CDK's purchase of Auto/Mate may create a major disruption in the dealer management system (DMS) industry. Here is our take. DOWNLOAD
Convincing a customer to return to your dealership on a regular basis is one of the most difficult tasks in the automotive business. Whether your intention is for sales or for service it can feel like pulling teeth just to get the client back in the door. Let alone asking the customer to open their wallets time and time again. By comparison, the industry that literally pulls teeth out of their customer’s heads has an arguably better retention rate than dealerships today. The average person has a hard enough time taking care of their own bodies, families, pets and homes; to have much energy or money left over to properly care for their vehicle.
I have used the analogy with customers that a poorly maintained vehicle could result in the death for themselves or their family. Harsh, but its true, and still rarely encourages anyone to get their vehicle maintained on schedule or even an oil change for that matter.
The majority of the automotive industry has never truly done a great job at building obligation for customer retention. For sales there is at least a service walk, cup of coffee, hood and trunk, get drive, etc. For customer retention however, they have always relied on a little sticker in the lefthand corner of the wind shield and little more. Yes, there are a myriad of different modern techniques in perusing customer retention (email reminders, SMS text reminders, Smartphone apps, BDC's etc) but they are all simply mimicking the little sticker that says "you really should come in before your next 6 months or 8,000 km. Why? Because. We asked you nicely.”
Truly successful customer retention is not developed with a pleasant dictatorship, but with creative obligation. Customers are far more likely to heed to your call with a sense of debt, than with a "mandatory" fist.
So the million dollar question is, "how do you successfully build obligation, which returns with customer retention?"
I can say with certainty, it is not by offering discounts or free gifts. True, this can work, and work well in certain situations. If you offer a good enough discount or gift to drive your customers in droves of course you can pat yourself on the back for a job well done. At the end of the day however, those mega promos take a big bite of your ROI in addition to the lack of longevity. Groupon is a perfect example of this reality: once a multi-billion dollar idea with nothing but blue skies ahead. Then problems began to arise: businesses were unhappy with the long term return, deals either became more obscure or too repetitive (spa deals, detailing, weight loss, etc), and finally with an endless amount of copycats we all became tired of the "daily deal", very fast. If you give away the farm for every promotion you will surely wake up at the bottom of the barrel with no way back out. Today's automotive customer is well aware of this technique and they are tired of it. Knowledge is far too prevalent and easy for anyone to fall for something that sounds too good to be true. If it is truly "that good", your ROI is in the toilet and you lose anyhow.
So what then?
Well I called it the "Automotive Candle Party" promotion.
Candle Parties have existed for as long as, or possibly longer than the automobile itself. Predominantly associated with women, the concept is that an individual invites over their closest, dearest, and newly acquainted friends for a night of: refreshments, fun, and entertainment. What isn't immediately realized is that the entire affair is a rouse to sell the guests products once they have had their fill of wine and cheer. Not always candles per say, sometimes wrapping paper, cheese, frozen chicken, porcelain trinkets, massage wands, and anything else they can buy wholesale; before the night is through the order sheet comes out.
Why does it work? Simple, your trusted friend and cohort has treated you to an evening of lavishness, and in return has proposed to you the idea that you may buy a candle or two. Not that the products are subpar, they are commonly great products. But these "candle parties" work because the obligation has been built, and then it is exploited.
Now start thinking of this technique in relation to customer retention in the automotive world. It is extraordinarily difficult to successfully invite a customer into your facility under normal circumstances, but what if you could get the same result under a different premise. Further to that, what if you could get a customer to enter your facility multiple times without trying to sell them anything? What if you could get a customer to visit your dealership 6-12 times in a year? Seems crazy but think about the obligation that could build. Think of where that customer would start their vehicle search for their next vehicle. Would that customer be more inclined to service their vehicle on schedule?
By now you are thinking it is a no brainier, "of course if a customer is in my dealership 6-12 times a year I will be able to make some money off them." I know your follow up question is something along the lines of, "yes that would be terrific, but how much would that cost me?"
With certainty it will cost less than your current promotions. Less than: "20% off service when you haven't been in the dealership in 12 months.” “Less than $100 off a set or tires.” “Less than $1,000 additional off our trade.” The costs are minimal, and the long term pay-off is fantastic.
Enter the "Automotive Candle Party" promotion. The ultimate goal is to create an honest, positive environment that your customer base is happy to attend time and time again. Like the Candle Party, this too can be targeted towards women. It doesn't have to be, it can be entirely male if you desire, but to piggy back on a tried and tested idea this will focus on women (don't worry; I will include some male only examples as well).
The concept is simple, host an event that the public will appreciate, attend, and share (via social or traditional word of mouth) with their friends and cohorts. Ironically these events do not cost much, as long as you get the adequate amount of attendees. We’re not talking thousands, but it will not work with 3 people, at least in the ROI sense. Furthermore, the Automotive Candle Party Promotion begins to advertise itself after it has existed via social media and word of mouth, for free I may add. It is all up to what you want to do with it.
So to accurately depict the candle party promotion, let's look at something a real world example.
Not to play too much on stereotypes, but women by-and-large love firemen. In Toronto there is a yearly calendar of the “hunkiest” local Fire Fighters supporting cancer research at the Princess Margaret Hospital. Since its inception in 2000 the Calendar has raised over $1 Million Dollars, which is proof positive there is a desire there. In comparison a fireman’s first duty is the safety of the people they serve, which also happens to include the female gender. It is a match made "in heaven".
So we held an event where both the “desires” of the female population, and the “needs” of the firemen were bothmet. We contacted the local fire brigade, and asked them if they would be invested in hosting a seminar to teach our customers what to do in case of an automotive emergency. Without question they were interested. The more informed the public is about emergency situations, the fewer problems they have to deal with. Additionally local fire departments have their own agendas of public safety, and appreciate any chance they can get to speak to a captive audience.
So the fire department was on board, and we set a date a few weeks in advance. We then advertised the event via email and social media under the title "Customer Appreciation Event - Meet & Great with your Local Firemen!" This is where creative copywriting comes in handy; we didn't lie to anyone but simply provided them with what they wanted. We further promoted the event in-store, making sure to mention the yearly Toronto Fire Fighter’s calendar to build excitement. Again, not lying, but being creative.
The result: well over 100 women attended from our community and had a fantastic day. All the women were taking pictures, sharing on their Facebook profiles, their friends, and their neighbors. Most importantly, they also learned about safety and what to do in case of a vehicle emergency. What was most amazing is that less than 50% of the attendees were from our database, the majority were informed by their friends and came along. A great acquisition bonus on top of the retention goal.
Fire department : free
Inviting local media to cover event: free
Covering event for social media: free, in-house with any camera
Promoting event via email and social media : free
Snacks and drinks for 100 women: $400
To quote the MasterCard advertisement: “priceless”
When is the last time that you spent $400 to have well over 100 customers visit your facility, have a fantastic time, thank you on your social media pages, tell their friends, and build significant obligation?
Never. Be honest.
We couldn’t track the specific ROI on this event, but I can tell you that our service department was full that month, and for months afterward, and we hit target on the sales floor. Tell me the firemen didn't have anything to do with it.
If you at a believer, I have made it easy; here is a myriad of other ideas you can easily implement in your establishment. But take warning, this is a long term marketing proposal. Remember the first event pushes the second, the third, and all thereafter. If you dedicate $5,000 for a year of these events monthly, you can guarantee your customer retention will increase exponentially. If one event doesn't bring customers in droves, don't do it again. Try a different idea the next time, but don't abandon the process.
· Complimentary Yoga Class(s)
· Drive-In Movie Night in the parking lot with inflatable screen
· Petting Zoo and Kids Fun Zone (jumping castle, clowns, balloons, etc)
· Girls Night "Know Your Car Night" with optional babysitting (up to 6 years old) on site
· Girls Night Spa Sales Event w/ Manicures, pedicures, facials and massages on site.
· Complimentary cooking classes with local Star Chef Series
· Winter / Emergency Preparedness / Basic Maintenance classes (What to do when things go wrong)
· Girls Night Self Defense Classes
· Girls Night business mixer / gathering - Socialize within your community and make connections
· Active Moms & Moms to Be Social Club
· Complimentary Tax Preparation Joint Venture with Tax Comapny (H&R Block) for Spring
· Complimentary Language Courses
· Golf Training Camp with local golf Pros
· To name a few…
You don't have to do any of these, if you have your own ideas. You have your own market; you know what your customers are interested in. Remember one key point of everything else, DO NOT TURN THIS INTO A SALES EVENT. It instantly taints the experience. Instead of positive sharing via social and word of mouth, it will be negative. People do not like to find out they have had the wool pulled over their eyes. Give a little, get a lot in the long run.