Focusing on customer retention is one of the most rapidly growing trends in the automotive industry. Manufacturers are driving retention, and with good reason. Newly appointed GM CEO, Mary Barra shared her thoughts in a 2012 statement, “We believe a single percentage point improvement in sales retention is about 25,000 vehicles or about $700 million annually, so it’s a pretty big financial incentive.” A single percentage point!
While retention to an automotive brand is all well and good, I can still buy that same vehicle from any number of area dealers. The same holds even more true in fixed ops. Not only are we competing for that customer’s service business with other dealerships, we are fighting the independent shops as well as the quick-lube/tire/brakes shops.
What sets your dealership apart? The answer we hear time and time again: we’ve got the best people/parts/products. The best sales/service/selection. The truth may very well be that you do, but your competition is saying the exact same thing. And it is falling on deaf ears. You’re dealing with a more informed consumer than ever before. At the click of a mouse they can learn everything about your dealership, your special offers, what people think about you. They can do the same for your competition.
So how do we attract, create and keep a customer that is loyal to your dealership? The first step is truly separating yourself from the other guys. What are you offering the customer that the competition can’t? We need to stop talking about price and start talking about value. How are you making your customer’s life better? What are you providing that makes it worth choosing your dealership every time?
Think about the last flight you took. The last hotel you stayed in. The credit card you used to pay for those. Did you earn points? Do these multi-billion dollar industries offer a rewards program simply because it’s cute? Come on – these are banks! The truth is that a loyalty initiative is one of the most effective tools available to drive more business, more often. In today’s economy, a customer is expecting their dollar to go further and are willing to go to great lengths to continue doing business with an organization that rewards them for their loyalty. How far will they go? Rockwell Clancy, VP of Financial Services at J.D. Power and Associates had this to say – “Consumers will often pay higher prices, or stick with a service that’s unsatisfying, simply because they’ve started earning points.”
What does this look like in the auto dealer world? The Walser Automotive Group in Minneapolis, MN, together with the re:member group, created the Walser Rewards program to attract and keep their most profitable customers. It couldn’t be easier to play. Members enroll for free, simply by providing an email address. Once enrolled, 10% of customer pay service work goes into a bank account that they can redeem toward their next vehicle purchase. The results have been amazing – Walser found that Members of their program service more often and spend 40% more in service than non-Members. This resulted in a boost of $4.6 Million in additional service revenue in a 2011 study and it continues to grow every year. Better still – since these points are redeemable only toward a vehicle purchase, Walser is on target to sell over 1,000 vehicles in 2013 from points redemptions. This holistic approach to customer loyalty has helped Walser attract and keep loyal, profitable customers in both service and sales, all while delighting the customer.
Customers that are truly loyal to your dealership are going to do 4 very important things that have a big impact to your bottom line. 1) They visit your dealership more often – not just for the major repairs, but for all repairs. 2) They spend more. A loyal customer is less price-sensitive and more likely to agree to recommended services. 3) They give great feedback. You’ll learn powerful insights from your customers and see strong online reviews – thereby attracting more customers. 4) They refer their friends and family. There is no greater form of advertising than a personal recommendation from a happy customer.
A customer becomes loyal when you present a value that the competition can’t match. When you exceed a customer’s expectations – not simply by satisfying them.
Nate Sieveking is president of the re:member group, the auto industry leader in customized loyalty solutions (www.remembergroup.com). You can email him at email@example.com.