A new benchmark report published last month by RSR Research, provides some interesting information about retailers and the shifts in focus and importance from 2012 to 2013.
According to the study, 61 percent of retailers feel customer retention has become more difficult, and building loyalty has become more challenging. This is a 10 percent increase from 2012. The study advised “if retailers are going to have collective leadership and responsibility for the customer experience, then they need to ensure that everyone is working off of the same vision for what the customer experience should be.”
In many businesses, there exists a general expectation that all employees proactively ensure that customers have a great experience. The problem is that there is typically not a single person charged with being responsible for it. You cannot have a goal of providing a great customer experience if you aren’t tracking whether or not you are providing it. You can’t rely solely on CSI scores and surveys from your OEM. You must have a process in place that surveys your customers and an employee in charge of analyzing the results and making process changes as needed. According to the study, “leaders identify – at an inordinate rate – that an executive tasked with managing and improving the overall customer experience is key to ensuring new marketing techniques have relevance.”
The study further found that 61 percent of business leaders believe that there needs to be a greater focus on customer experience and less on the product. At the same time, 44 percent responded that their marketing departments don’t spend enough time building customer loyalty.
And, while 52 percent of businesses with above average sales growth say that their marketing department is not spending enough time acquiring new customers; surprisingly this number rises to 100% for businesses with below average sales growth.
Dealerships have always spent the majority of their marketing budget on new customer acquisition. As the customer base grows, they may then shift some of their budget to customer retention. The problem is that while focusing on acquiring new customers, many dealerships fail to also pay attention to customer defection. The result is that they end up simply replacing defecting customers with new ones. And, rather than achieving growth, simply maintain the status quo.
According to the study, any growth strategy of acquiring new customers “may actually mean you can’t afford to take your eye off the target when it comes to keeping existing customers happy – because they can so easily share their dissatisfaction in social spheres and thereby chase new customers away.”
Business leaders increasingly recognize that the key to a successful growth strategy is to recognize that new customer acquisition must include a strategy for customer retention. It does not work to simply keep refocusing your efforts from one to the other. There has to be a symbiotic relationship between them.
Don’t try to plug the dam by running around sticking your finger in one hole to just to have another leak appear. A strategy that combines acquisition with retention along with successful execution will allow you to plug all of the holes at the same time.
How does your business retain customers?
Which do you think is more important: acquiring new customers or retaining your current customers? Why?
It’s one of those unfortunate, inevitable facts of life: every company and every employee will at some point have to deal with an angry customer. Whether their anger is warranted because of a bad situation, or whether they are just plain difficult, doesn’t matter. These days, companies must respond and deal with angry customers. If they don’t, they risk those customers becoming brand detractors, using social media to spread the word, starting boycotts or writing negative reviews.
Every employee should be trained how to deal with angry customers. They need to know that even if they are being insulted to their faces, they still need to make a genuine effort to regain that customer’s goodwill. Here are some steps that may help turn an angry customer into a loyal one (or at least, not a detractor):
1. Acknowledge the Anger.
Anger trumps logic. Sometimes, presenting a customer with the facts isn’t enough. Anger is a powerful emotion that stems from the fact the customer felt something very negative. It’s up to you to find out what the root cause of their anger is, and it may have little to do with the alleged incident or accusation. Is the customer really angry because they were overcharged, or did they feel like their complaint was ignored? Or were they shuffled around to three different people—or have to deal with a complicated voice mail system in order to register their complaint? The initial “issue” often isn’t the real issue, it’s how the company responds to the initial issue that can escalate a customer’s emotions into anger. Don’t try to rationalize what happened; instead, just acknowledge that they have a right to be angry.
2) Diffuse the Anger.
The next step in dealing with an angry customer is to diffuse their anger. This is easier said than done. Sometimes, people need time to vent. That’s fine. Be patient while they do so. The key to making this happen is to listen to emotion without getting emotional. Don’t start flinging angry comments back. Be patient, speak softly and in a steady tone, and state back to the customer what you believe their problems and concerns are.
3) Own the problem.
It doesn’t matter if you created the problem or not. An angry customer doesn’t want to hear it wasn’t your fault or that you’re just the messenger and there’s nothing you can do about it. Employees should be trained that an angry customer is a top priority and should be taken care of. Even if they truly don’t have the power to fix the issue, they should take charge by taking the issue to the managers that do have the power. However, that’s no excuse for handing the customer and their problem over and forgetting about it. Owning the problem means making sure the issue is being taken care of, no matter who else is handling it.
4) Resolve the Issue.
Once the issue is resolved, inform the customer that this specific problem is resolved and is not expected to reoccur. Demonstrate your confidence by reiterating the customer’s original concerns and actions that you took to correct the issue. If more than one customer gets angry about an issue, there may be some long-term changes that need to take place. If you identify a problem with another employee, or with some policies in the workplace, then take your concerns to your manager with the complaints and some suggestions for necessary changes.
5) Follow Up
After a few days and then again after a few weeks, follow up with the customer to inquire whether the corrective action was effective. A phone call or personalized e-mail demonstrates compassion and attentiveness, and sends a powerful message that your company cares about their individual customers. This type of follow-up may be enough to turn a now-neutral customer into a loyal customer, and may even earn you a few new customers!
Do you have any additional tips for handling angry customers?
What steps do you think are the most challenging or difficult for employees to learn?
Can you share examples of how you have turned an angry customer into a loyal customer?
Dealers often question the need for a points-based customer loyalty program for their business. The real question isn’t whether or not they need one—our research says they do—but how to move beyond a traditional loyalty program structure to something designed with the needs of the customer and the dealer in mind.
DMEautomotive’s white paper, “Marketing Success in a Changing Loyalty Landscape,” which is based on a survey of over 4,000 consumers, asked customers whether a loyalty program is important to them, whether they would join a program and what features would be most important to them. The study validates loyalty programs as a highly viable strategy with substantial consumer interest and a high potential for turning disloyal customers into dealer loyalists.
In the survey dealer loyalists identified a loyalty program as among the top 10 most important service provider attributes, with 34 percent saying they would be likely to participate. Your loyalists care about loyalty programs and you risk losing your most valuable customers if your competitors offer a loyalty program and you don’t.
For years dealers have struggled implementing easy, effective customer loyalty programs, often because they were overly complex and costly. The good news is that you no longer need to change your operational processes to deliver the most desired features of a loyalty program to your customers, including discounts on parts and services, special savings events and the ability to earn rewards points. All of this can be done through direct marketing communications.
The most important thing to remember when implementing a loyalty program is that it needs to be easy for you and easy for your customers. The problem with many loyalty programs on the market today, is that they require the infamous ‘loyalty card.’ With a loyalty card there is the issue of scanning and keeping track of the card, which can frustrate both dealership personnel and customers. There’s a better way. New card-less loyalty programs automate the entire process. Points are awarded based on sales and/or service purchases, and point certificates are automatically sent to customers via mail and email.
But are customers really okay with not having a card? Of 12 common loyalty program features evaluated by DMEa, a physical membership card ranks last in importance for customers. Only five percent of customers said it was important to them.
Also, with the recent emergence and growth of mobile apps for dealerships, consumers can now easily manage their loyalty points at their fingertips via their smartphone. According to Pew Research Center, 46 percent of all adults now own a smartphone. And people are spending more time on their phones than ever before. According to a recent study by Flurry Analytics, consumers now spend more time on mobile apps than on the web! Mobile apps are the ultimate platform for making future loyalty programs super customer friendly.
When it comes to loyalty programs remember:
1. Loyalty programs are an important tool for retaining you most valuable customers.
2. Make sure the program is simple for your dealership to implement.
3. Make sure the program is simple for your customers to use (i.e., no card).
Keep these things in mind and your loyalty program will be an easy success…
Mike Martinez is chief marketing officer for DMEautomotive, an industry leader in science-based, results-driven automotive marketing that provides a range of marketing services to the biggest and most innovative automotive organizations in the industry. For more information, email email@example.com.
Source: Dealer Marketing Magazine, August 6, 2012. Author, Mike Martinez
How can you simplify your current loyalty program?
Are your customers able to access their loyalty program from their smartphone? Do you have a mobile app created for your program?
New customers are the lifeblood of companies. Or are they? Lately, marketers have been spending more time on current customers — revamping what customer service means, investing more in customer relationship management (CRM) systems and building teams to improve communication with customers.
In this age of social connectivity, customer loyalty has become more valuable than ever. Consumers share stories of their interactions with businesses on social media, meaning that word-of-mouth marketing is more valuable than ever.
Since customer loyalty can be critical to making a sale, ask yourself what you’re doing to cultivate it. When was the last time you spent money or resources on making your customers feel appreciated? Many might argue that a focus on customer appreciation isn’t just a best practice — it could mean the difference between failure and survival in today’s word-of-mouth driven economy.
Here are five ways you can take customer loyalty up a notch:
1. Improve your ‘Thank You.’
Most of us have a Web page or email that thanks our customers for converting, whether that means joining the community, purchasing a product or signing up for a newsletter. But chances are good that the “thank you” could use some work. Because the thank you page or email is seen by every single one of your customers, you should ask: Does it put your best foot forward?
Rather than merely using that page to confirm an action, why not add some useful resources, follow-up steps or company contact information? Other ideas for improvement include lacing in a promotion to instigate immediate action or simply making the message more visually enticing.
2. Optimize your feedback channels.
Feedback comes in many forms, but chances are you’re getting customer responses you aren’t even using. While many companies tap into what their customer service department is hearing, they are less likely to proactively survey their website visitors or to analyze their cancelation and return forms. That’s a shame because these are all opportunities to get more information on what customers need.
When you take the time to improve your feedback channels, you are telling your audience, “We care about what you think.” This reminder can help build loyalty and help you answer concerns in a timelier manner, reducing customer loss and building trust.
3. Go beyond cancellations as a performance indicator.
While you need to know how many of your customers are cancelling, it is a reactive performance indicator. In addition to monitoring your customers loss, you can gauge loyalty by watching your company’s “net promoter score,” frequency of customer interactions with your business and the length of time between customer visits. By tracking how engaged customers are and how likely they are to recommend your company, you can get a more complete measure of their loyalty.
4. Assign someone to manage it.
Tracking and improving customer loyalty can be a challenge if no one specific is managing it. Good candidates for this responsibility often come from customer service, marketing, operations or product teams. The key qualifications are the ability to work well with others and a belief in the value of both qualitative and quantitative data analysis.
Whoever you choose should understand that customer loyalty may touch a number of departments at your company, but it deserves its own champion for maximum success.
5. Evangelize the gains and losses.
While customer loyalty should have a dedicated advocate, it is a company-wide effort. Unfortunately, customer loyalty scores rarely get touted as much as revenue and profits. Why is that? Many companies see customer loyalty as something beyond their control, that it is the natural result of the websites they build and products and services they sell. But companies have a number of opportunities to build trust and loyalty by making their interactions with customers the best they can be.
To show the importance of these interactions to customer retention, you can share with the rest of the company the results of your loyalty measurements, whether good or bad. This makes it a company-wide priority, and only then are you really taking customer loyalty to the next level.
Source: Entrepreneur, August 6, 2012. Author, Joanna Lord
Is your business currently following these five ways to increase customer loyalty? Which of these areas do you need to spend more time focusing on?
Who do you think is the best person at your company to manage customer loyalty?
For dealers, two primary goals of implementing a loyalty program are: (1) to have the customer return to the service department for repairs, in order to increase customer pay RO, and (2) to have the customer purchase their next vehicle from your dealership. Therefore, it’s important to ensure that both sales and service are working together to build loyal customers.
The relationship between these two departments is critical, according to the recently released J.D. Power 2012 Canadian Customer Commitment Index Study, as summarized in this Loyalty 360 article. The study measures the service behaviors, satisfaction and loyalty of owners of vehicles that are four to 12 years old. Overall customer satisfaction is determined by examining five key factors of the service experience: service initiation; service advisor; service facility; service quality; and vehicle pick-up. The study also examines customer satisfaction with both new-vehicle dealerships and aftermarket facilities.
The results were that 42% of customers who rate their dealer service experience 10 (on a 10-point scale) indicate they “definitely will” purchase the same make the next time they shop for a new vehicle. In contrast, only 7% of customers who rate their service experience between one and five say they definitely will purchase the same make. Clearly, providing a good service experience is one of the keys to building loyal customers who will purchase their next vehicle from your dealership.
Additionally, the study found that one of the biggest factors in making sure customers are happy with service, and therefore more likely to return for future purchases, is communications.
Customers prefer to be communicated with via the same method they use to schedule service appointments. Among customers who schedule a service appointment via telephone, 54% prefer to be contacted in the future by telephone, compared with e-mail (32%) and traditional mail (10%). Similarly, among customers scheduling service appointments via the Internet, 66% prefer to be contacted by email, compared with phone (22%), traditional mail (3%) or text message (8%).
What processes do your dealership have in place to ensure that both sales and service are “on the same page” in terms of how they reach out and communicate to customers?
How often do your sales and service people work together as a team, solving problems and referring customers to each other?