How to Retain Satisfied Customers

In my previous post, I wrote about a troubling statistic released by Bain & Company that shows how even satisfied customers defect to the competition.  What does it take to retain those satisfied customers?

According to countless studies, it costs 4 to 10 times more to acquire a new customer than to keep an existing one (some studies even place it as high as 30 times more expensive!).  Think of all the money you’re investing to get new customers in the door.  How much are you spending for those new leads?  According to NADA Data, dealerships are spending over $600 in advertising per new unit sold, on average.  All this to acquire a new customer, “satisfy” them, and send them along their merry way to a competitor for their next service or purchase.

Now consider the fact that existing customers spend 67% more than newly acquired customers.  Both of these stats are common business knowledge, but sadly so often overlooked.

The reality is you’re pumping tons of money into lead generation to acquire new customers, who will likely defect even after giving positive CSI scores.  At the same time, the loyal customers who have already opened their wallets and are spending significantly more are being neglected.  Does that math work out for anyone? Can you rely on that first customer experience to persuade your customer to come back again and again? I mean they said they were satisfied, right?

No – the truth is, a focus on customer retention is critical to the overall success of your company.  Take a moment and think about your current advertising spend.  What percentage is focused on keeping your existing customers?  Be honest about it – don’t redefine “existing customers” to make your results more favorable.  What percentage is truly devoted to customer retention?

You know that existing customers cost significantly less and spend significantly more. Why then wouldn’t you invest in your current customers? What does that mean for your bottom line? According to leading customer loyalty researcher and inventor of the Net Promotor Score, Fred Reichheld, a 5% increase in customer retention can improve a company’s bottom-line profitability by between 25% and 85%. Can you afford not to focus on customer loyalty?

Cultivating true customer loyalty starts with showing customers appreciation for their business. By rewarding them, you lock them into future business. That investment goes a long way.

Sure, it’s different from what you’ve done before – but was that old way really driving dramatic results?  According to Jeff Bezos, CEO of, “What’s dangerous is not to evolve.” 

Stay tuned for the conclusion of this series where I discuss tips, tools and programs that keep your most profitable customers coming back.

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Nate Sieveking


Why Satisfied Customers Leave

I came across a statistic recently that should keep you up at night – “Bain & Company’s research has shown that in business after business, 60% to 80% of customers who defect to a competitor said they were satisfied or very satisfied on the survey just prior to their defection.” Let that sink in for a minute.

Our customers told us they were satisfied, so where did they go? Why did they leave?

The first problem may well be that we’re measuring satisfaction with a broken tape measure. Most auto dealers today boast CSI scores well above 90%. That’s an incredibly impressive number! Should we all pat ourselves on the back and say we’ve reached the pinnacle of customer service? If that were the case we’d never have to worry about customer retention because that level of service should sell all future business – right?

But let’s be honest about this, because your bottom line is riding on the truth. We know that a target of 95% satisfaction is common for automotive dealers. We know that pay plans, bonuses, incentives, holdbacks, inventory – you name it – are tied to these scores. We know that anything less than a perfect 10 is considered a failure. We know that salespeople will beg for high marks or even sweeten deals in exchange for perfect results – heck, their job depends on it! We know that deals even get turned down based on the threat of a low score – it takes too many perfect scores to make up for that one bad one. Can we then agree that there is too much going on with this measurement tool to utilize it as any useful gauge of true customer satisfaction?

Dave Illingworth, former Toyota and Lexus exec puts it best: “The only meaningful measure of satisfaction is repurchase loyalty.”

We measure customer satisfaction, but what we really want is customer loyalty. Going back to that first quote from Bain and Company, satisfaction no longer will cut it. With an investment as large as a vehicle purchase, we need to move well beyond simply satisfying our customers. Customers have an abundance of choices today. They are doing their research, they know the product they are interested in purchasing – often times even better than the salesperson. They can buy that exact car from any number of dealerships. The prices have to be fairly similar in a competitive market. How do we stand apart?

What wins you the business now and in the future is rewarding customers who choose your dealership over the competition.

Stay tuned for part 2 of this series. We’ll continue to explore customer satisfaction, what it means in relation to customer retention, and how important creating customer loyalty is to your bottom line.

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