do business with me?
c. How can I turn one-time buyers into long-term customers?
6. What Results Can I Expect from a Loyalty Initiative?
a. Frequency of purchase?
b. Member revenue or spend?
c. Non-transactional benefits?
7. For Auto Dealers: How Do I Reconcile a New Rewards Program with an OEM Program?
a. Is the OEM program a benefit or a drawback?
b. Does the OEM program help my dealership specifically?
c. What member data does the OEM program collect?
d. What is my dealership’s ROI through the OEM program?
Feel free to share your responses to any of these outlined items – or suggest additional factors – by commenting on this post!
In a lagging economy, keeping your loyal customers loyal can become increasingly more challenging, but there is probably no other time when good customer loyalty is more vital to your business. Your loyal customers are your high-value clients, bringing in as much as 80% of your overall sales, according to Pareto’s principle (the 80-20 Rule). These customers will not leave you for your competitors based merely on prices; customers stay loyal to businesses that provide them additional value and consistently outstanding customer service.
Do you know who your most loyal customers are?
What are you doing to keep these high-value clients happy and loyal customers?
We’ve provided 5 tips for maintaining customer loyalty in any economic climate – even today’s lagging economy. These steps will help you gain a better understanding of who your best customers are and what you can do to keep them loyal.
1. Ask Them What They Think. Survey all of your customers, former customers and potential customers with just two simple questions: a. On a scale of 1 to 10, would you recommend us to others? (1 = definitely no, 10 = definitely yes) and b. Why or why not? The answers to these two questions tell you how what general percentage of your customers is loyal as well as their reasons behind why they are or not.
2. Stay In Touch. Whether it’s included in a loyalty program or you purchase on separately, find an email marketing tool and use it wisely. Be sure to target messages to the right customers at the right time. Provide your customers specific information they would find helpful and special offers that are customized just for them. Let them know about contests, upcoming events, new products, etc. But don’t send out too much too often. Find a balance between encouraging their patronage without taking advantage of their trust.
3. Go the Extra Mile. In addition to your advertisements, announcements and non-solicit emails, sign up for a greeting card system or set up recurring email campaigns. Send birthday greetings with a gift or special offer just for them. Thank them on their “customer” anniversary for their continued patronage to your business. Send them a greeting if you’ve not seen them x-number of months and extend a special offer for their return visit. This personal touch helps your customers understand that you value them as individuals and invites more loyalty and trust.
4. Encourage Participants, Not Spectators. Keep your loyal customers involved and ask for their opinions as any pending changes or new directions in your business arise. You never want to make a business decision that will alienate your loyal customers. (Remember the Pareto principle!) As loyal customers, they will love having a say in things and will provide an invaluable incite to your focus groups and planning meetings. Plus, once a decision is reached, their word-of-mouth marketing will achieve more success than almost any other marketing efforts you employ.
5. Say It To Their Face. Never shy away from an opportunity to thank your customers for their business. Train your employees to extend sincere thanks for even the smallest business transaction. Greet your customers by name (when you can) and encourage all your employees to do the same. Host customer appreciation events. Support local charities. Be involved in their (your) community and you will be surprised how much you get ahead by simply giving back!
We know this list of tips is not exhaustive! Please share any other approaches have you taken to keeping your loyal customers loyal by submitting comments to this post.
Texas retailer Ancira Group is using UltraCare to sell private-label prepaid maintenance plans (PPM) to help lure customers back to the shop after the sale. The company introduced the Ancira Advantage plan at all eight of its stores, most in San Antonio, 13 months ago. In September 2010, Ancira Winton Chevrolet also started selling the contracts in the service lanes. The company eventually plans to sell the program out of the shops at its other stores. In addition to the Chevrolet store, Ancira has two Ford stores and Nissan, Volkswagen, Kia, Chrysler Dodge Jeep and Buick GMC dealerships.
The company’s best-selling PPM contract is a 12-month/12,000-mile package that includes three oil changes, two tire rotations and balances and three 27-point inspections, plus a 10 percent discount on any other service, accessory or part. The contract retails for $139.95.
During a recent interview with Automotive News, Joey Blackmon, Ancira’s Vice President of Operations, provided the following feedback on Ancira Group’s new PPM program:
Why did you introduce the program?
We just felt like with the cars being made better and the volume of car sales dropping over the last two years, we wanted to do something to tie our customers into the dealership.
What kind of results have you seen?
Ancira Winton Chevrolet sold 195 policies in September, 105 in the shop and 90 in the finance and insurance office. Ancira Chevrolet sold 242 new and used vehicles in the same month and wrote about 2,500 repair orders in the shop — giving it a 37 percent sales penetration in the F&I office and a 4 percent sales penetration in the service bays.
Sales were lower in October. In the F&I office, we sold 54 contracts out of 199 new and used-vehicle sales. In service, we sold 75 of the contracts. So service is still outselling F&I.
On average, the customers who purchased the plan and come in for one of the services it covers also buy $85 in additional service work.
Do you sell other maintenance contracts?
We sell the manufacturers’ contracts. On Credit life and disability and GAP, we partner with Service Life and Casualty out of Austin (Texas). We also do an in-house extended service contract where we are self-insured.
What results have you had with other PPM programs?
We sold a few of the factory programs, but never did a good job at it.
What did you expect when you sold the Ancira Advantage plan?
In its first month, the service department outsold the finance department — we didn’t expect that to happen. We’ve sold extended service plans out of the service lanes for years and years. If a store did four or five sales a month in service, it was doing a lot. This was a shock.
We also were shooting for a 30 percent sales penetration in F&I; we got a 37 percent penetration in September. We had a 29 percent penetration in October, but that’s still about on target.
Why do you think you sold more maintenance plans in the shop than you did the F&I office?
The service advisors were cautious. They needed to believe they weren’t taking advantage of the customer. They didn’t want customers to challenge their credibility. If we tried to make a big profit out of the deal, the customer would ask: Why would you charge me more than I could buy the individual item for? Customers are conscious about that, so we lowered the price.
When you cut your price, were you able to make a profit?
We weren’t trying to sell it to make a profit up front but to tie our customer to the dealership. We can break even on the contract and get repeat customer upsells from that. We might get away from service advertising if we have a continuous stream of repeat customers.
We also are banking on customers not using all of it. That helps offset our cost. We sell it for a little less than the street value would be.
What kind of incentives did you pay the service employees to sell the plans?
I can’t say what the spiff is. But we spiff the service manager and the service adviser.
Do you need to spiff both?
I think we do have to spiff both. People are driven by the profit opportunity. Most pay plans are commission-based. People do a better job when they have got skin in the game.
The service manager gets a smaller spiff. It’s based more on volume. He gets the spiff on every one the service advisors sell. The advisors get a larger spiff on each one they sold individually.
Did you spiff service employees when you tried to sell other plans from the service lanes?
We spiffed the other products we offered in the service bays, and it didn’t work. The service advisors weren’t comfortable selling them.
What’s the advantage selling maintenance plans in the service lanes?
If you sell one in the finance department, the customer drives the car several thousand miles before getting an oil change or tire rotation. It takes time to build business. But if you sell it in the service drive, they might already have 20,000 miles on the car. They need it immediately, and you can upsell something more than you can off a new car.
What kind of terms do you sell?
We have one-, two- and three-year plans. We’re mostly selling the one-year plans right now. I am happy as long as we’re bringing customers back that might buy from us again.
So what’s the key to your high sales penetration?
The key to selling it is having it priced right and having the person selling it think it’s a value to the customer. That’s especially true of service advisors. Service people are a different breed than F&I people. A lot of the service advisors were technicians before. They have got to be confident that what they are offering the customer is a good product for the price.
What results have you seen through your PPM program?
How do those results compare with this dealership’s?
What do you think determines the success of PPMs?