In the last article we talked about the financial importance of customer retention, which requires some level of relationship or database marketing. We talked about how you could better plan your inventory purchasing based on your customers needs for specific vehicles. The point was also made, that if your customers felt appreciated for their business, they were treated well, and they were followed up with during the life cycle of the vehicle, that they would prefer to do business with you, than take a chance on a complete stranger.

In part II, we are going to talk about how to go about this thing called relationship or database marketing.

In the marketing world, database marketing is the process of building and maintaining a database on your customers purchasing history, patterns, volume, etc., and adding as much demographic data as possible such as name, address, phone number, age, birth date, income, occupation, employer, marital status, family size, household ownership, etc. This information is all readily available on their loan applications, and used to build a profile of your customers, and then target prospects that closely fit the profile of your best customers. The database is also used to follow-up with past customers with personalized and timely mailings with messages and offers more specific to their needs.

Relationship marketing in the traditional sense takes database marketing to the next level. At this phase, you are seeking to build not just data and targeted mailings, but personalized one-to-one marketing. Here you will survey at deeper levels, uncovering what each customer likes and dislikes about your dealership, your sales process, and your staff. You will learn what they like and dislike about their current and past vehicles. You will learn what they want in their next vehicle and why. You will learn about their driving needs and habits. You will ad to your demographic database information on their psychographics. Such as hobbies, sports, lifestyle, travel interests, favorite restaurants, etc. You will have more meaningful and personalized contacts, like handwritten birthday and Christmas cards, and sending a copy of an article on a subject they are interested in. Sound complicated? It is. And rarely done by any company. So we will not discuss this level of relationship marketing.

For our purposes, relationship marketing will mean something much more simple. It will mean everything we discussed under database marketing, as well as the simple act of thanking your customers for each purchase with something as basic as a card in the mail, to a small gift sent to their house. It means sending them a Christmas card, and at least a quarterly sales piece.

In order to tackle either of these two retention marketing levels, you need to start with the basics.

You can load your customer files onto a standard PC computer system, with an external storage device, like a JAZ or ZIP Drive from Iomega, or a CD burner. You now have a permanent record of your past customers that will be safe from accidental deletion, overwriting or crashes. But don't forget, that this customer list should be updated once a year by a licensed NCOA (National Change Of Address) vendor from the U.S. Postal Service, so that it will always remain fresh, accurate and usable.

On this computer, you can run all sorts of software that will provide customer contact management capabilities (Gold Mine or ACT are powerful contact management programs), spread sheets (Excel) and true databases (Microsoft Access), charts and graphs, mapping to show where your customers live (Business Map Pro), as well as prospect identification by providing names and addresses of your customers neighbors, and on and on.

You will also want a good page design program to create personalized mail etc.

From this platform you can build, tailor, and expand your own targeted marketing capabilities with simple to use, low cost, and very powerful software right off the shelf. You can improve your computer as needed with very low cost upgrades from your local computer dealer. A super fast, super powerful PC these days can be had for $3,500. Add a fast laser printer ($1,200), a color printer for graphical reports ($400), an external read/write storage drive ($400) and a boatload of software, and your into it for $7,000 or so.

In part III, we will discuss various ways to survey your customers with relative ease, and the types of people and skills you will need to implement a solid customer retention program.