In a recent press release, Amazon announced that, in celebration of its 20th birthday, July 15 will be “Prime Day” – a day on which Amazon claims it will offer more deals to its loyal Prime members than Black Friday. Amazon promises, “new deals starting as often as every ten minutes,” with the ultimate goal to make this a global shopping event. For non-members, Amazon is offering free 30-day trials of its paid loyalty program.
Amazon has steadily increased the value of its Prime membership by adding movie and music streaming services, in addition to its free 2-day air shipping. And, that’s not all — to increase the buzz and introduce the new Prime Photo service, social media contests are being held, with a rather enticing $10,000 gift card as the prize. The hype surrounding Amazon’s announcement, along with its offer to non-members of free trials, will almost certainly result in a membership enrollment spike.
Well … this is all very interesting, but how does it apply to the auto industry?
Dealers who use loyalty programs gain two valuable assets:
- A customer that enrolls in your loyalty program is telling you that they will be returning. This mental commitment in the customer’s mind increases with each visit, as they progress towards a reward, or use the membership for savings. As long as you consistently provide a good customer experience, the chances of defection by that consumer decrease. In addition, members of loyalty programs tend to visit more often and, on average, spend more when they do, which increases revenue in all departments.
- These programs usually have robust reporting tools. As such, you gain access to valuable data that can be used to market better. You can also identify customers who are likely to defect through such data as time between visits, or decreased spending. Loyalty programs also help identify – and reward – those customers that are the most loyal. These customers are the most likely to refer friends and family, as well as to become brand advocates.
Innovative dealers that think outside-the-box usually trump the competition. Perhaps it’s worth taking a page out of one of the most successful retailers on the planet – Amazon. Consider holding loyalty events, or days similar to the one Amazon is employing. These events don’t have to be costly. It could be something as simple as “Free Member Car Wash Day,” or an additional savings day in service. This could help to keep your loyalty members loyal AND drive in more members.
Amazon’s “Prime Day” sale is likely to be a success. Whether or not it trumps Black Friday in the eyes of consumers is yet to be seen. One thing it will probably accomplish, however, is to add a whole new group of consumers to their membership base, anxiously awaiting the next deal – and there is no business that wouldn’t want that.
If you were to ask today’s consumers if they’d like to hang out at a car dealership, chances are that the majority would respond “no.” When consumers do visit a dealership to purchase a vehicle or get their vehicle serviced, many times the process can be longer than desired and is not always a great experience for the consumer. Dealerships have been attempting to streamline the sales and service process through the use of technology to make the entire process faster andmore efficient so as to be more consumer friendly.
Some dealerships are going a little bit further to make the customer experience more enjoyable with the addition of delis, Starbucks, movie theaters and hair salons, as permanent fixtures. And thinking even further outside the box, a recent Automotive News article highlighted a Fort Worth, Texas dealership that chose to open a 250 square foot wine store inside their dealership. It has been so popular with their customers that it has actually added $700,000 to the dealership’s annual bottom line.
Due to its popularity, the dealership then opened a full size retail wine bar in downtown Fort Worth… with a catch. Not only does the dealership display new Cadillacs inside (and outside) the bar, the bar also serves as a satellite service drive that allows wine bar customers to have their vehicles serviced while socializing and enjoying some wine. The wine bar is 20 miles from the dealership so there are employees on-site who transport customers’ vehicles to the dealership for service, then back to the wine bar upon service completion. This provides a very unique customer experience. It also makes service much more convenient for the many downtown Fort Worth employees who would otherwise have to drive 45-minutes to an hour to have their vehicle serviced at the dealership. In addition, the wine bar produces at least one vehicle sale per month, to say nothing about the increased service business.
Regardless of whether you decide that a wine bar within your dealership is a good idea, creating an excellent experience for your customers certainly is. If your customer experience is less than great, it won’t matter if you have an amusement park in the back lot, your customer could still leave. Customer loyalty is a fickle creature that can be lost much faster than it can be gained. Give your customers a reason to choose your dealership. Then ensure that the experience they have is one that they would want to repeat. Only then can you really build that relationship and transform your customers into loyal customers that will return because they want to – not because they have to.
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.