I’ve written many articles about the different types of loyalty and how each can affect your business’ growth and revenue. However, I’ve never written an overview of how all these components fit together in a holistic manner. Hopefully, this blog article will help put the pieces together so that you better understand these concepts more globally.
Internal Service Quality:
It all begins with your internal service quality. Components of this include:
- Workplace design – A well-designed dealership will maximize space to create a more efficient environment for employees and customers.
- Job design – This doesn’t just include job descriptions but practicality. Ensure that the right employees are responsible for things that they have the knowledge and experience to handle effectively. And that all positions complement each other and generate the most efficient work-flow possible.
- Employee selection and training – By having a hiring process that enables the best selection of employees with the highest chances of success in a given position, you can create a team of people that are effective. Experience and knowledge must be considered along with a candidate’s ability to work well with others. Ongoing training also assists in maximizing employee efficiency and productivity.
- Recognition – By recognizing employees, you reinforce positive behavior and provide other employees with examples to follow. This also assists employees in better understanding your expectations of them, and it lets them know that they will be recognized for good work.
Paying attention and implementing programs and processes for these areas, can help increase employee satisfaction. Employees that are satisfied with their jobs tend to be more productive. This can then create a need for fewer employees, thus lowering your fixed expenses for staffing, reducing employee turnover and increasing employee retention.
External Service Value:
External service value should include a results-oriented service concept focused on providing an excellent customer experience through efficiency and communication. Customer recognition programs, such as loyalty programs, reinforce to the customer that you value their business.
If employees do their jobs in the most efficient manner possible, while the company rewards that hard work by providing a great work place, a positive environment is created. In this type of environment, employees care about customer service and experience which translates to higher customer satisfaction.
Higher customer satisfaction then leads to an increase in customer loyalty and customers become brand evangelists. Loyal customers are essential to any growth strategy. They generate revenue from repeat business in service and sales. They also lead to increased retention and generate customer acquisition through referrals. All of this, of course, leads to revenue growth and profitability for the dealer.
My goal has always been to help dealerships see value in each of these areas and assist them in improving through education. Every one of these components is equally important.
I’m sure you’ve heard the saying that you are only as strong as your weakest link. Usually this saying is in reference to a team. What I’ve outlined is no exception other than it is also applicable to your processes. A weak link in process can be just as damaging as a weak link in your team. Take a moment and do an honest assessment of these areas of your dealership. The pieces for the puzzle are all right in front of you. It’s up to you to complete it.
Have you accessed your dealership? What changes did you make?
How does your dealership recognize employees to promote employee retention?
I came across an excellent blog article recently that discussed the different forms of loyalty that exist in the car business. In this article, the author described three levels of customer loyalty: brand loyalty, dealership loyalty and salesperson loyalty. He described these three different types of loyalty as follows:
Brand loyalty: The focus here is on customer loyalty to a specific vehicle brand. Manufacturers’ entire marketing efforts are designed to retain current owners and convince owners of competing brands to switch. They use many different ways to build this loyalty including quality comparisons, performance, safety, comfort and practicality. This is important for brand market share but also just as important in assisting franchises by driving customer interest and traffic.
Dealership loyalty: Loyalty to a dealership is built through providing an excellent customer experience, treating customer right and being consistent in efforts to recognize and reward frequent and repeat customers.
Salesperson loyalty: Salespeople that stay at a specific dealership for any length of time have the ability to develop relationships with customers that can last a lifetime. They can even get to the point where they no longer have to assist new customers as their referral and repeat business keeps them busy with a constant, steady flow of business.
These are all valid and excellent points. The author of the aforementioned blog placed these different types of loyalty in order as sort of a funnel from the top down. I believe that it’s important for dealerships to recognize the importance of all of these areas but to also realize that, from a business point of view, there is a definite hierarchy that management must recognize in order to create a loyalty strategy that maximizes success.
This is the order I believe accomplishes this best.
Dealership loyalty: By far the most important type of loyalty to a dealership must be loyalty to that dealership. This is the only type of loyalty that a dealership can directly influence. Dealerships must build a base of loyal customers, and then service those loyal customers in order to survive. The less customer retention a dealership has, the more focused on customer acquisition they must be. A solid and growing base of loyal customers will assist dealerships in growth and make customer acquisition less important. If your dealership has a 30 percent defection rate, it will always need to replace that 30 percent with new customers, just to maintain the status quo. Decreasing defection through customer retention allows a dealership to grow. Dealerships will only accomplish this through providing an excellent customer experience in all departments. They can also reinforce and reward repeat customers through rewards programs and recognition.
Salesperson loyalty: Dealerships can assist in this effort by building employee loyalty. Providing a great work environment, with basics such as training to help increase the salesperson’s abilities, along with a company philosophy that reinforces positive attitudes and behavior, can decrease your employee turnover and increase longevity of employment. This allows relationships to be built and serves to reinforce to the dealership’s customer that your dealership is a great place to do business with. Ultimately, however, dealerships cannot control an employee. Turnover does happen, and the last thing any dealership wants is to lose customers because they are more loyal to a salesperson than to the dealership. Too often salespeople take their customers with them which is why dealerships need to focus on retaining their staff.
Brand loyalty: Manufacturers focus almost entirely on brand loyalty and conquest. A dealership’s sales revenue is dependent on both new and used car sales. Most dealerships carry multiple brands in their used car inventory and would be more than happy to sell a customer a pre-owned vehicle of a competing brand. Not only is brand loyalty affected in this manner but a recent study by ADP showed that 63 percent of online shoppers began their research with the intent of purchasing a specific brand. Only 20 percent of those shoppers actually ended up purchasing that brand. While a dealership can certainly reinforce brand loyalty through new car sales and leasing retention, this is where they have the least influence.
The bottom line is that every dealership must focus on loyalty at all levels, but just as in all facets of business, focus must be prioritized to maximize efficiency. Place the order of importance on items where you have the most influence at the top, to those that you have the least at the bottom. By doing so, a dealership can maximize its efforts in creating a loyal customer base that will sustain the dealer and assist in its growth.
What order do you believe accomplishes “a loyalty strategy that maximizes success” best?
What is your dealership doing to reward repeat customers?
There are countless articles on how hard it is to create a truly loyal customer and how easy it is to lose one. Creating customer loyalty is a challenge that all businesses face. There are many techniques and strategies that can assist you along this path but, at times, we’re presented with opportunities that can accomplish this instantaneously.
Earlier this year, a young boy went shopping with his father and managed to lose one of his Lego mini-figures after his father had told him not to bring them since – surprise – he was likely to lose them. Well, turns out the boy actually did. The boy had saved all of his money to purchase a Lego set that cost upwards of $80, so he was very upset. The father then suggested that the boy write a letter to Lego to see if he could get it replaced. This was the letter:
My name is Luka Apps and I am seven years old.
With all my money I got for Christmas I bought the Ninjago kit of the Ultrasonic Raider. The number is 9449. It is really good.
My Daddy just took me to Sainsburys and told me to leave the people at home but I took them and I lost Jay ZX at the shop as it fell out of my coat.
I am really upset I have lost him. Daddy said to send you an email to see if you will send me another one.
I promise I won’t take him to the shop again if you can.”
Lego could have handled this any number of ways but this is how they chose to:
“We are very sorry to hear about you losing your Jay minifigure but it sounds like your dad might have been right about leaving it at home. It sounds like you are very sad about it too.
Normally we would ask that you pay for a new one if you lose one of your minifigures and need to have it replaced.
My bosses told me I could not send you one out for free because you lost it but, I decided that I would put a call into Sensei Wu to see if he could help me.
Luka, I told Sensei Wu that losing your Jay minifigure was purely an accident and that you would never ever ever let it happen ever again.
He told me to tell you, “Luka, your father seems like a very wise man. You must always protect your Ninjago minifigures like the dragons protect the Weapons of Spinjitzu!”
Sensei Wu also told me it was okay if I sent you a new Jay and told me it would be okay if I included something extra for you because anyone that saves their Christmas money to buy the Ultrasonic Raider must be a really big Ninjago fan.
So, I hope you enjoy your Jay minifigure with all his weapons. You will actually have the only Jay minifigure that combines 3 different Jays into one! I am also going to send you a bad guy for him to fight!
Just remember, what Sensei Wu said: keep your minifigures protected like the Weapons of Spinjitzu! And of course, always listen to your dad.
You will see an envelope from LEGO within the next two weeks with your new minifigures. Please take good care of them, Luka.
Remember that you promised to always leave them at home.”
– RICHARD, LEGO
These figures retail at $2.99. The thoughtfulness and creativity involved in this Lego representative’s response was above and beyond anything he was required to do. Not only did he replace the figure with a better one but he also included an additional one for the boy. All things considered, this ~$5 investment by Lego probably created a loyal customer out of this 7-year old. He will not only continue to enjoy Legos through his childhood, but more than likely introduce them to his children, and maybe even grandchildren. In addition, this act of generosity and great example of customer service went viral with numerous blog articles (including this one) being written, as well as national media coverage.
Creating a loyal customer isn’t hard if you’re paying attention.
How is your business going above and beyond to provide excellent customer service?
List one example of how you were “paying attention” and created a loyal customer.
One challenge all businesses face is creating loyal customers. As business owners, we try to analyze our customers to figure out what methods we can use to build that base of customers which is so important to future growth. Without loyal customers, your efforts at customer acquisition quickly go from growing your business to replacing defecting customers.
James Kane is a behavioral scientist that has advised top businesses about customer loyalty. He studies the brain and what triggers loyalty in people. According to Mr. Kane, there are three triggers that influence loyalty in a person.
A Sense of Trust – According to Mr. Kane, “…trust is obtained by doing the things that people expect you to do anyway…” This is especially important for car dealerships. While people are hoping to be treated fairly and honestly, there is a stereotype that has instilled distrust in car dealerships. This is why it’s especially important to ensure that you treat every customer just as you would expect to be treated in a transaction where you are buying something from Nordstrom’s that costs $30k. You would expect to be treated in a professional manner and to be appreciated for your business. Make all your customers – sales, service and parts – feel appreciated for their patronage and live up to their expectations.
A Sense of Belonging – Businesses build a sense of belonging in their customers “by showing that a business empathizes with the worries that make customers lose sleep at night,” says Kane. Just like you, customers have a lot going on in their lives. They have bills to pay, have kids to take to soccer practice and work long, stressful days. The last thing they want is a business adding to those worries. Whether your service customers arrive for regular maintenance or come in because something is wrong, they want you to help alleviate their worries. Don’t add to them by failing to live up to any promises you’ve made or failing to solve their problem correctly. Your sales customers worry that they aren’t going to get a good deal and that they will spend too much time at your dealership. If they’re at your dealership, they’re obviously in market for a vehicle. Be an actual advisor and help them find a vehicle that fits their needs. Then facilitate an efficient transaction in a friendly manner that is mutually beneficial.
A Sense of Purpose – Show your customers a sense of purpose by operating in a manner that says, “We stand for something beyond just the exchange of money…” Don’t focus solely on what a customer brings to your business. Examine what you can give back to your customers. If you don’t already have one, create a mission statement and display it in your showroom and in your service waiting area. Show your customers that you are committed to them by sharing your organizational beliefs; (they should include customer-centric ideals). Ensure that your customers know that they are more than just dollar signs to you. Demonstrate how you appreciate their business and will do everything in your power to make sure they leave satisfied. Then live up to your promises.
In this industry, we use psychology all of the time without knowing it. We listen to a customer’s needs and help them down the path of the sale. We have sales processes designed to encourage the customer to buy… and buy now… and we have service processes designed to better assist our customers to make choices that keep their vehicles operating at optimum levels. Customer loyalty is imperative in our hyper-competitive industry. Many companies are advising businesses to shift their focus from customer acquisition to customer retention. Not only is it less expensive, but it also ensures that money spent on acquiring new customers is actually leading to growth, rather than the status quo.
What are some of the challenges that you face when trying to keep customers loyal?
How do you create a sense of trust and belonging with your customers?
In what ways do you demonstrate that you appreciate customers’ business?
Life lessons typically come when you least expect them as software coder, Ted Dziuba, discovered. He and his friend went to a bar that served Pappy Winkle’s Family Reserve Bourbon Whiskey that is widely regarded as the world’s best bourbon. While drinking, they talked to the bartender who explained to them it’s origins and other interesting information about it. He then told them about other drinks that were interesting and they were enthralled with his creativity and mastery at his craft.
Around that time, a man approached the bar and said, “Lemme get a Captain and Coke, brah.” After the gentlemen left, they asked the bartender whether it bothered him to make such a common drink when he quite clearly had demonstrated his expertise. His response was:
“No, it doesn’t bother me. If the customer orders Pappy and can talk about fine whiskey, I’ll pour Pappy and talk about fine whiskey. But if the customer orders a Captain and Coke, I’ll make the best Captain and Coke I can.”
Mr. Dzubia learned a life lesson that we could all benefit from. In his words, what he learned was “that barcraft is fundamentally about giving the customer what they want…[and that] the true master obliges both.”
How does this apply to car dealerships? Think about the many different types of customers you see every day come through your dealership in all departments. Dealerships see a wide spectrum of customers from “gear heads” to those who don’t know how to turn on their headlights. Dealerships have certified mechanics that are highly trained, service advisors that know vehicles intricately, salespeople that know every detail of their product and a leadership team in place that, typically, encompasses it all.
I think the lesson learned is applicable to not only “barcraft” but to all crafts. Every position in your dealership should be viewed as a craft. You expect your porters to know how to make a new vehicle immaculate when it’s sold to pass even the most discriminating customer’s inspection because you know a CSI survey is going to ask that question. Your mechanics are trained to do it right the first time and have the knowledge and ability to accomplish that. Your salespeople are infused with the knowledge about your product as well as the ability to assist customers in selecting one that’s appropriate and right for their needs.
Ultimately, all of these positions have exactly the same fundamental purpose, to give the customer what they want.
When a service advisor gets a customer in service that’s a “gear head”, he has the ability to talk the language with them. If their customer knows nothing about cars, he should change his language to speak in a way that the customer understands. In addition, a big part of a service advisor’s job is identifying and recommending additional services to each customer. They can be much more successful doing that if they can adjust their language to match each customer’s.
Great salespeople know to mimic their customers. Not only will they copy their language and speak to that specific customer’s knowledge level but they’ll go as far as mimicking body language. If a customer is interested in a high-performance sports car, the salesperson will sell the vehicle by pointing out all the performance features: how fast it is, how much torque it has, horsepower and speed. If their customer is looking for a family vehicle, the salesperson will focus on the safety, comfort and practical features of the vehicle.
Too often, dealership personnel don’t give the customers what they want. Maybe the service advisor is talking in a language above the customer’s knowledge level or a salesperson is trying to sell a vehicle that’s not matched to the customer’s needs and wants.
Learning to give the customer what they want is a craft in itself. Learn how to listen to your customers. Make sure that you’re speaking in a language they can understand. You’ll offer a superior customer experience while increasing customer loyalty and retention.
Have you trained your service advisors how to talk to different types of customers?
How does your business ensure that you give the customer what they want?