As football season approaches, I am reminded of a story that was widely publicized last spring. Joe Flacco, having just signed a $121 million contract with the Baltimore Ravens which made him the highest-paid player in the NFL, decided to celebrate by going to McDonald’s. Why would a man who could obviously afford to celebrate anywhere choose a $7 meal at McDonald’s?
No one really knows for sure but it’s not the only example of high-profile people celebrating milestones in their lives at places that may seem unusual. Jeff Van Gundy also celebrated his contract extension at McDonald’s and Phil Mickelson celebrated his Master’s win at Krispy Kreme (much to the chagrin of McDonald’s, I’m sure).
In a recent research paper, scientists explore the idea of loyalty and fanaticism citing companies such as Volkswagen, Apple, Nike and Harley Davidson, among others, as having “cult-like following(s)”. They attribute this to emotional attachments developed through past experiences and over time. Business leaders have talked about creating brand evangelists; the importance they can have over the growth and exposure of your business. According to the paper, brand evangelists “can act as opinion leaders to bring others’ attention to the brand and attract new customers”.
While dealerships may not have the brand recognition of McDonald’s, cars have historically been a way in which people celebrate milestones in their lives. Countless parents have purchased cars for their children as they graduate college or to celebrate a significant event in their lives. You hear stories of these occurrences every day at your dealership, I’m sure. If you gave every child that came into your dealership with their parents a lollipop or popcorn, that child may start looking forward to their parents’ service visits.
People can also develop emotional attachments to a brand through their parents’ choices. Think of that cool Mustang a father owned but never let their child drive. When it comes time for that child to buy a car, a Ford Mustang will most likely be on their wish list.
Car dealerships have the opportunity to be a part of special moments in many people’s lives. For most consumers, the simple act of buying a new car is a special moment. Combine that with a life event (and the buyer’s emotional attachment and memories to that event). A car dealership can be a part of the memory of that event by enhancing it, even if it’s as simple as placing a bow on the car or helping with a surprise. In this way, the dealership can become a part of a positive life experience and begin a relationship that can last a lifetime.
How is your dealership creating customers for life?
Can you provide an example where you and your team have enhanced a customer’s purchasing experience?
A recent study by Barclays Bank revealed interesting statistics about consumer behavior as it relates to small and medium-sized businesses. The study included the retail behavior of 2,006 consumers and also surveyed loyalty business practices of 1,216 decision makers from small to medium sized businesses. It found that 59% of consumers stated that loyalty to a business began with a smile. More interestingly, only 54% of the decision makers said that they practiced this in their businesses.
Other notable statistics from this study are that only 36% of consumers attributed their loyalty to great customer service, 22% said that the business remembering and recording previous transactions influenced them and 60% said that they are “always, often or sometimes willing to pay more” for those services.
Customer retention is important not only for company growth but increased profitability. “Cutting customer losses by 5 percent can boost profits by 25 to 125 percent,” according to an article in the Houston Chronicle.
This survey was done for Barclays Bank, (the seventh largest bank in the world; with over 48 million customers in 50 countries), to determine whether a loyalty program was a wise investment. They’ve since begun implementation of a customer loyalty program that rewards their most loyal customers with decreased fees.
It amazes me that only a little over half of these decision makers reported that smiling at their customers was a practice they employed. Humans are, by nature, emotionally driven. If your dealership isn’t training your employees to smile and be friendly, no automotive loyalty program will be able to help you. My guess is that while you expect your employees to smile and be friendly to your customers, it is probably not a policy.
And a smile is just the start of a great customer loyalty program. When a repeat customer comes into your dealership, do your employees have the ability to see all of that customer’s transactions? Take service for example; many customers patronize a single place for all their service needs for the simple fact that all of their vehicle’s service records are maintained there. Automotive loyalty programs can help you extend this into all departments of your store making your loyal customers easily identifiable by your service, sales and parts departments.
Don’t forget that personal touches are imperative to your dealership’s long-term success. When you go into a business and are greeted by name by an employee who smiles at you and has knowledge of your history with their business, you are impressed and in turn, keep coming back.
Efforts in increasing customer retention and loyalty today will help your business grow and increase your dealership’s profitability. Smiling at a customer is only the start, however. Customer retention isn’t easy in today’s hyper-competitive world, especially in the automotive industry. If a smile, great customer service, recording previous transactions and a dealership loyalty program are all aligned, you can increase customer retention and develop life-long loyalty.
What is your dealership doing to increase customer retention and loyalty?
How are you training employees to add personal touches when interacting with customers?
A brilliant and successful businessperson recently shared why he loves his angriest customers. Phil Libin, CEO and co-founder of Evernote, wrote an article for Inc. where he explained that customer feedback is essential to the growth of any business. All companies solicit feedback from their customers be it via online or physical surveys, suggestion boxes or some other way. Even companies that don’t solicit it, get it.
According to Mr. Libin, there are three types of customer feedback: complaints, suggestions and compliments. For any of this feedback to matter, you first have to have a leadership team that not only cares, but knows how to handle each of these. He explains that while suggestions are great, other than an occasional nugget of inspiration, they have very little value for improving your product or service. Compliments are always wonderful and have value in that you can hear what you’re doing right. They can also increase employee morale, but only if you share them, which many managers fail to do. The real value in customer feedback, the one Phil not only says he loves but also feels holds the most value, is complaints.
As most dealerships know, angry customers are typically the most vocal and will more frequently vent that anger towards you either directly (via e-mail, letter or a phone call) or indirectly (via an online review, social media post, etc.). The problem, he says, is that most people charged with monitoring feedback take complaints personally. Many times this is simply due to the fact they have no experience with being criticized online.
“Complaints are great; the more detailed, the better. They tell us where our product or overall experience is failing. Plus, they are the easiest form of feedback to get. No training or solicitation required. People are naturally good at complaining…” says Libin.
Complaints are actionable items that can assist you in identifying areas of your business that needs improvement. You cannot expect to increase customer retention and build loyal customers if you’re not willing to listen to what they believe is wrong. Remember, they are your customers. While you may think your product or service is the best in the universe, chances are you aren’t your company’s source of revenue. It’s the customers’ opinions that matter.
Make sure that you have a leadership team in tune with customer feedback that knows how to properly manage, and respond, when necessary. You don’t have to make every change suggested in every complaint – the point is that you need to listen. Don’t just listen to feedback sent directly to you, but also make sure you are paying attention and monitoring for the feedback that customers are sharing with others.
Your customers are your business’s most important assets. Without them, all you’ll have are some pretty desks and technology… and even that won’t be for long! Take the time to not only solicit feedback from your customers but listen to the feedback that is the hardest to listen to: complaints.
Sometimes the truth hurts but as I’m sure you’ve heard before… “No Pain. No Gain.”
How do you ensure that your team is properly managing customer feedback?
What does your team do to handle angry customers and negative feedback?
I came across an article recently by Jeffrey Gitomer that really hit home. In essence, he said that there are countless awards given out for levels of “customer satisfaction” by many companies including the likes of JD Powers, and Consumer Reports. The winners of those awards publicize their victories in their marketing to attract new customers and give themselves pats on the back. In his opinion, however, all of those awards for “customer satisfaction” levels are meaningless. In fact, he said that not only are they meaningless, they are worthless.
His view is that customer satisfaction is synonymous with “mediocre” and “anyone that posts a ‘satisfaction’ award has an army of people that hate them for the lousy service they provide, AND a bigger army of people laughing at the audacity and the phoniness of the [award]”.
Gitomer explains why, “Satisfaction is the LOWEST level of customer service. And, in the end, means nothing.”
If customer satisfaction is meaningless, what should we be looking at?
“Customer loyalty is all that matters,” writes Gitomer.
A satisfied customer is simply one who believes that the service you’ve provided is acceptable to them. What it does NOT mean is that they would continue to do business with you, recommend your business to their family and friends, or proactively become a brand evangelist for you. A satisfied customer could be one that does business with you because your business is convenient for them. They are happy enough that the inconvenience of going somewhere else outweighs the convenience of staying. That’s not something to be proud of.
What we really should be measuring is customer loyalty. Gitomer defines a loyal customer as; “people who will do business with you again, tell others about you, and refer others to do business with you.”
Your customer loyalty levels have much more meaning than any customer satisfaction statistic or award. CEOs of many of the largest companies in the world started with mission statements not based on growth and market share, but on winning loyal customers. Gitomer poses the example of Hugh McColl, former Chairman and CEO of Bank of America. McColl was a driving force behind consolidating a series of progressively larger, mostly Southern banks, thrifts and financial institutions into a super-regional banking force. Gitomer stated: “His philosophy was simple: ‘I take care of my people, my people take care of my customers, my customers take care of my shareholders.’”
Up until recently most companies have been all about measuring customer satisfaction to judge performance through surveys and various other statistics. How do you measure customer loyalty? It’s simple. Start counting repeat and referred customers, sales and profit. And according to Gitomer; “The rest is bogus.”
Customer loyalty is a circular chain that starts at the organizational level. I’ve written many articles about the importance of customer loyalty, and my company’s purpose is to help businesses retain and create loyal customers, which is why this article really hit home with me. Everything we do at Performance Loyalty Group, including our loyalty program and pre-paid maintenance program, is designed with this exact purpose in mind.
The next time you’re evaluating your company’s performance in relation to “customer satisfaction,” instead of asking, “How did we do?” start asking “Would you give me a testimonial?” Or “Would you refer someone to us?” The customer’s willingness to do (or not do) either one of those things will tell you more about how well you’re doing than any trophy ever could.
What is your business doing to increase customer loyalty?
How do you evaluate your company’s performance in relation to “customer satisfaction”?
Dealers using an incentive program (such as our BeBack card), find that approximately 18% – 20% of prospects return and purchase a vehicle within 10-15 days of receiving the incentive card. Salespeople select the prospects who are leaving the dealership without making a vehicle purchase, and give them a denomination-based incentive card as an enticement to return and buy. These have been proven to work, time and time again!
A good incentive program also provides your dealership with a method to determine why customers did not purchase and maintains contact and top of mind for several more weeks as they consider their vehicle purchase more closely. Wouldn’t you like to know why your customer did not make a purchase? E-mail a survey to your prospect as soon as they leave the dealership. The survey should seek to determine the exact reason(s) why the customer did not make a purchase. Based upon the customer reply, create another response tailored to their reason. You will be surprised by the candid customer responses. Our dealership customers who do this typically get a 30-40% response rate to the survey.
What incentives have you used to get customers back into your business?
Do you do surveys to find out why customers didn’t buy? If so, what are the main reasons?