In the past, it wasn’t uncommon for employees to spend their whole working lives with a single company. People would start in their late teens and many would retire without ever having worked anywhere else. However, businesses, in general, and dealerships, specifically, are experiencing less loyalty from employees today than ever before in history. Why?
According to Orlando Barone of The Wharton School of Business, Gen Y has been educated and trained to be transactional managers and leaders. “I got the impression they perceived themselves more loyal to their values than to a particular company or organization,” Barone said. “They would be loyal to a place that enabled them to make the kind of impact they would like to make. I did not sense that they would be likely to identify with their organizations as if it were a sort of home or family. And reciprocally, they do not expect that kind of loyalty from their employer.” He goes on to say that employers who allow them to be these types of managers and leaders can earn a great deal of loyalty from them.
The labor laws of today encourage freedom. Freedoms of an employee to work where they want to as well as the freedom of employers to hire whom they want and to let them go when they’re ready to. Gone are the days of commitments that must be upheld by either an employee or an employer. Every day we see major players in key industries either leaving large, respected companies to start their own businesses or join competitors.
Working in the car business is a very taxing career. There are many late hours and not as many days off, especially in sales. Several positions are commission-based, which introduces stress into the equation as well. Combine these factors with a general lack of loyalty and you get a recipe for high turnover.
So how is a dealership supposed to combat this shift in attitude and increase employee loyalty?
The first thing that could be done is to create an environment that is conducive to family-life. Recognizing that for most of your employees, family comes first and respecting and encouraging that puts your dealership in line with their values. Creating an environment in which someone would want to work is also important. Employees want to not only feel appreciated, but also want to feel as if they’re making a difference. Empowering your employees to make decisions when it comes to customer experiences and fixing problems helps them feel as if they play an important role in your dealership. It can actually make a difference and help transform your dealership into one in which they are proud to be a part of.
All of this is easier said than done. People are resistant to change and putting your trust into your employees may be scary as a manager but it shows them that you believe in them and their judgment.
If you want your employees to be loyal to you, you have to be loyal to them.
How do you keep employees loyal at your business?
How can you show employees your loyalty as a manager/owner?
Why do you think that businesses are experiencing less employee loyalty than ever before?
Manufacturers are increasingly introducing programs designed to increase brand loyalty, and car buyers are staying more loyal than ever before. One of the most recent examples is GM’s decision to expand its free scheduled maintenance programs to more of its vehicles including most 2014 Chevrolet, Buick and GMC vehicles.
Many dealers have offered a few free scheduled services to their sales customers in an effort to not only introduce them to their service department, but to keep them coming back. With manufacturers focusing more on retention and shifting towards offering free scheduled maintenance for new car buyers, this offers dealerships greater opportunity than ever before to build a customer relationship with a car buyer (whether that car was bought from them or a competing dealer). This can not only increase up-sell opportunities, but also increase their chances at future vehicle sales.
Dealerships who have an OEM customer retention program need to recognize that this is a golden opportunity for them to really focus on “WOWing” the customer as, at this point, a customer has no concerns about price (the service is free to them). It’s all about the customer experience. Provide a great customer experience and they will continue to come back after their free maintenance benefit expires. Treat them poorly and they will take their vehicle to your competitor.
Cadillac has offered a 4-year, 50,000 mile free scheduled maintenance program for a while. Even with car buyers keeping their cars longer (58 month average in 2012), dealerships will still have the opportunity to impress and win the loyalty of the consumer for most of their time of ownership. If done properly in combination with the OEM’s brand retention strategies, a dealership can greatly increase their chances of converting that long-time service customer into a new car sale that then converts back into a service customer.
This “circle of life” could continue indefinitely as long as both the brand and your dealership focus on providing customers with programs that are designed to maintain the customer’s brand and dealership loyalty. As length of ownership continues to increase, fixed operations revenue becomes more important than it ever has been in the past. Leverage your OEMs brand initiatives to support your own dealership retention strategies and you can set yourself up to earn more lifetime customers.
The reason OEMs see the wisdom in using such maintenance programs is to sell more vehicles and importantly keep those buyers loyal to their GM dealer. One might conclude then that this trend erases any market need for third-party prepaid maintenance (PPM) programs. After all, PPMs are substantially the same as those OEMs offer.
Given this, are factories’ free maintenance programs making third-party PPMs unnecessary?
On the contrary, they are now more vital than ever. The first automotive loyalty programs were utilized by dealers in 2002. Now, more than half of all the US dealerships employ some type of loyalty initiative (many through OEM sponsored programs). But what about the dealerships with multiple brands where the OEM programs could do more harm to the remaining dealer brand than the good they provide to the other? Multi-brand dealership groups need a solution that will allow cross-selling and plan redemption between all of their brands. OEMs simply can’t provide this type of solution, nor are they expected to. Think of the brand Starwood Hotels and Resorts. We all know them as The Westin, Sheraton, The W, Le Meridian and others. Starwood wants to encourage their loyalty members to utilize all of their different brands but under one common moniker. Dealership groups that have multiple brands can benefit from this practice, and they will start realizing the benefits it provides to them in cross-brand marketing, (not to mention the vast amount of customer purchase data and analytics it provides).
With a third-party PPM program, a dealer extends maintenance services at a discount price (some dealers choose to give them complimentary to purchasers). Consider that for GM, late-year buyers of its 2013 models won’t receive free factory maintenance. A dealer offering a PPM program can bridge that gap.
Furthermore, only PPM programs enable dealers to:
- Offer similar maintenance incentives to customers who purchase or lease a model year not covered by the factory program.
- Offer these conveniences – and gain their retention value – to purchasers of other makes it sells from its used vehicle inventory.
- Capture bought-elsewhere and other-make customers who visit the dealership service department.
- Offer these advantages to customers of other franchises in its group whose OEMs do not offer free maintenance.
- Offer customers prepaid maintenance after the duration of the OEM program to further retain them.
What new programs are you introducing at your dealership?
Have you thought about extending your maintenance services with a PPM program? Why or why not?
“The British are coming” shouted Paul Revere in his famous midnight ride frantically trying to warn colonists of the impending attacks by England.
Did you know that statistically only 4 in 10 people cared about this news? Only 40% of colonists supported the revolution, with some historians even estimating support in the 20-30% range. The other 60% were either loyal to the Crown or wanted nothing to do with picking sides. Winston Churchill once said, “History is written by the victors.” If you were to take a history class in England, you would be taught a whole new perspective on the outcome of the Revolutionary War. Their viewpoint is, at a very basic level, that they let us win.
With the celebration of our Independence only a couple of days away, we celebrate everything that the United States embodies: freedom, choice and opportunity. Even after the war was “won” in 1783, many didn’t know what to think. People weren’t sure if they were just trading one government for an equally bad one. Not until 1787, four years later, was the Constitution signed, and it didn’t go into effect until 1789 when it was ratified by eleven states.
Today, of course, the United States enjoys patriotism and loyalty from many and was found to be the most desired place in the world to live when Gallup polled foreigners who desired to relocate.
So how did this country, which began with a rebellion that had the support of less than half its residents transform itself into the country that today enjoys some of the most loyal people in the world?
It all began with a promise. The basic principle of that promise was the freedom of choice. Think about it. In the Bill of Rights, all 10 amendments have to do with personal freedom and restriction of government to impose on that. For over 200 years, America has kept that promise and become a place that people want to live.
Businesses themselves may or may not exist if it weren’t for the promises that were made and kept in the centuries that have passed.
Just like the loyalty our country has earned from us, customer loyalty begins with a promise. As a business, your dealership needs to define that promise and then keep it… no matter what. You must make that promise as unbreakable as the Constitution and show your customers through your actions that there are no exceptions.
Do this and you will not only earn their loyalty, you will become a place others want to do business with as well.
How does your business create customer loyalty?
Have you implemented a loyalty program into your store? If so, what do you offer customers so they keep coming back?
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!