In the automotive world, the bottom line is that many dealerships experience very high turnover rates with employees, especially in sales. Our world is one of high stress, long hours and feast or famine. (This might not be as true in the service departments.) However, the face of your dealership to a customer who bought their car from you is their salesperson. Yes, it is. The person that sold them their car is their go-to person for everything. If there is a problem, they usually don’t call service, they call the salesperson.
So, assuming that’s the case, if your dealership experiences high turnover in sales, how can you expect a customer to be loyal to you when they feel as if they’ve been abandoned? I like to refer to them as “orphan owners”. People have an emotional need to connect. They can’t connect with your billboard or giant inflatable gorilla. They certainly can’t connect with the mysterious shadow-figures sitting behind the desks in the sales tower that they never see. Their connection is with their car and the common bond between their car and your dealership is their salesperson.
I’ve talked to many people who have purchased vehicles from dealerships over the years and, in many cases, the customers go into the relationship already thinking that their salesperson won’t be around for long. No matter how much reassurance a salesperson gives them, they typically have little confidence that, when they need him or her, they’ll be there for them.
The fact remains that your employee retention has a direct effect on your dealership’s customer retention. If your salesperson did their job well and provided a great buying experience for that customer, it creates a feeling of obligation and reciprocity between the customer and that salesperson. Mind you that I never once said this customer bond was between them and the dealership. Emotional connections are made between people. In many cases, the only human a customer could connect with is their salesperson.
So, what do we do about this? Well, the obvious answer is to build a better workplace environment. Create an environment that people want to work at and enjoy coming to. Treat your employees well and understand that they have lives outside of work and respect that. I understand that, no matter how “above and beyond” you go, turnover is inevitable so…
Make sure that sales customers, during and after the sales process, have multiple interactions with people other than just the one salesperson. Have the Sales Managers, General Manager, Service Director and anybody else that can take a moment, actually meet and talk to these customers in person– not just come over, say hello, thank them for their business and then walk away – but interact in some way. This simple technique increases the number of people in your store that a customer has the opportunity to bond with. It also decreases the chance that a customer would ever feel “orphaned.”
If the customer didn’t buy their vehicle from your store but only service it there, the same principle should be followed. Make sure that the customer is introduced to as many of the advisors as possible including the Service Manager. Once the emotional connection is created and the customer believes that you care, the customer is not bringing their business to your business, they’re bringing it to the people at your business. We all know that people do business with people, especially ones that they like. Make sure that your customers like your people. The more of them they like, the easier customer retention becomes.
By creating more emotional connections between people in your store and your customer during the first transaction, you will decrease the likelihood that the loss of a salesperson could influence the loyalty a customer feels towards your store. These early stages of relationship building with customers are vital, and it is worthwhile to do everything in your power to build that relationship as quickly as possible.
When your customers start referring their friends to you by beginning with the phrase, “ I have a friend that works at Bob’s Dodge…” not only have you gained a friend, you’ve also gained a loyal customer and brand advocate.
How does your dealership prevent customers from feeling abondoned?
Do you introduce new sales customers to your service department? Why or why not?
As social media gets more and more entrenched in our daily lives, it’s becoming the easiest and most visible place for one of the most important things your company can have but can’t buy – word-of-mouth marketing.
You can have your customer experience down pat, a loyalty program that rocks and customers lined up to do business with you; but does that mean you’re leveraging everything you can?
Many social media sites like Facebook, Foursquare, and Yelp have some sort of “deal” type feature. What would happen if you take advantage of this feature and tie it in to your existing loyalty program?
Here are some things you may or may not know about these deal features. (I’m going to focus on Facebook since it has the most advantages, in my opinion.) There have been many studies that have concluded that 60% of people “Like” a business’s Facebook page for special offers and deals. Facebook has two features: check-in deals and offers. I’m going to explain how check-in deals can benefit your dealership since this feature is free and easy to maintain.
When you have a Facebook check-in deal running, a customer would go to Facebook and “check-in” using their mobile device to your dealership. When they do this, it shares with their entire network that they are at your dealership. That’s great exposure! It gets better however. If you have a check-in deal, and the customer checks-in and claims the deal, not only does it share it with their network, it will share that 1) they are at your dealership 2) they claimed a deal and 3) the specifics of the deal, quantity remaining and deal expiration date. The best part about this is that these posts to their walls go into their friend’s news feeds and cannot be hidden!
Here’s an example of what one looks like after it’s been claimed:
Imagine is your “deal” was tied to your loyalty program. What would that look like?
Let’s say you give “points” for each dollar spent at your store towards your customer’s loyalty account. At some point you’ve placed a value on these points. How much would this advertisement, which, in reality is word-of-mouth advertising to your customer’s entire social network, be worth?
Instead of the check-in deal being “20% off any order,” it could be “1,000 loyalty program bonus points” with a check-in. Of course, you could disclaim it as a one time offer per loyalty member or one per customer per day and include that the check-in must correspond with a purchase to avoid people simply stopping by to claim their free loyalty points without spending any money. However, even they just stopped by, wouldn’t that endorsement to their entire network be worth something to you?
If you could get every one of your customers to recommend your dealership to their friends, you would. You certainly try all the time. You ask for referrals. You might even incentivize current customer for bringing you new ones.
Word-of-mouth advertising is still one of the most powerful forms of marketing in existence. The fact remains that it’s continuing to shift online all the time. Leveraging some of these social sites to increase the visibility of your loyalty program by incentivizing your customer for “checking-in” and sharing their endorsement of your dealership with their entire social networks is worth its weight in gold.
You couldn’t pay for better marketing.
[Note: Facebook is merging its “check-in deals” with it’s “Offers” product as of July 1, 2013. It is still free but allows for more flexibility in creating different types of promotions. You can read more here.]
How is your business using social media to get more word-of-mouth marketing?
Have you ever ran a check-in deal on Facebook? If so, what were your results?
Study Reveals that Dealer-Branded Prepaid Maintenance Programs Boost Customer Retention and Service Up-sell
Dealer-branded prepaid maintenance (PPM) programs that are 100 percent funded by customers are boosting service revenue by 15 percent and customer retention to 60 percent (and even higher). These findings and other auto dealer reports are featured in a new white paper from Performance Loyalty Group.
Ancira Winton Chevrolet in San Antonio, Texas, enjoys $80 additional up-sell per repair order from customers using its plan. Approximately 96 percent of its 8,000 customers currently have a prepaid maintenance plan.
“Our plan holders have generated more than $635,000 in service up-sell revenue during their program service visits,” notes the dealership’s Parts and Service Director, Jim McAfee. “Our Ancira-branded prepaid maintenance plans have boosted service customer retention here to 50 percent.”
Dealers’ results when selling PPM plans to new- and used-car purchasers, lease customers, and service-only customers are detailed in the downloadable white paper, How Dealer-Centric Prepaid Maintenance Programs Significantly Increase Automotive Customer Retention. The study also details additional compelling third-party statistics about the power of PPM programs to brand the dealership first, while supporting OEM retention as well.
This new white paper details why dealers are attracted to prepaid maintenance programs now more than ever:
- These types of plans brand the dealership. OEM programs brand the OEM. Most dealers consider branding their dealership far more important in their local market.
- This type of program is funded 100 percent by the customer so there is no investment on the dealer’s behalf.
- They are affordable. Customers recognize their value, and will purchase with a higher frequency.
- Ninety percent or more of customers purchasing prepaid maintenance plans redeem more than 80 percent of the plan elements.
- Plans are self-managed through the DMS and administered by the dealership, thus all profit, reserve and forfeiture monies are retained and recognized by the store.
Dealers see a big advantage with lease customers as well. “Selling prepaid maintenance plans in F&I to lease customers is all about retention – keeping them returning to Honda Cars of Boston for ongoing service and their next vehicle acquisition. When presented with these benefits, 40 percent of lease customers choose to purchase a plan,” reports Dean Talley, General Manager for Honda Cars of Boston.
According to this study, more than 25 percent of the dealerships that utilize a prepaid maintenance program today are selling dealer-branded, self-administered plans that provide many tangible advantages over third-party administered or OEM-branded products.
“The average age of vehicles on the road today is nearly 11 years, and as an owner progresses through the vehicle’s lifecycle, dealership retention drops and service spend increases,” notes Jeff Shenk, Director of Operations, at Performance Loyalty Group. “As this is happening, however, standard dealership service marketing fails to attract many of these owners of older vehicles. Time erases the initial loyalty or relationship with the dealership.”
“Additionally,” he added, “many others are pulled away by force of competitors offering below-market pricing incentives. A well-implemented PPM program will not only boost customer retention, but it will also drive service revenue as a by-product of plan ownership.”
As How Dealer-Centric Prepaid Maintenance Programs Significantly Increase Automotive Customer Retention points out, customer loyalty and automotive service retention are essential today if a dealership is to be productive and profitable. Dealer-centric prepaid maintenance programs are one of the most powerful loyalty and retention tools at a dealer’s disposal. To download directly go to: http://ow.ly/lHMvI
The whole idea of a loyalty program is to encourage and reward customers for doing business with you. The easier you make it for them to earn rewards and the more desirable those rewards are, the more likely a customer will utilize your program by returning to your business. How many supermarket “loyalty” cards do you have? Most people have one for each grocery store they go to, both regularly or occasionally. Is that proving loyalty? No, it’s a customer using the loyalty card only because they happened to choose that grocery store on that day.
So, how do you make your loyalty program meaningful? A program where the customer chooses your business every time, not just when they were going to anyways?
An interesting study by two consumer researchers resulted in a concept they named the “Endowed Progress Effect”. In essence, the “Endowed Progress Effect [is a phenomenon], in which people who are endowed with progress toward a goal increase the effort that they exert in reaching that goal.”
One of the studies conducted by these researchers was at a local car wash. One day they handed out 300 loyalty punch cards. Half of the punch cards required the purchase of 10 car washes to receive one free. However, these cards came with 2 of the 10 car washes already stamped with special stamps, which they explained to the customers, was part of a promotion they were running that day, so they only really had 8 car washes to go to get one free. The other half of the cards required the customer to purchase 8 car washes to receive one free. The fact is that both cards really had the same offer; buy 8 car washes, get one free. Half of the customers received what they perceived to be a head start, however.
Over the course of 9 months, the researchers tracked the purchases and use of these punch cards with the owners affixing dated stamps to cards whenever presented by customers.
The results? The customers that were given the cards that had no “head start” converted – meaning they satisfied the requisite 8 purchases and redeemed the card for the free car wash – at a rate of 19%. The customers that were given cards that had a 2-stamp head start (but still needed to purchase the same number of car washes) converted at a rate of 34%! That’s almost double!
It became clear that the customers with perceived progress in the beginning were statistically more apt to complete the program to earn the free wash. They also wanted to see if there was more effort put into the achievement. Those with the 2-stamp head start cards had on average 2.9 days less between visits which decreased an average of ½ a day after each additional visit.
What does this mean? Not only did giving the customer the illusion of progress from the start almost double the success rate of the promotion, those customers made more of an effort to achieve the goal faster.
After reading about these findings, you might want to consider incorporating this practice into your existing loyalty program or, if you don’t have one yet, using this to your advantage once you get one.
The bottom line is that the car wash never gave any special treatment to any of those 300 people. They were all required to buy 8 car washes in order to receive a free one. It’s all about a perceived advantage and is an interesting concept that can be used to maximize the value and use of any loyalty program. It could help to create a loyalty program people make an effort to use, not one they use only when it’s convenient.
What is your business doing to increase customer loyalty?
Do you have any tips & tricks to help improve customer loyalty program results?
I recently read an article about a recent Forrester Report titled “Banks and Retailers: You Cannot Price Your Way Out of Bad Customer Experiences.” It was quite fascinating but there was one part that really resonated with me.
In every instance, when a customer is making a decision on whether to be loyal to your business or not, any question they ask themselves can be boiled down to one simple question.
“Is this company making my life easier or harder?”
If the answer to that question is “easier”, they’ll continue to do business with you. If not, they will start looking for your replacement.
We are constantly analyzing data to try to solve the formula for customer retention. We’ve asked many questions and had many different results. However, boiling the overall question down into something that simple is something a manager can intuitively understand and apply.
Sure, there are still a lot of process changes, analysis, employee reviews and customer surveying to be done. However, if all of this is done with the goal of making the customer answer that your company is making their life easier, you’re already ahead of the game.
The Forrester report mentions that companies can no longer compete with each other on price. This is because, in the age of technology, consumers have access to real-time alternative pricing while standing in your store. While not completely discounting the power of low prices (it works for Wal-Mart, right?), car dealers don’t have 20,000 products on shelves and stay open 24 hours per day. Even if you did, a low price may win you customers, but it won’t win you loyalty. If your customer is only your customer because you have the best price, then they will only be your customer until a better price comes along.
The report instead recommends that businesses compete for business based on experience, not just price. Of course your prices need to be competitive but they don’t have to be the lowest to win loyalty. That being said, the customer experience you offer better justify your prices and, ultimately, make the customer leave feeling as if you’ve made their life easier.
We’re fortunate that we have technology available in our industry to help facilitate better customer experiences. Many dealers go out of their way to ensure that the customer experience is top-notch, done quickly and provide every convenience possible for the customer. Dealers are constantly working on ways to quantify and stop (or reverse) defection, reward loyal customers through loyalty programs, and incentivize employees for great customer service. And all of this is while trying to win new customers through marketing efforts, word-of-mouth or new sales customers.
Just keep in mind that, consciously or not, the customer is asking: “Is this company giving me what I need, on fair or great terms, and making the interaction easy and enjoyable?”
Help the customer answer yes to that question every time, and you’ll have a loyal customer.
How is your business making your customers’ lives easier?
How are you rewarding your customers?
In what ways do you incentivize employees?