By
Duane Sprague
(Originally ghost written for Grant Dunning)
As the 21st
Century approaches, the industry leaders in the new millennium
will be those who's primary focus is on customer retention,
not on manufacturer's CSI scores.
In the 80's,
the industry focus was on car quality. During the 90's, the focus
has been on Customer Satisfaction and CSI scores. However, manufacturers
are now learning what dealers have always suspected: high CSI
scores alone are not predictors of dealer success. The saying
"you don't take CSI scores to the bank" has never been
truer. Customer retention, loyalty, and advocacy have a much greater
impact on dealer success, profitability, and longevity.
So what is
the tangible value of customer retention?
Industry leaders,
successful dealers, and consultants have attempted to answer this
question. Carl Sewell, a highly successful Cadillac dealer and
author, calculated that each customer was worth $332,000 over
their lifetime in terms of gross revenue in sales, service and
parts. Mr. John Pohanka of the Pohanka Automotive Group said each
customer represents $325,000 to his dealer group. Consequently,
both of these legendary dealers have set-up all their dealership
systems and processes to maximize customer retention.
Although the
tangible value of each customer will vary from dealership to dealership,
based on product, volume, and gross margins, one truth remains
constant: an increase in customer retention translates into an
increase in profit!
So what are
the tools and methodology to achieve the task of increased customer
retention?
INFORMATION!
It is extremely important to have a system that allows you to
communicate with prospects and customers in a two-way dialog.
You need to know what your customers think about your sales people
and staff, before the deal is lost. The CSI report is too little
too late.
LOVE YOUR
CUSTOMERS! You should always make your customers feel appreciated.
Thank your customer adequately. Your customer retention and loyalty
are directly affected by how good your customers feel about doing
business with you.
TIMING IS
EVERYTHING! As soon as possible, you should find out how your
customers were treated first during the shopping, and then the
delivery process. Taken as a two step process, you will convert
more shoppers to customers, and more customers to advocates.
You can only
fix that which you are aware is broken. The CSI survey is not
enough, because the rate of returns on the survey is very small,
and the turn-around time is very slow, which prevents you from
solving problems that exist today, before they cause even more
damage. In addition, the CSI survey does nothing to identify problems
that are preventing shoppers from becoming customers.
BE PROACTIVE WITH CUSTOMERS! You need to maintain a consistent
level of communication after the purchase to keep customers from
feeling abandoned. At the very least, contact customers on special
occasions such as the anniversary of their car purchase, holidays,
and birthdays.
Changes
in consumer behavior, technology, and automotive distribution
will dictate the rules of marketing in the 21st Century.
Success in the new millennium will be based on the successful
execution of the three main components of building customer
relationships and loyalty as outlined here: expressing tangible
appreciation for their business, gathering information about
them and their experience in doing
business with you, and communicating with them one-to-one
on a regular basis. Dealers who incorporate these elements
of relationship marketing to existing customers will enjoy
a major competitive advantage in the years to come.
