One challenge all businesses face is creating loyal customers. As business owners, we try to analyze our customers to figure out what methods we can use to build that base of customers which is so important to future growth. Without loyal customers, your efforts at customer acquisition quickly go from growing your business to replacing defecting customers.
James Kane is a behavioral scientist that has advised top businesses about customer loyalty. He studies the brain and what triggers loyalty in people. According to Mr. Kane, there are three triggers that influence loyalty in a person.
A Sense of Trust – According to Mr. Kane, “…trust is obtained by doing the things that people expect you to do anyway…” This is especially important for car dealerships. While people are hoping to be treated fairly and honestly, there is a stereotype that has instilled distrust in car dealerships. This is why it’s especially important to ensure that you treat every customer just as you would expect to be treated in a transaction where you are buying something from Nordstrom’s that costs $30k. You would expect to be treated in a professional manner and to be appreciated for your business. Make all your customers – sales, service and parts – feel appreciated for their patronage and live up to their expectations.
A Sense of Belonging – Businesses build a sense of belonging in their customers “by showing that a business empathizes with the worries that make customers lose sleep at night,” says Kane. Just like you, customers have a lot going on in their lives. They have bills to pay, have kids to take to soccer practice and work long, stressful days. The last thing they want is a business adding to those worries. Whether your service customers arrive for regular maintenance or come in because something is wrong, they want you to help alleviate their worries. Don’t add to them by failing to live up to any promises you’ve made or failing to solve their problem correctly. Your sales customers worry that they aren’t going to get a good deal and that they will spend too much time at your dealership. If they’re at your dealership, they’re obviously in market for a vehicle. Be an actual advisor and help them find a vehicle that fits their needs. Then facilitate an efficient transaction in a friendly manner that is mutually beneficial.
A Sense of Purpose – Show your customers a sense of purpose by operating in a manner that says, “We stand for something beyond just the exchange of money…” Don’t focus solely on what a customer brings to your business. Examine what you can give back to your customers. If you don’t already have one, create a mission statement and display it in your showroom and in your service waiting area. Show your customers that you are committed to them by sharing your organizational beliefs; (they should include customer-centric ideals). Ensure that your customers know that they are more than just dollar signs to you. Demonstrate how you appreciate their business and will do everything in your power to make sure they leave satisfied. Then live up to your promises.
In this industry, we use psychology all of the time without knowing it. We listen to a customer’s needs and help them down the path of the sale. We have sales processes designed to encourage the customer to buy… and buy now… and we have service processes designed to better assist our customers to make choices that keep their vehicles operating at optimum levels. Customer loyalty is imperative in our hyper-competitive industry. Many companies are advising businesses to shift their focus from customer acquisition to customer retention. Not only is it less expensive, but it also ensures that money spent on acquiring new customers is actually leading to growth, rather than the status quo.
What are some of the challenges that you face when trying to keep customers loyal?
How do you create a sense of trust and belonging with your customers?
In what ways do you demonstrate that you appreciate customers’ business?
Life lessons typically come when you least expect them as software coder, Ted Dziuba, discovered. He and his friend went to a bar that served Pappy Winkle’s Family Reserve Bourbon Whiskey that is widely regarded as the world’s best bourbon. While drinking, they talked to the bartender who explained to them it’s origins and other interesting information about it. He then told them about other drinks that were interesting and they were enthralled with his creativity and mastery at his craft.
Around that time, a man approached the bar and said, “Lemme get a Captain and Coke, brah.” After the gentlemen left, they asked the bartender whether it bothered him to make such a common drink when he quite clearly had demonstrated his expertise. His response was:
“No, it doesn’t bother me. If the customer orders Pappy and can talk about fine whiskey, I’ll pour Pappy and talk about fine whiskey. But if the customer orders a Captain and Coke, I’ll make the best Captain and Coke I can.”
Mr. Dzubia learned a life lesson that we could all benefit from. In his words, what he learned was “that barcraft is fundamentally about giving the customer what they want…[and that] the true master obliges both.”
How does this apply to car dealerships? Think about the many different types of customers you see every day come through your dealership in all departments. Dealerships see a wide spectrum of customers from “gear heads” to those who don’t know how to turn on their headlights. Dealerships have certified mechanics that are highly trained, service advisors that know vehicles intricately, salespeople that know every detail of their product and a leadership team in place that, typically, encompasses it all.
I think the lesson learned is applicable to not only “barcraft” but to all crafts. Every position in your dealership should be viewed as a craft. You expect your porters to know how to make a new vehicle immaculate when it’s sold to pass even the most discriminating customer’s inspection because you know a CSI survey is going to ask that question. Your mechanics are trained to do it right the first time and have the knowledge and ability to accomplish that. Your salespeople are infused with the knowledge about your product as well as the ability to assist customers in selecting one that’s appropriate and right for their needs.
Ultimately, all of these positions have exactly the same fundamental purpose, to give the customer what they want.
When a service advisor gets a customer in service that’s a “gear head”, he has the ability to talk the language with them. If their customer knows nothing about cars, he should change his language to speak in a way that the customer understands. In addition, a big part of a service advisor’s job is identifying and recommending additional services to each customer. They can be much more successful doing that if they can adjust their language to match each customer’s.
Great salespeople know to mimic their customers. Not only will they copy their language and speak to that specific customer’s knowledge level but they’ll go as far as mimicking body language. If a customer is interested in a high-performance sports car, the salesperson will sell the vehicle by pointing out all the performance features: how fast it is, how much torque it has, horsepower and speed. If their customer is looking for a family vehicle, the salesperson will focus on the safety, comfort and practical features of the vehicle.
Too often, dealership personnel don’t give the customers what they want. Maybe the service advisor is talking in a language above the customer’s knowledge level or a salesperson is trying to sell a vehicle that’s not matched to the customer’s needs and wants.
Learning to give the customer what they want is a craft in itself. Learn how to listen to your customers. Make sure that you’re speaking in a language they can understand. You’ll offer a superior customer experience while increasing customer loyalty and retention.
Have you trained your service advisors how to talk to different types of customers?
How does your business ensure that you give the customer what they want?
There are many benefits to having an automotive loyalty program at your dealership to increase business and customer retention. You must be mindful, however, of some dangers that exist if the program is not implemented and administered properly.
Loyalty programs seek to reward behaviors. For dealerships, automotive loyalty programs exist to reward customers for spending money at your dealership whether that’s in your sales, service or parts department.
In the behavioral theory of operant conditioning, the negative contrast effect exists. This effect happens when a customer is rewarded for certain behaviors and then those rewards are reduced or withdrawn. Customers are, in turn, less likely to exhibit the reinforced behavior in the future than if they had never been rewarded at all. The theory explains that the customer starts to view the desired behavior as work where they were only temporarily rewarded. In the long run, this could even make the customer feel like the behavior is a chore. For example, if you reward a child for washing the dishes for a period of time, then withdraw the reward, the child starts to view washing the dishes as a chore. This would decrease their desire to wash dishes, as there is no longer a reward to be achieved as a result of successfully completing the behavior.
If we extend this theory into the world of retail business and loyalty programs, the goal of the program is to incentivize your customers for being loyal. By implementing these rewards, you’re instilling in your customers an expectation of reward for a behavior. Let’s say you offer your customers a free oil change after every 3 purchased as part of a loyalty program. In the past, I’ve shared with you the “Endowed Progress Effect” which states that customers are more likely to increase the effort they put forth to achieve a goal if the goal seems more achievable. Conversely, the negative contrast effect would say that not only would removing this reward make your customers less likely to be motivated to complete it, they would make less effort to come in to your dealership.
The important thing to remember is that when implementing a loyalty program at your dealership, consistency and a commitment are required. By removing a reward system after your customers get acclimated to it, you could actually diminish the business you encouraged and achieved when you rewarded your customers.
It has been proven by countless businesses of all sizes that loyalty programs can increase service and sales revenue and customer loyalty. A loyalty program is a long-term commitment. If you aren’t consistent, your customers won’t be either.
How is your loyalty program providing long-term benefits for your customers?
What types of rewards does your business offer to keep customers coming back?
Today Groupon launched the first phases of Groupon Rewards, a new platform that tries to provide businesses with a way to build customer loyalty. Groupon Rewards’ release comes amid concerns from merchants that Groupon customers demonstrate no loyalty to the businesses offering deals.
What Groupon Rewards Does:
Groupon users who spend a merchant-determined fixed amount (at that same merchant) can earn a Groupon Reward, providing a deeper discount than a regular Groupon deal. For example, after spending $50 or $100 at a business over time, a customer might get a Groupon Reward to spend $4 and get $20 worth of food.
How Groupon Rewards Works:
Groupon Rewards are tracked using user credit cards. Once users have opted in to the program, they would need to consistently use the credit card which is already on file with Groupon in order to build their Groupon Reward. A spending goal, set by the merchant, can be met after multiple visits. Users will receive email or phone notifications after each visit alerting them that they just spent money at a merchant offering a Groupon Reward and indicating how much more they need to spend to unlock their Reward.
Pros & Cons for Businesses & Their Customers
While there is no cost for the Groupon Rewards program itself, TechCrunch indicates that “unlike a regular Groupon deal, the merchant will not keep half of the coupon amount. If the reward is a $4 coupon for $20 worth of goods, that entire $4 will go to Groupon.”
Businesses will now be able to track ROI – a feature that was previously unavailable through Groupon.
As the program is tied to the customer’s credit card, merchants and shoppers wouldn’t have to worry about a loyalty or membership card; however, in order for the program to work at all, customers must only use the credit card they have registered with Groupon.
How effective do you think this new program will be in generating repeat business? In generating loyalty? What is the difference?
How well do you think Groupon Rewards would work for businesses when compared to other loyalty rewards programs?
Few brands have created worldwide impact as significant as Disney. Just mentioning “Disney” elicits smiles from kids – and kids at heart – in virtually every nation.
So how do they do it?
Last month the Cincinnati Business Courier hosted a seminar called “Disney’s Approach to Brand Loyalty.” Featuring representatives from the Disney Institute, the seminar highlighted time-tested strategies to help businesses “retain customers for life” by identifying the “powerful relationship between experiences and how a brand generates superior bottom-line results through greater customer and employee loyalty” (bizjournals.com).
The course presented the following eight tips on how Disney keeps customers coming back for a lifetime:
1. Everyday “Little Wows” Build Up to Make “Big Wows”
Disney has learned that it is often the little things that make the biggest impact. Going above and beyond in simple, unexpected ways will help you win your customers’ hearts and their loyalty forever.
2. Create a Brand Promise
Disney’s brand promise is “Entertainment with Heart.” Those three words are the guiding force for everything they do and they fulfill that promise continually.
3. Control Your Brand
Being true to its brand in everything from theme parks, cruises, movies and TV series is what distinguishes Disney from any competition. They know who they are and what how they want to be perceived – and they do everything they can to control that image.
4. Don’t Focus on Just the End Result, But the Step-By-Step Experience
Disney never wants to hear “It was wonderful, except for…” It’s important to Disney that the customer experience is great from start to finish – from food and rides to parking and finding your vehicle at the end of a long day.
5. Put Your Employees First
It’s Customer Service 101: If your employees aren’t happy, your customers will feel and reflect that negativity. Disney knows that keeping its employees happy and treating them well will help to ensure positive customer-employee interactions.
6. Know & Study Your Audience
Marketing experts at Disney study its audience extensively. Then know that children are their primary audience, so windows in Main Street shops are low enough that the merchandise can be seen from a stroller. They know when to expect influxes of visitors from specific regions and stock items that would be most attractive to those individuals. Most importantly, they know who their high-value customers are and how to keep them loyal.
7. Create Strong Customer-Employee Interactions
Disney encourages employees to interact with guests of all ages. Your front line of employees has the most face-to-face interaction with your customers and can provide invaluable customer feedback to your marketing team. That interaction also fosters the strong relationships built between a business and its customers.
8. Learn to Say “Yes”
Disney doesn’t like to say “No.” Hearing “No” can completely dampen a customer’s otherwise perfect experience. Disney analyzed why it was saying “No” to a lot of requests (like “Can I get married at Disneyland?”) and what steps it could take to turn “No” into “Yes.” By making additional experiences available, Disney was able to increase its market and its overall customer satisfaction.
How has the Disney brand impacted your experiences with the company?
What other companies have similar approaches to brand loyalty? What is it about this approach that works so well?
In what ways can you apply – or have you applied – these practices to your own business to improve the customer experience?