By Duane Sprague
Customer
retention is not just for the big dealers to think about.
Every dealer should
be thinking of ways to increase sales volume by selling more
cars to those people who have already purchased from you.
It has been
a proven marketing fact in every industry of every size, that
it is far cheaper to sell more products to your existing customer
base than it is to acquire additional new customers.
With all of
the advertising clutter, increased competitive choices in every
market, dual income families, and time crunched consumers, there
is less and less time for comparison shopping and advertising
consumption. Therefore, the importance of relationships with previous
vendors, and thus brand building, has become more important now
than ever. As far as the average consumer is concerned, all things
being equal, they would much prefer to shop and buy from those
vendors who they have a prior knowledge of, trust, and relationship
with. It makes the buying experience easier, faster, and more
comfortable.
Think about
it, do you feel more comfortable working with your insurance agent,
real estate agent, banker, CPA, attorney, doctor, etc. that you
have known, worked well with, and trusted for years, or would
you rather shop around and start from scratch every time you need
one these products or services?
It only makes
sense, that if you were treated well, followed up with, and given
quality service and products at a competitive price from your
existing vendors and service providers, that you would never replace
them simply because it takes too much time to find a new one,
it is risky, and people generally avoid change.
Your customers
are no different. If you treat them well, give them a quality
product at competitive prices, and follow-up on a regular basis,
they will return to you again and again.
Now take
it one step further. What if you engaged in relationship marketing
where you actually knew what type and price range of vehicle
your customers were looking for in their next vehicle and
when, and
when you were able to call them up and tell them you just got
in the very truck they were looking for? And since you already
had their
personal and existing vehicle information in your records, you
were able to pre-qualify them for a loan, and give them a
tentative
trade-in value. Now how impressed do you think a person would
be if they got that kind of personal attention and service.
Why
would they buy from anybody else?
This type
of marketing is called "database marketing" because
you retain a computer database of all your customers, what
they
bought from you and when, so you can keep tabs on them over
the life cycle of the vehicle in order to anticipate their
next
vehicle
purchase. It is also called "relationship or one-to-one
marketing"
because you have created a relationship with your customers,
so they will feel comfortable with telling you the information
you
need in order to service them in this way.
It is the
advent of this type of marketing that is eroding the importance
of "share of market" and replacing it with "share
of customer" as the predominant focus. The traditional
share of market approach is concerned with selling to as many
individuals
as possible in the market, one time. Share of customer on the
other hand, recognizes that there is a limited number of new
customers
within the market, and it is becoming increasingly expensive
and difficult to attract new ones using traditional mass media.
Therefore,
the share of customer marketing approach wants to re-sell to
their existing customers, as many products as they can over
the customers
lifetime. And not only that, they want to sell to their customers'
friends and family.
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Now think
about how efficient it would be, to be able to purchase
those vehicles you already knew you had buyers for, and how
much money
you would save in financing, insurance, labor and cleaning
when you increased your average vehicle age from 30 days to
5. If you
really had the kind of database and relationship with your
customers I am talking about, you could easily accomplish this.
Think I'm
crazy? Read The Nordstrom Way by Robert Spencer,
or
The One To One Future by Don Peppers and Martha Rogers
or Up the Loyalty Ladder by Murray Raphel and Neil
Raphel. It is happening today, all around you, in industries
far
more complex than your own.
Next month
we will talk about how to go about it.
