TechWeb, a division of United Business Media (UBM Tech) recently released a comprehensive white paper sponsored by IBM, titled, “The State of Customer Analytics: Taking a Proactive Approach to Loyalty & Retention”. The white paper explores how customer analytics can increase customer retention and minimize defections through optimally timed, personalized retention offers while significantly improving a company’s bottom line.
Most companies have vast amounts of data about their customers, but have trouble sorting through it all to make meaningful decisions. New analytic tools are becoming available that make it possible to do this.
By using customer analytics to create 360-degree consumer portraits, and then personalizing communications, companies can up-sell and cross-sell to those clients to maximize profitability and increase customer lifetime value. Businesses doing this are not only increasing revenue, but maintaining and developing crucial relationships with their customers.
Customer loyalty & retention analysis enables companies to calculate customer value and to determine whether the retention effort for that specific client is worth the investment. Loyalty is not only concerned about rewarding customers with personalized offers through loyalty programs, but also with turning satisfied customers into successful brand advocates. Techniques such as social network analysis enable businesses to identify those customers with a significant sphere of influence among their peers. As customers’ trust in traditional marketing messages has been steadily decreasing, the ability to leverage peer recommendations by capitalizing on those active in social media is a powerful way to enforce brand loyalty.
Retention analysis allows companies to identify early warning signs of defection. Companies can proactively approach the best customer to target based on their likelihood to accept an offer to stay and not stray to a competitor.
An emerging area, social media analytics, unlocks the value of customer sentiment. It functions both as a listening tool and as a means for predicting consumer behavior and improving customer satisfaction. As business professionals assess the critical infrastructure necessary to cope with the Big Data onslaught, one component is key—comprehensive customer analytics adoption. From accessing rich social media data to increasing customer loyalty & retention, businesses today have a number of goals to focus on at once. A key question remains: How are business leaders viewing the role of technology in assisting them to accomplish their loyalty and retention tasks?
By implementing proactive loyalty and retention initiatives, they can better understand who their satisfied customers are and turn those customers into successful brand advocates.
MediaTrac has released several ebooks demonstrating how dealerships can boost sales with customer loyalty and retention programs. They are available to download for free at http://www.media-trac.com/resources/whitepapers.shtml
How does your business sort through all of your customer data?
Is your company tracking social media analytics? If yes, how are you doing this?
Are you currently using a customer loyalty and/or retention program? Why or why not?
- Average/unconflicted: 61%
- Spendthrifts: 15%
- Tightwads: 24%
Each of these types responds differently to different marketing messages. So, how can you identify which is which, and how do you sell to them?
Tightwads tend to feel pain associated with buying; they tend to avoid spending money even in situations where most individuals would find the expense to be justified and of good value. Tightwads are differentiated from ‘frugal’ people, as frugal people don’t tend to feel pain at buying, they just enjoy saving more. Tightwads tend to carry little credit card debt and have more money in personal savings accounts than the “average” or “spendthrift” buyers.
To sell to tightwads, you want to minimize their buying pain. One way to do this is to appeal to the utilitarian or practical aspect of the purchase. For instance, if they need a pick-up, don’t try to sell them the luxury model; to a tightwad, paying extra for luxury features is unnecessary. Another way to minimize their buying pain is to watch how you use language: avoid saying things like “immediate payment in full,” or a “fee of $100.” Instead, say things like, “small down payment,” or “only a $100 fee.” Also, tightwads don’t like per-item pricing; bundling features together in package pricing works better.
Spendthrifts are three times as likely as tightwads to have credit card debt, and they are likely to have less in savings. This means that right up front, although they are willing to buy, financing will be more of an issue. Spendthrifts tend to derive great pleasure from buying; these are the types that respond to the “luxury” pitch, or the emotional satisfaction of immediately driving off the lot with a new car (unlike tightwads that don’t respond to that type of sales pitch). Spendthrifts want instant gratification.
“Average” buyers fall somewhere in the middle and are susceptible to both types of marketing messages and pitches.
Identifying what type of buyer is in front of you can be accomplished with casual conversation; ask a consumer about past purchases, and what they did or didn’t like about cars they have previously owned. Tailoring your marketing messages to different types of buyers can help boost sales and customer retention, especially to the 24% of the market identified as “tightwads” – but please don’t use that term in front of your customer!
Do you segment your customers into buying “types”? If so, which types?
What have you found to be effective for selling to tightwads, spendthrifts and “average” folks?
New data from DMEautomotive reveals power of OEM/PPMs lasts well beyond expiration
While most dealerships offer some degree of prepaid maintenance (PPM) or complimentary dealer and OEM maintenance plans, many question how effective these plans really are and if they do in fact provide the intended retention and ROI. Good news—research shows that they do and additionally they provide the unique opportunity to tap into the highly desirable younger market segment.
DMEautomotive’s recent national consumer survey provides fresh insight into the state of prepaid and complimentary maintenance plans, along with evidence of their powerful ability to provide consistent dealer retention. Research shows that strong programs can keep customers coming back for repairs long after the expiration of their respective maintenance package—shifting business that typically bleeds into the aftermarket, into firm dealership territory. Below are some of the key findings of DMEautomotive’s recent survey:
- Roughly one in four U.S. vehicle owners have a dealer or OEM prepaid or free service plan.
- Free or prepaid, 35 percent of customers are not using plan for all maintenance. While 65 percent use plans for all scheduled maintenance, a surprising 25 percent only use it for “some” and nine percent have not used it at all.
- Plan usage and satisfaction levels align: those using their plans for all scheduled service at the dealership report the highest satisfaction and 75 percent are either “extremely satisfied” or “satisfied.”
- Next-generation servicers (under 35) are more likely to have a plan (31 percent) than those over 35 (18 percent) making these plans a powerful tool for young, dealer-disloyal servicers.
- Plans drive long-term retention as 56 percent of consumers with a prepaid or “complimentary” service plan report they are likely to continue servicing their vehicle at their dealership after the plan expiration.
- Loyalty during plans impacts future loyalty—almost twice as many consumers who use their plan for all maintenance (versus those who only use it for some) report they’re “very likely” to continue servicing their vehicle with that dealer at plan-end (30 percent versus 17 percent)
One of the most valuable pieces of information gathered from the survey is that there is a new way to reach our younger customers. Results show that younger consumers are significantly more likely to use their plans for all maintenance than older consumer segments. Notably, 84 percent of those aged 25-34 (who used the plan for all maintenance) reported high plan satisfaction, in addition to 62 percent stating they are likely to service at the dealership post-plan. Given that that the 25-34 year old age range is typically the largest group of dealer-disloyalists, it’s clear that maintenance plans can be yielded as a uniquely powerful tool.
While maintenance plans provide a powerful opportunity, they do take effort. We have learned that customers covered by maintenance plans often stray from the dealership for repairs. While this may initially be seen as a profit gain, research shows that customers who stray are more likely to take servicing needs elsewhere upon expiration—demonstrating the importance of consistently engaging with customers post-sale; something to keep in mind as you manage your ongoing customer relationships.
Mary Sheridan is a CRM insights analyst for DMEautomotive’s strategy and analytics team, which is focused on producing cutting-edge research on service customer behavior to help automotive retailers build greater customer loyalty and retention. Sheridan has a PhD in clinical psychology, and has nearly a decade’s experience in primary research, including over four years in customer experience and loyalty.
Source: DMEautomotive, September 2012. Author, Mary Sheridan
This week, CBT News features Mike Gorun, managing partner and founder of MediaTrac, discussing how your business can build loyalty with mobile users. Learn more about the four guidelines to ensure you are building loyalty through your mobile site.
Click here to learn more about building loyalty with mobile users.
Click here for more automotive resources on CBT News.
Neuromarketing is an interesting blog combining brain science and marketing. A recent post discusses the growing trend of using scent logos: and not just by large companies, but by small and medium-sized companies. So what is a scent logo, and could it work in your business?
An olfactory logo, also called scent branding, is a custom scent that the brand creates to embody its unique brand characteristics. Much like a graphic logo, the olfactory logo is used wherever the brand is present. After repeated exposures to the logo, customers strongly associate the smell with the brand.
For example, Abercrombie & Fitch disperses their signature fragrance, Fierce, in all of their stores. Fierce is strong, edgy and appeals to young, upscale consumers. Fierce is also sold as a personal fragrance and is the number one selling fragrance for men in theU.S.andEurope. Abercrombie & Fitch customers claim they can identify authentic A&F jeans solely by their smell.
Most of the major hotel chains also use a scent logo. For example, the Westin uses a cool and relaxing white tea fragrance, and the St. Regis uses an elegant blend of rose, sweet pea and pipe tobacco. If you’ve walked into the Mandalay Casino inLas Vegas, you’ll recognize an exotic floral, coconut spice scent; and other casinos each have their signature scent too.
So would this work in a dealership? People are bombarded by an average of 5,000 marketing messages a day, and scent is a big differentiator. Smell creates a powerful emotional response and can boost brand identity as well as customer loyalty. Here are a few ideas for incorporating an olfactory logo into your dealership marketing:
1) Diffuse the scent throughout your dealership.
2) Instead of selling hanging car scent trees with other odors, get trees made with your own signature scent and hang one in every car you service and sell.
3) Include a scent strip on your postcard and brochure mailings to customers.
4) Sell the scent in your dealership, or give it away free with purchase.
What do you think? Is it crazy, or could scent logos work in your dealership? Think about the personality of your brand; is it relaxed or power charged? Is your target market young, middle-aged or older? Are they value or luxury buyers? Are you a rural dealership, in the woods, or do you have a hip, urban location? These characteristics can be matched with different fragrance elements to create a scent that embodies your brand characteristics.
What would your scent logo be?
Do you think this could really work for your dealership? Why or why not?