Historically, auto dealers have worked hard, been extremely creative and spent vast sums on creating new customers. Looking for the new mousetrap to find customers has always been an addiction for the majority of dealers. Ask any dealer about marketing and you will hear elaborate stories and details about TV, radio, newspaper, internet, digital and other forms of media to reach and bring new customers. You will hear passionate opinions about the best media forms of advertising/marketing. However, in all my years in the business, it has been almost non-existent to hear a dealer talk in the same detail and passion about retaining customers.
Traditional thought and dialogue about keeping customers or creating repeat and referral business has centered on treating customers right. The harsh reality is that the customer experience in itself has not been enough to keep customers for at least the last two decades.
The marketplace has undergone generational, technology and free market changes. These changes have brought about different societal norms and mores in regards to customer thought, behavior and loyalty. There is an old saying “Would you rather have customer satisfaction or customer loyalty?” The factories pounded the drum for customer satisfaction and clubbed dealers over the head with programs that were inaccurate, ineffective and totally misguided. Dealers spent resources on getting new customers and lived by the “treat’em right” mantra for getting them to buy again. This has been a deadly combination for dealers.
Just imagine if someone asked you if you how your marriage was and you answered. “I’m satisfied.” What if someone asked how your kids are and you answered, “I’m satisfied.” What if an old school buddy you have not seen for a while asked you the following question, “How is everything going?” and you said, “I’m satisfied.” Get the point? How ridiculous do those answers sound? There is a new reality for all businesses to keep customers. Businesses must now be run with science that matches the art. Seat of the pants management is no longer acceptable. Hoping your customers you sold come back again because you treated them right is no longer acceptable.
The average dealership retains somewhere around 30% of his customers for a future sale. The average dealer has somewhere between 11%-19% sales to service retention. The average dealer cannot truthfully say what the sales to service conversion and retention figure is at his dealership because the average dealer does not measure that component of their business. If you are a dealer who knows how much you spend monthly on advertising/marketing but not what your repeat sales figures are or sales to service conversion and retention percentages are then you are doomed to boom or bust cycles. You will be a slave to bad manufacturer decisions and any other thing that you do not control.
The good news is you do not ever have to be a slave or a victim again. You can control and increase all of those above measurable components of your business. You can experience 100% or better service absorption. You can have both satisfied and loyal customers in a marketplace with a dominant culture that does not encourage loyalty and demands almost perfection in execution just to be satisfied.
To be successful you must plan and take massive action to prompt, promote and reward customer thoughts and behavior. “The first sale is made on the front-end and the next sale is made in the back-end.” “The sales department brings the customer in and the service department brings them back.” Do those sayings sound familiar? Both of those sayings have a lot of truth to them. Based upon those truths I invite you to stop thinking of your business in terms of front and back-end but as a fully functioning integrated business.
From now on, do not think or plan anything you do in regards to the front-end of your business without considering how you can integrate the back-end and how everything would be affected. The same goes for the back-end of the business. Eventually you will begin to think in terms of the business as a whole and it will affect the decisions and management of all your actions.
A marketing mentor of mine once said, “Often, the best business you can have is the business you find within a business.” Within all original business entities is another undiscovered, untapped business that can be created or elevated that often has more potential than the primary business.
In an auto dealership there are unlimited opportunities to look at your business in a different light than you ever have before. Begin to think of and create ways that will add so much value to your customer and their lives that your customer can’t help but do business with you. Stop copycatting all the small minded approaches of the norm and begin a journey to become a category of one.
A commodity or a commoditized industry can only be that way if you let it be that way. A vehicle is a commodity. The auto business is highly commoditized. Your customer can buy the vehicle they are selling from anywhere, anytime with a stroke of a keyboard, a phone call or a quick drive. Car dealers bastardize ideas, programs and operating methods from competitors, 20 groups and conventions. You can and should create something that defines you and your dealership value in such a way that brands you. Your brand will be driven by increases of sales, profits and retention and not by some nebulous marketing theme. Even programs and ideas used by others can become solely yours if implemented correctly. “Tell your story, tell it well and tell it often.” I promise you that 99% of your competitors do not tell their story well, often or possibly even at all. You are your only competition.
If I were instructing a new salesperson today I would tell him that there are six levels of potential customers.
Level 1 – Random prospect
Level 2 – Targeted prospect
Level 3 – Referral
Level 4 – Attempted but unsold prospect
Level 5 – A previous but inactive customer
Level 6 – A current customer
My question to you is where do you put the most emphasis in creating business? For most dealers the truthful answer would be Level 1. The correct answer would be Level 6. You start at Level 6 and move backwards to Level 1. Although, every business needs a new stream of customers, it is often overlooked and neglected that many of those customers can be created from Levels 2-6 rather than just Level 1 and high emphasis on Levels 3-6.
I often visit Panera Bread for lunch. The Panera Bread stores have good food, baked goods and coffee. So does just about everywhere else today. The first extra bonus I get at Panera Bread is when the cashier greets me. Every Panera Bread restaurant I go to has a greeter who is an absolute mega watt positive energy giver. It’s impossible to feel bad about your order when you are greeted by a person who takes your order while displaying an incredible fire of passion.
The Panera mega watt cashier always asks me for my Panera card which I gladly carry on my key chain. I smile each time they give me something for FREE and I build my points and get discounts. Does Panera influence my behavior and loyalty? Absolutely! In fact, the secret is that it is not loyalty at all. It simply is about incredible value. Really good food, service and incentives drive my repeat business.
Every week I visit my local Kroger grocery store for groceries and the convenience store for gas. Is it cheaper than Wal-Mart or some of the other discount grocers? Probably not.
I like the store, the people and love the Kroger rewards program. I love to watch my total bill drop when I enter my number or swipe my card. I love to redeem my 10 cents a gallon loyalty gas discount. Kroger influences my behavior with perceived value. I would not call it loyalty but it definitely is about strong value proposition.
I have implemented VIP Loyalty/Retention Programs with dealers all over the country and watched numbers skyrocket. I have installed Lifetime Powertrain Programs that have incredibly strong value propositions and are built in continuity programs increase every measurable component imaginable. I have assisted dealers in creating referral programs that tapped unmined resources. I have assisted dealers in creating what I call their “Specific Defining Proposition” and what I call their “Better than money back guarantee” or outrageous claim.” In each one of these things I have seen amazing short and long term ROI and just as importantly a huge cultural shift in the dealership.
There are only five ways to increase the bottom line of any business.
#1 – Sell more goods and services
#2 – Increase your profit margin per good or service
#3 – Increase your referrals
#4 – Increase repeat business
#5 – Increase the speed of your repeat business.
Most dealers tend to concentrate solely on #’s 1 and 2. I invite you to look at programs such as our VIP Program or Lifetime Powertrain Program that would increase #’s 1-5 all at the same time. If you concentrate solely on #’s 1 and 2 you can experience linear growth. If you concentrate #’s 4 and 5 you will experience exponential growth.
The keys to growth and success are always the 4P’s – People, Process, Product and Market Positioning. If you get better in all of these 4 areas, your dealership will experience increased results. When you combine communication with a strong value proposition you will experience incredible results.
As an example, I have a Honda client that experienced an over $500,000 increase in service business this year from INACTIVE customers. Most of these inactive customers had not been to the dealership for years! This is found money! Over 50% of your customers will give you another shot if you just try to reengage with them. However, if you do not communicate with your customer for 18 months it’s as if you never sold them. You have to start all over again in the reengagement process. Why waste all the time, money and effort to get a customer and then simply let them go.
Do not think that a fancy and expensive CRM by itself will accomplish your communication. It will not. If you do not see an increase in the measurable components of your business after you have installed a CRM then you are wasting your money. Everything and I mean everything must be measured and must show ROI. Communicate consistently with your customers using multiple channels. You must achieve marketplace awareness to achieve market share.
In today’s brutal and unforgiving marketplace, you do not have margin for error. You must operate on all cylinders. The good news is that the only competition you have comes from your existing belief systems, patterns and outdated operating methods. There are no excuses today for a lack of success. It is EASIER today to compete and win than ever before if you do the right things. Being small, having a bad location, bad facility, lack of operating capital, nor anything else is an acceptable excuse today for not getting all you deserve. The opportunity is there. The question is, “Do you think you deserve it?”