Yes, your current customers. As small business owners, we often focus on acquiring customers. The easiest sale, however, is to the ones we already acquired. Think about it: you have already spent time and money acquiring them, they know you, they know your products and business, and they can generate new sales for you via word of mouth.
In her book, Carroll suggests employing a ROCK strategy to reach your current customers:
R – relevant marketing
O – orchestrated customer experience
C – customer-focused culture
K – killer customer service
While a customer-focused culture doesn’t need explanation, let’s look at the other 3 terms. Relevant marketing means tailoring your marketing messages so they are relevant to your existing customers. While you might hook new customers by offering them a discount, free consultation or sample, your current customers would be more likely interested in buying a complimentary service or add-on product.
An orchestrated customer experience means making every touch point, whether it’s directly with you, online, an ad, or walking into your store, meaningful. You want to constantly make a positive impression to build brand loyalty. If you have a bricks and mortar location, how is it laid out, what does it look like, how clean is it, what does it smell like? When the customer uses your product or service, how is their experience?
Killer customer service mean providing such great customer service that your customers want to shout (in a positive way, of course!) from the rooftops. If you treat them well, they will be happy to be customer advocates for you.
For any business, typically 80% of your business come from 20% of your customers. Your advocates are about 5-10% of your customers, and by advocates, Carroll refers to your best customers, who can become a great source of referrals for you. Figuring out who they are is not that hard.
Every day advocates are the people who sell your product or service based on compliments they receive. “I love your website, who designed it for you?” Mentions in tweets or blogs are also examples of every day advocacy.
Your best advocates are hand raisers. A hand raiser is a customer who is always on your Facebook page leaving comments; the person who takes time out of their day to fill out a survey; the people talking about your product or service online and to friends; and the people shopping in your store all the time.
Of course, one company who really pays attention to their customers is Zappos. Another great example is FreshBooks, which focuses on social media to take care of customers. Here’s on example: If a FreshBooks executive is traveling, they will send a message to all local customers and invite them to breakfast, lunch, or dinner. There is no pitching, just building a community and network. FreshBooks customers love this concept, and they tweet and post status updates on Facebook about their experience.
Source: Network Solutions, July 6, 2012. Author, Monika Jansen
What strategies have you used to effectively target your current customers?
Do you have any examples of businesses that pay close attention to their customers? Which ones?
Whether your dealership has, or is considering a loyalty program, it’s important to make sure your marketing messages align with the overall brand or image of your store. What is your dealership known for? Aggressive, “best” pricing? Friendly, no-pressure salespeople? A multi-generation, family owned pillar of the community?
A brand is your identity’s business, and conjures up powerful images for customers, both consciously and subconsciously. Whether you realize it or not, your brand creates a visual, emotional and cultural connection between you and your customers. Think about brands you know: Disney has a strong brand as the family entertainment leader. Apple commands higher prices than its competition because it has a loyal following that appreciates its innovative, counter-culture image. The Volvo brand is identified with vehicle safety. When a customer walks into your store, what kind of experience do they expect? Do they get that experience every time? Is that experience remembered when they receive their next communications?
All great brands share one thing in common: all of their marketing communications reflects their brand. This includes loyalty marketing. If your dealership is known for aggressive pricing and blow-out sales, and your latest loyalty program e-mail fails to mention pricing anywhere, or instead displays a cozy image of a family around the dinner table, that message will not resonate with your customers. They may not understand why, but it simply won’t ring true. Or, if your dealership is known for its no-pressure sales process but you are sending out e-mails with aggressive sales messages, chances are you are eroding your customers’ trust.
When customers buy a brand, they buy its values and promises, and feel that their expectations are aligned with the company. The goals of your marketing messages are to meet those expectations and continue to reinforce that alignment with your brand. Loyalty communications provides an opportunity to connect with your customers on a regular basis. Like customer loyalty, building brand awareness is an ongoing process—but an important one to ensure long-term success.
Do your marketing messages reflect your brand? In what way?
What are your customers’ expectations when they visit your dealership?
Does your marketing attempt to meet those expectations?
Has one of your favorite “brands” ever disappointed you and if so, did they ever win your business back? How so?
It’s that time of year when giving takes priority over receiving. Most dealerships I know are extremely generous when it comes to charitable causes, but there’s no need to be humble about it. The more you engage your customers in your holiday gift drives, the more you will be building loyalty with them.
In this recent survey by the American Red Cross, most consumers say they plan to give to their favorite charities despite the slow economy. 79% of people say that they would rather have a donation in their honor than to get a gift they wouldn’t use; and 70% plan to give as much as they did last year. Enabling customers to give contributions through your store’s program is one way to bring customers in, start conversations and create mutual goodwill that can last well into 2013.
Here are a few ideas to build loyalty and tie-in promotions to your current loyalty program around the holidays:
1) Send an e-mail campaign to your current customer base highlighting which causes you’re involved in and how they can donate. At the same time, promote your loyalty rewards program for 2013 by offering to donate something in their name if they become a member, or giving them “free” points to join.
2) Take advantage of end-of-the-year crowds by ramping up sales efforts for pre-paid maintenance plans. What better gift can a person give than a year’s worth of peace of mind? Again, maybe you can tie an incentive such as a donation to a charity of their choice when they sign up for a pre-paid maintenance program.
3) Create a fun, loyalty-building campaign like this “Christmas Cookie” cookbook that Howdy Honda produced last year. Every person who sent in or posted a Christmas cookie recipe on Howdy Honda’s Facebook page received 10,000 bonus rewards points towards any service of their choice.
The holiday season can add a lot to a dealership’s bottom line; but there’s nothing wrong with leveraging a little goodwill so you can build customer loyalty and set yourself up for a great 2013 as well.
How are you building loyalty with your customers this holiday season?
Have you ever created a fun, loyalty-building campaign? If so, what have you done?
How many loyalty cards do you have in your wallet? The average U.S. household now belongs to more than 18 loyalty programs, for a total of more than 2 billion memberships. That’s an awful lot of loyal customers, but as it turns out, all these programs and cards are having an unintended effect: customer loyalty fatigue.
According to a recent survey by LoyaltyOne, customers are becoming increasingly “fatigued” by customer loyalty programs. So does that mean you shouldn’t have a loyalty program? On the contrary; despite some of the annoyances, most people still participate in their ‘favorite’ loyalty programs, and for many businesses, it’s a proven marketing tool that adds revenue to the bottom line.
So why are customers being turned off? Some of the most common reasons are “I always forget to to bring my card,” “the coupon I got in the mail has expired,” “restrictions on merchandise,” “not getting good discounts,” etc. For the most part, it seems that customers just aren’t perceiving much value in their customer loyalty programs.
To combat this customer loyalty fatigue, make it a priority to create a loyalty program that stands out from the rest, and is perceived as valuable by your customers. Here are a few tips on how to accomplish this:
1) Consider a loyalty program where cards aren’t mandatory. All the customer has to do is give his or her name, or phone number, and all the membership information and transactions can be pulled up and done on screen.
2) Give members something fun to work towards. Having a tiered loyalty program allows you to send updates like “only 100 points away from becoming a silver/gold/platinum member!” In general, people like to feel they’ve achieved VIP status or increased recognition. But if you have a tiered program, make sure the customer feels like they’re getting something for achieving the new level! How does gold feel different than silver? If you or your customers can’t explain that, then re-think the tiers. Remember, sometimes you have to give more to get more!
3) Offer choices. One thing that many customers don’t like is being restricted in terms of what they can use their rewards points for. Be sure to keep your plan flexible and place the customer firmly in control of what they can use their points for. Whether it’s towards a new car, a discount on a maintenance service, dinner for two at a good local restaurant, or even cold, hard cash, people define “value” differently and will appreciate different types of rewards.
4) Don’t spam your loyalty program members. These are your best customers who have entrusted you with their e-mail addresses. The last thing you want to do is break that trust by spamming them with e-mails every day, or even every week. Be sure that you are only sending them selective, relevant e-mails. It may take a little more work to divide members into groups with specific preferences, but trust me, it will pay off.
Are your customers suffering from customer loyalty fatigue? Creating a customized, flexible program that offers customers real benefits is the key to ensuring that your program is perceived as valuable.
Is your business suffering from customer loyalty fatigue? How do you know?
What are you doing to prevent customer loyalty fatigue?
What type of reward do your customers react to the most?
The longer an owner keeps a vehicle, the more likely the owner is to replace it with a product from a competing brand, according to data from R.L. Polk & Co. The decline in loyalty, though gradual with each passing year, means that many automakers and dealers will need to work harder to retain customers.
Job losses, wage cuts and general economic uncertainty in recent years caused many people to delay buying a new car or truck. Leasing, which puts buyers back in the market every two or three years, became almost nonexistent during the downturn.
As a result, Polk says the average American now keeps a new vehicle for about six years, up from around four years before 2007.
“They’re almost like a first-time buyer when they return to market, and they become a conquest opportunity,” says Brad Smith, director of Polk’s loyalty management practice. “It’s going to be a situation where everyone’s going to be scrambling for every tenth of a point of market share as these customers are returning to market.”
Polk’s latest data show that 46.2 percent of consumers who go three years between buying new vehicles choose the same manufacturer for their next purchase. Loyalty rates decline steadily for each additional year, dropping to 39.8 percent at nine years.
Adding to that trend, dealers and analysts say they have seen more consumers willing to cross-shop domestic and import brands recently, particularly after last year’s earthquake in Japan caused vehicle shortages at many U.S. dealerships.
Big differences in market
The market has changed significantly since many people last bought a vehicle: Brands such as Pontiac and Mercury are kaput, while Korean and domestic companies that many shoppers ignored in the past now offer much-improved lineups. Toyota and Honda have even lost some of the magic that used to bring buyers back again and again.
“Overall, the general consumer realizes that cars are better today than they were in the past,” says Arthur Henry, manager of market intelligence for Kelley Blue Book. “It emphasizes that you can’t rest on your laurels. There are others around to take your place.”
On average, loyalty rates are likely to decline across the industry as pent-up demand from the recession is released, Henry says.
Erich Merkle, chief sales analyst at Ford Motor Co., says the company has “a great opportunity” to get on more people’s shopping lists, given how much the Detroit 3 have struggled to overcome negative perceptions.
“I’m happy that we’ll have more customers out there doing that homework and comparing us to other automakers,” Merkle says.
Analysts say Hyundai, Kia and Volkswagen, brands that have become more prominent in the past decade, are among those expected to have the most success attracting shoppers who want a change.
“Five to seven years ago, people would come in and we’d have to explain why a Sonata is worth buying rather than a Camry. They had to be convinced of that,” says Scott Falcone, owner of World Hyundai in Matteson, Ill. “Now, the product is just so good.”
‘Too many options’
In addition, people’s lives can change considerably over six years, altering their vehicle needs in the process. A couple with a small sedan might now have several children and want a minivan, or empty nesters could be ready to ditch their SUV for a luxury vehicle or a sports car. They could find that their current brand is less competitive or does not offer a vehicle in the segment they now desire.
Shoppers also might discover that the salesperson they liked in the past is gone or even that the dealership closed, further reducing their attachment to that manufacturer.
“When you lose that connection, you’re creating a scenario where the consumer can go cross-shop,” Smith says. “The consumer has too many options.”
Toyota, whose customers have been among the most loyal in the industry, says dealers shoulder much of the burden to keep buyers from looking elsewhere because that is where the relationship with the company is formed. Having a fresh, appealing vehicle lineup is the other big factor, says Nancy Fein, vice president of customer relations at Toyota Motor Sales U.S.A.
“If you’ve got both of those things, your customers are going to stay loyal to you,” she says.
Kelley Blue Book ranked the Toyota brand first in shopper loyalty in the second quarter, as it has for five of the nine most recent quarters. Of the Toyota owners shopping with the help of its Web site, 52 percent were considering the brand again, up from 48 percent during its recalls but below the 56 percent that it had registered before that. The industry average, Kelley Blue Book says, is 35 percent.
Service builds loyalty
Toyota’s complimentary two-year maintenance program, begun after its recall crisis in 2010 and formalized as Toyota Care in early 2011, is one way the company is helping to strengthen the bond between dealers and customers. Fein says getting buyers to visit their Toyota dealership for service three to five times doubles the likelihood they will stay with the brand.
“It’s absolutely the dealership’s relationship with the customer that keeps them coming back,” Fein says.
Dealership service departments play a greater role in sales today, says Smith, the Polk consultant. Encouraging customers to go there for oil changes and repairs — which are needed more with the average vehicle now about 11 years old — instead of an independent garage is critical to promoting loyalty.
“If a dealer isn’t seeing their customers twice a year, you can almost bet that those customers will defect,” he says. “If they can get them back in for service, they’ve got a better opportunity to get them back for their next new vehicle.”
In some cases there is nothing an automaker can do to stop consumers from switching.
“They say, ‘I really enjoyed this car for 10 years, but now I’m ready for something different,'” says Neil Kopit, director of marketing for Criswell Automotive in Gaithersburg, MD.
Criswell, which has Chevrolet, Honda, Nissan and the full family of Chrysler Group franchises, trains its sales staff to sell vehicles from any of those brands. Says Kopit: “That is very important, because you keep the customer loyal to you even if they’re not going to remain loyal to the brand.”
Small gains and losses in a company’s loyalty rate can have a big sales impact. General Motors says an improvement of 1 percentage point means about 25,000 vehicles and $700 million in revenue annually.
GM says attracting a new buyer costs five times as much as holding onto a past customer and now factors customer retention into annual bonuses for salaried employees. It has set a goal of increasing its loyalty rates from the middle of the pack to the highest in the industry by the end of next year.
Speaking last week at an event highlighting retention efforts, Alicia Boler-Davis, GM’s vice president of global quality and U.S. customer experience, said: “Customers who are engaged with General Motors — if they have OnStar, a GM card or other services — those customers are the most loyal.”
Mike Colias contributed to this report
How is the recession hurting your dealership? What are you doing about it?
What are you doing to build customer loyalty?
Does your dealership have a loyalty program? What about a pre-paid maintenance (PPM) program?