When it comes to customer loyalty programs, customers like to feel appreciated and recognized for their loyalty. And, if they are not, it doesn’t take much to turn them away from being loyal customers into brand advocates.
I recently came across an interesting story about an Uber customer who wrote an open letter concerning his experience with the company. He wasn’t just any old Uber customer. According to Uber’s leaderboard (yes, apparently they have one), he was the TOP customer in the world, as he had utilized Uber for more rides than anyone else.
In his letter, the customer shared that, while he still loved Uber’s service, he never felt special, recognized or even rewarded for being Uber’s top customer. He stated, “I’ve more rides in an Uber than anyone else on Earth. Has your company once thanked me for my undying loyalty? Not even once.” He went on to state that he feels as if Uber is “missing the boat when it comes to fostering great relationships with its customers…your faithful clients are your biggest potential evangelists… treating them with a special touch would turn them into brand advocates who would spread good cheer about the company on their social networks.”
According to this customer, when he tells friends that he is Uber’s top customer, they inevitably ask what perks he receives. However, he has none he can tell them about.
Let’s translate this into the automotive world. Think about that loyal, repeat customer. The one that has purchased the most vehicles, referred the most people and made the most repeat visits to your service department.
What if they were never thanked, recognized, or rewarded for their loyalty and support. I’m pretty sure that eventually that customer will go away. Sure, they may, if asked, still tell people that they’ve been doing business with you. But the real value lies in them proactively inserting themselves into conversations, encouraging their friends, relatives and networks to check you out first – whether that’s for sales or service.
Customers nowadays may be used to loyalty programs – and some retailers think that the mere fact that they are used to them makes them less valuable. But think about this for a minute: the loyalty program may be why they came to you in the first place. However, that experience quickly fades if you do not look after them and maintain an exceptional customer experience with each visit. If that customer is not acknowledged and appreciated for their loyalty, they may still leave satisfied, but don’t necessarily feel like their business is appreciated, valued or rewarded.
And that’s where loyalty programs come in.
Loyalty programs offer your dealership a way to recognize and reward those customers who have supported – and continue to support you — through sales, service or both.
Dealerships have no problem offering coupons and discounts for customer acquisition efforts — low price offers with disclaimers that state “for first time customers only.” How do you think that makes your loyal customers feel?
Loyalty programs can incentivize future visits, increase the volume of visits per customer and the amount of money spent per visit.
Consider the argument by Uber’s top customer: Even though he’s a loyal customer and continues to love the service, he wrote a letter and published it online simply to share with Uber how unappreciated he feels.
Lack of customer recognition and a less than exceptional customer experience will certainly fail to attract new customers or increase the loyalty and frequency of visit of existing customers. It only serves to show that no matter how often they spend money with you, they’ll continue to be treated like any other customer.
One of the advantages of Pre-Paid Maintenance Programs (PPM) is that they span the generational gaps. Regardless of which generation consumers happen to be in, none of them like surprise repairs, or other expenses. That’s why dealers focus on payments – and not price – when selling cars.
Consumers want fixed expenses. When it comes to millennials, they tend to be saddled with all sorts of debt including those credit cards they eagerly accepted while in college, and the student loans they end up with in order to launch their careers. Older generations are at, or close to, the point of fixed incomes from retirement plans or social security. Peace of mind that their vehicle is covered, and they are protected against any unexpected repairs, is perhaps more valuable to these consumers than ever before. That’s why many service industries have navigated to fixed price service plans.
Consider cell phones. The big rage nowadays is the “All-inclusive price” plan. Consumers simply choose a carrier and have all the service they need for a fixed amount. I’m sure you’ve seen the advertisements and commercials. Why are these plans so attractive? I would argue that it’s the fact that consumers don’t like surprises or variables in their monthly expenses.
PPM programs are attractive for exactly the same reason. They provide car buyers with peace of mind that their monthly vehicle expenses will remain the same and that their vehicle will be reliable.
However, while these items may be missed (or declined) in the finance office, there is a perfect opportunity that many dealerships miss to pursue them later in the service drive. Just because someone said “No” in your finance department, doesn’t mean that they will say the same thing later. Lots of factors are in play when buying a car – emotions are high, anxieties over payment could be in play, and exhaustion from being at the dealership for several hour could also be part of the problem. Once the sun comes up and all of those factors settle down, a consumer could perhaps have a clearer view of the advantages of a PPM.
Recent research suggests that almost 65 percent of dealers are ignoring the opportunity to offer dealer-branded PPM plans to current customers that visit their service lanes. While many offer OEM branded plans in the F&I department, the service lane is generally overlooked, not only as a selling opportunity, but as a chance to reengage hundreds of customers for a guaranteed period of time. Dealers are in fact losing two thirds of their possible customer service affinity as well as potential missed revenue measured in millions of dollars.
Really? Millions of dollars left on the service drive floor? Yes. It is so simple.
There is no argument that PPMs significantly raise dealer service retention. It is in fact documented that many dealers experience a retention rate of over eighty percent among those customers who purchase a PPM. So, why are so many dealers’ service retention numbers so much lower than that — anywhere from thirty, to, in rare cases, maybe sixty percent? That’s a huge loss in retention and potential profit.
In my thirty-five years in the automotive business dealers have shared many different rationalizations as to why they choose to overlook the potential of PPMs in service. While many of the reasons are beyond sensible business logic, such as “I can’t handle anymore service business,” or “My advisors are too busy to sell anything else,” they all escape the fact that, as a dealer, they likely see more customers in the service department in two months then they sell in new vehicles in an entire year! Yet only about 35 percent of franchise dealers offer service drive PPMs today.
It really is simple, but it takes a good eye on both new and used vehicle buyers in your service drive. Just like any other service lane up-sell, it should be positioned as an additional customer advantage on top of what the dealership is already doing, and should be included on all service product menus. By including it on your service menu it serves as a tool for your advisor to sell other services by utilizing any discount the plan may offer on the service the customer is contemplating purchasing during that visit.
Don’t be afraid to keep discussing the benefits of pre-paid maintenance with your customers – whether you sold them the vehicle or not – as it only serves to benefit both your dealership (by maintaining a customer relationship) and the customer.
In the automotive industry, as in all others, no matter whether you’re in a dealership or work as a vendor, you’re most likely part of a team. Sometimes the people on your team (or perhaps, even you) neglect an important detail or fail at something important. When this happens, it can cultivate emotions such as mistrust and anger. That lost commission, upset customer, or incorrectly placed blame, can transform attitudes towards your team – or their attitudes towards you – into something toxic that threatens to endanger the bond that should exist for a team to succeed. But you shouldn’t let it.
One day in 1987, Maica Folch, a famous trapeze artist, was rehearsing for a big show the next day. While being hoisted 80 feet in the air, all of a sudden, the harness she was wearing malfunctioned and she began to plummet to the ground, certain she would die. Because the safety contraption attached was like a giant rubber band, Maica, who stayed calm and collected despite the imminent threat of death, ended up bouncing off the ground, receiving only bruises. She managed to steady herself by grabbing a rope during her ascent. One would think that a trapeze artist who routinely puts herself at risk would be angry. She did almost die – and the crew and safety harness designers failed to ensure her safety. What was her response? “When something goes wrong, there is no one to blame. I love what I do, I love doing it with you, and it’s because I trust you. We don’t live in a perfect world.”
The fact is that, as Maica Folch said, we don’t live in a perfect world. It is hard to expect total perfection, 100% of the time from ourselves and our teammates. Mistakes get made. The key is how those mistakes are handled – and the reactions to those mistakes that determines whether a team is really a team – or just looks like one. Of course, you don’t want someone on your team who constantly fails to pull their weight, and never really acts as a member of the team. However, if they are a trusted team member that constantly makes their numbers, has your back and just makes the odd mistake, surely they are worthy of your support?
A recent McKinsey podcast shared that when it comes to loyalty programs, a large part of the population is being ignored: elderly customers.
The podcast featured Jaana Remes, partner of the McKinsey Global Institute, and coauthor of the report “Urban World: The global customers to watch.” According to Remes, the elderly population will grow by more than one-third in the next 15 years, totaling about 222 million people, and account for approximately 51 percent of urban consumption growth, which is equivalent to more than $4 trillion.
That’s a pretty large base of consumers with some hefty spending power that many fail to market to.
According to the McKinsey podcast, the elderly consumer (60+ years) has some attributes that Millennials don’t have and that are very attractive to retailers.
- They were raised in a time of loyalty. This is the demographic that would shop someplace because of a great customer experience, they like doing business there and have developed a relationship with the company. Millennials, on the other hand, have more fragile loyalty ties to businesses and will defect much more quickly.
- The elderly generation has much more financial stability and, in many cases, has the credit and disposable income to make large purchases very easily should they desire to. Millennials are more likely to make less money, be saddled with student loans and have less disposable income.
All generations have buying power but simply make decisions in different ways.