Browsing articles tagged with " customer loyalty programs"
May
28

The Longer You’re Married, the Harder You Have to Work

By Kathy Winslow  //  2013, May  //  No Comments

The Longer You’re Married, the Harder You Have to WorkCreating a loyal customer is sort of like getting married. The introduction is followed by a period of courtship and, if all goes well, commitments are made. Loyalty in the automotive world is something that everyone battles from the OEM level to the dealership. Did you know, however, that the longer you’ve had a customer the harder it is to keep them?

 Logic would dictate that you would need to focus more on creating customer loyalty in the beginning than after the marriage. However, according to R.L. Polk, “loyalty rates decline after the third year of ownership and continue to decline after the fourth year, and every year after that.” Polk attributes this fact to “boredom”. Their studies show that the longer a customer owns a car, the less exciting the ownership experience becomes.

 Just as in marriage, there’s what is referred to as a “honeymoon” period. You’ve taken the vows and began your new life together, and everything is wonderful. Apparently, according to Polk, a similar period exists when it comes to customer loyalty and retention. As we consider ways to increase customer retention, it seems as if length of ownership is extremely important. It certainly makes sense that, no matter how long you’ve had a customer and no matter how great of a relationship you’ve had with them, if they get “bored” and switch to a new make, you’ve definitely lost a sale but chances are probably very good that you will lose them as a service customer.

The fight against “boredom” is something that OEMs take on by introducing fresh models with new features, more powerful engines, sleeker more modern looks and technological advances. They encourage leasing by offering low residuals and money factors with the hopes that the customer will stay loyal by returning to lease another vehicle.

How do you help buck this trend and insure that your customers stay loyal? One way is certainly by making the customer experience exceptional. People certainly love excellent customer service, and it is one of your greatest weapons in creating loyal customers. Another way is by implementing a dealership loyalty program that incentivizes customers to keep doing business with you.  There’s a reason that almost every major retailer in the US has a rewards program of one form or another. It allows you to track how your customers are spending money with you which then gives you the data to create offers better tailored to them. 

 No matter what you do, make sure that you’re retention strategy isn’t focusing solely on creating loyalty in new customers. Analyze your sales history and shift some of your focus to customers who purchased 24-36 months ago and you’ll be well on your way to helping your OEM increase brand retention while insuring that you’re giving your dealership the opportunity to intervene with your loyal customers before they get bored.

What techniques are your business using to keep customers loyal?

Are you currently using a loyalty program at your business? Why or why not?

Feb
5

How to Build Customer Loyalty in 2013

By The Editor  //  2013, February  //  No Comments

Inc. | By Geoffrey James | December 20, 2012

How to Build Customer Loyalty in 2013As we enter 2013, the business world remains in a state of uncertainty. Will the economy recover? Will new taxes be in place? Regardless of what happens, your key to success will lie in one thing: customer loyalty.

Customer loyalty builds your business when times are good and keeps you in business when times are bad.

Customer loyalty makes your revenue both more predictable AND more profitable since it costs far more to acquire a new customer than to keep an existing one.

How do you keep customers loyal? Simple:

1. Create and market products that make it easier for your customers to sell to their customers. When building your strategies, start with the needs of your customers’ customers and work backwards to discover how you can be the most helpful.

2. Anticipate what your customers might need from your firm and handle it long before they’re aware they need it. Your goal: provide such incredible service that your customers feel like they’d be crazy to even consider buying from anyone else.

3. Provide extra value that goes far beyond the customer’s expectations of your products and services. For example, find customers for your customers so that they can build their own business and thus give more business to you!

4. Whenever possible, meet your customers in social situations rather than purely business ones. Trade shows and industry events are great, but attending a charity event where your customers will be present is even better.

5. Be more than just a vendor.

Have a great 2013, everyone!

What are you doing to build customer loyalty in 2013?

Have you ever met with your customers in a social setting? Where?

Dec
18

Do You Really Know What Your Customers Think of You?

By Mike Gorun at Performance Loyalty Group  //  2012, December  //  No Comments

Do You Really Know What Your Customers Think of You?How is your company’s customer service? Pretty good? Sure about that? According to statistics provided by Bain & Co., 80% of companies surveyed said that they offer a superior customer service experience, but only 8% of their customers agreed with them. Ouch.

 Okay, so you’re not sure about your customer service. But you think it’s pretty good because your online reputation is good and you have five thousand followers on Facebook. Well, think again. In another customer relationship study conducted by IBM in 2011, companies were surveyed as to the reasons why their customers followed them on social media sites. The companies listed discounts among the least important reasons, but when the customers themselves were surveyed, they listed discounts as a major reason for following a company on a social site.

 For a majority of businesses, there is clearly a disconnect as to how they believe they are viewed by their customers and how their customers actually view them. One reason for this is because so many dealerships are focused on pushing out marketing messages—whether it’s via e-mails, snail mail or other advertising channels. Even with social media, which offers an opportunity to engage with customers, many businesses fall short because they are focused more on responding to criticisms or coming up with witty or engaging content—than what the customers are saying. In short, most businesses aren’t really listening to their customers.

 In today’s competitive environment, simply having a great product or service and providing a good customer experience isn’t enough. Customers now want a fantastic experience—they want to feel appreciated for their business. You may roll your eyes at that, but if you do, you will be overlooking profits. In return for a fantastic experience, customers reward you with their loyalty. We’ve all heard the statistics:

  •  A 5% increase in customer retention can increase a company’s profitability by 75% (Bain & Co.)
  •  80% of your company’s future revenue will come from just 20% of your existing customers (Gartner Group)
  •  Attracting new customers costs your company five times more than keeping an existing customer (Lee Resource International, Inc.)

 A CRM may give you a response rate and ROI on dollars spent on this month’s campaign, but it gives you no indicator of what tomorrow’s campaign may do, or how customer perception will affect your revenue next year. A loyalty program, on the other hand, gives you the ability to answer the questions, ‘what do your best customers care about most?’ and ‘why are they doing business with me?’ With a loyalty program, you can easily identify, track and promote to individuals who are most likely to become loyal, long-term sources of revenue.

 How do your customers view your business?

How do you track how your customers think of your business?

What are other benefits with using a loyalty program?

Nov
13

4 Tips for Combating Loyalty Program Fatigue

By Mike Gorun at Performance Loyalty Group  //  2012, November  //  No Comments

How many loyalty cards do you have in your wallet? The average U.S. household now belongs to more than 18 loyalty programs, for a total of more than 2 billion memberships. That’s an awful lot of loyal customers, but as it turns out, all these programs and cards are having an unintended effect: customer loyalty fatigue.

4 Tips for Combating Loyalty Program FatigueAccording to a recent survey by LoyaltyOne, customers are becoming increasingly “fatigued” by customer loyalty programs. So does that mean you shouldn’t have a loyalty program? On the contrary; despite some of the annoyances, most people still participate in their ‘favorite’ loyalty programs, and for many businesses, it’s a proven marketing tool that adds revenue to the bottom line.

So why are customers being turned off? Some of the most common reasons are “I always forget to to bring my card,” “the coupon I got in the mail has expired,” “restrictions on merchandise,” “not getting good discounts,” etc. For the most part, it seems that customers just aren’t perceiving much value in their customer loyalty programs.

To combat this customer loyalty fatigue, make it a priority to create a loyalty program that stands out from the rest, and is perceived as valuable by your customers. Here are a few tips on how to accomplish this:

1) Consider a loyalty program where cards aren’t mandatory. All the customer has to do is give his or her name, or phone number, and all the membership information and transactions can be pulled up and done on screen.

2) Give members something fun to work towards. Having a tiered loyalty program allows you to send updates like “only 100 points away from becoming a silver/gold/platinum member!” In general, people like to feel they’ve achieved VIP status or increased recognition. But if you have a tiered program, make sure the customer feels like they’re getting something for achieving the new level! How does gold feel different than silver? If you or your customers can’t explain that, then re-think the tiers. Remember, sometimes you have to give more to get more!

3) Offer choices. One thing that many customers don’t like is being restricted in terms of what they can use their rewards points for. Be sure to keep your plan flexible and place the customer firmly in control of what they can use their points for. Whether it’s towards a new car, a discount on a maintenance service, dinner for two at a good local restaurant, or even cold, hard cash, people define “value” differently and will appreciate different types of rewards.

4) Don’t spam your loyalty program members. These are your best customers who have entrusted you with their e-mail addresses. The last thing you want to do is break that trust by spamming them with e-mails every day, or even every week. Be sure that you are only sending them selective, relevant e-mails. It may take a little more work to divide members into groups with specific preferences, but trust me, it will pay off.

 Are your customers suffering from customer loyalty fatigue? Creating a customized, flexible program that offers customers real benefits is the key to ensuring that your program is perceived as valuable.

 Is your business suffering from customer loyalty fatigue? How do you know?

What are you doing to prevent customer loyalty fatigue?

What type of reward do your customers react to the most?

Jul
17

Ramping Up Your Loyalty Program?

By Mike Gorun at Performance Loyalty Group  //  2012, July  //  No Comments

Last month General Motors announced a new compensation structure based on customer retention. The pay plan affects 29,000 salaried employees in the U.S., who will be paid bonuses based on how well they promote customer loyalty through return purchases and services. Third-party sales data and internal numbers will determine if a dealership hits its loyalty target.

It’s nice to know that the major manufacturers are realizing the importance of customer loyalty. For General Motors—and other—dealerships who are ramping up their customer loyalty programs, here is a very short primer on how to set up a successful program:

Ramping Up Your Customer Loyalty1) Strategy: Offer multiple membership levels, including a free “starter” base level offer, ascending to an advocate level for the best customers who frequently buy and refer friends. The goal is to create customers who talk positively about their experience and refer family and friends.

2) Process: Identify dealership market segments; design appropriate promotions and communications; establish a schedule for customer communications; design the rewards redemption process and program results measurement tools; train employees to properly promote & explain the program.

3) Management: Establish best practices and determine how much of your program you want to automate. Assign management duties for each part of the program.

4) Reporting & Measuring: Determine which metrics should be used to provide an accurate analysis of how the program is benefiting the dealership. Examples include increasing customer retention rates, decreasing service acquisition costs, selling more maintenance, i.e. increasing RO hours and revenue.

Excerpted from MediaTrac’s white paper:  The Auto Retailer’s Ultimate ‘How-to’ Guide to Customer Loyalty & Retention Program Set Up, Management & Measurement.”

What do you think about General Motor’s plan to create greater customer loyalty? How do you think employees will react to the new pay plan? 

Do you have any other tips that create a successful loyalty program?

 







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