I had just finished reading this article on marketsoft.com about customer loyalty, when a business associate told me about a similar situation that happened to him. In his mailbox was a glossy, oversized postcard offering a discounted oil change for his vehicle from the dealership from which he purchased it. In an attempt to cater to new customers, the dealership was offering a $16.95 oil change, which it claimed, was a savings of over 50 percent off of the regular price of $34.95. The next day, my associate received an email from the service department at the same dealership. It was reminding him that his oil change was due and that he could schedule an appointment on the dealership’s website and lock in the VIP customer rate of $34.95 for the oil change.
Wait, what? The VIP customer price is actually the regular price. Where is the VIP rate? As a current customer, it surely appears that he needs to pay double? It may not seem to be a costly mistake on the surface. But stop for a moment and view it as the customer would. Suddenly both of the communication pieces become worthless as the customer level of trust is now fractured.
This happens all too often in the auto industry. For marketing purposes, customer information and vehicle data is imported into a CRM from a DMS, or many times obtained from outside third party resources. Sometimes the information is duplicated, errors occur between software platforms due to different data structures, multiple entries are created, and of course, sometimes, humans make mistakes with their data entry. You can probably count dozens of ways that you’ve gathered customer information: in person; from the OEM; purchased marketing lists; and Internet leads are just some that come easily to mind. Data isn’t routinely scrubbed for duplication or errors. With the numerous software applications being used, it isn’t hard to see how in one instance, one person may be viewed as a valuable prospective new customer, and then in an instant becomes a long-time “VIP” customer
A customer database is a gold mine and should be treated as such. Have you ever taken the time to evaluate how you assign customer ID numbers to your service files? Duplications and old outdated information is the norm, not the exception in most dealerships today. Every dealership would be wise to make a concerted effort to go through their customer database, update phone numbers, emails, remove duplicate entries, and ensure that the data is correct. How many times has your store sent out a service reminder to an individual that no longer has the vehicle? Without accurate data, how can you correctly target your customers and prospects? Customer attrition will surely accelerate if you make the mistake my associate’s dealership did of targeting the same customer with different messages, offering a higher price for a “VIP” customer than a new customer: that’s a great way to drive away loyal customers.
It is common knowledge that it costs significantly more to attract and obtain new customers than it does to retain current ones. With little or no profit in the discounted oil change, it is fair to assume the dealership hopes to sell additional services to the customer when they first visit, as well as capture their future business. However, what is surprising is that, like many other companies, this dealership appears to be focusing the majority of their efforts on customer acquisition, instead of customer retention.
Looking at the volume of car dealers that use newspaper ads and television commercials to deliver sales offers, the audience is clearly directed to acquiring new customers instead of delivering messages to their existing customer base. While acquisition is always a necessity in order for businesses to grow, the marketing efforts used are often out of proportion to the energies, resources and potential returns on maintaining existing customers.
The marketsoft.com article shared a research study by Harris Interactive, which found that “only 38% of businesses are primarily focused on repeat customers for revenue growth, while nearly half (49%) are still focused on new customers.” Assuming these numbers hold true with car dealerships, as they do with other businesses, it comes as no surprise that the dealership my associate has used for years is trying to capture new business by luring him in with a service special. However, the dealership is actually shooting itself in the foot by sending him both offers so he can see how little value he has as a regular, loyal customer.
It’s important to have an ongoing effort of eliminating multiple customer files and ensuring that the data you have is accurate. Investing in the resources to review and clean your data can pay off immediately. It enables your dealership to generate the correct marketing pieces to each precisely targeted segment of prospective customers. It can also save you from the embarrassment of sending lowball customer acquisition offers to customers who don’t qualify for the offer. This then leads to better customer loyalty, a rise in customer retention and a lessening of customer attrition.