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Chris Costner

Chris Costner Account Executive

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Customer Loyalty Is Fragile

According to J.D. Power & NADA, almost 90% of retail customers are never contacted after delivery.  That statistic alone shows many dealers do not have a loyalty process in place.  It’s sad to see and hear.  As hard as we all work to capture someone’s business, we seem to want to continue to work just as hard to find another customer to earn their business and not focus on those we already have earned their trust and respect.  Not to mention it is 5 times more expensive to find that new customer.

Loyalty is very fragile and is earned at every customer touch point throughout their entire ownership.  Touch point is also known by a term you may have been hearing quite often lately, “moment of truth.” You see, somewhere in your dealership, you have a “customer loyalty bank” that is hidden and only your customers know where it is.  Each “moment of truth” is when a customer forms an opinion of your dealership through a recent experience.  Depending on that experience, the customer can either make a deposit into your “customer loyalty bank” or they could also make a withdrawal.  It’s more of an “emotional bank account” for them.

The road to keeping a customer once they have made a purchase with you should begin the day after they take delivery.  It’s nice to spend money on reminder cards, loyalty cards, or any other of those glitzy third-party mailings that make a dealership feel good because they are keeping in contact with their current customers.  It all sounds good, but does the client feel good about them? Thinking back to the dealerships “customer loyalty bank”, how many of the client’s “moment of truths” have been positive each time they have been in your dealership since taking delivery? Positive “touch points” keep the customer making those deposits into your “customer loyalty bank” which will make it easier to recapture that customer for their next purchase.

There are a few “leading practices” that show to produce the best results during the four phases of the customer buying cycle and can be tailored to each individual dealership.  They should be monitored by management on a daily basis and are a great roadmap for new hires. 

 

Here is how the following leading practices can be implemented to each phase:

PHASE 1: (0 – 1 Years) New Car Phase or the “Honeymoon Phase”

 

  • Customer should be contacted immediately after delivery for satisfaction and reminded of the “New Owner Service Clinic” date and time.
  • Customer should be met during each service visit to reinforce relationship.
  • Customer personally contacted 9 times by telephone in the first year.
  • Managers in the beginning before reassigning to another salesperson handle orphaned customers.

 

PHASE 2: (1 – 3 Years) My Car Phase or the “Comfort Years Phase”

 

  • Sales Manager contacts customer to ensure satisfaction yearly.
  • Customer should be met during each service visit to reinforce relationship.
  • Customer contacted by salesperson 3 times by telephone during each of these years.
  • Additional service contacts can be made supported by discounts.
  • Begin the End of Term Process conversation during this period.  It will strike up questions and is a good time to discuss current programs and incentives.

 

PHASE 3: (3 – 4 Years) Just A Car Phase or the “Blah Phase”

 

  • Sales Manager contacts customer to ensure satisfaction yearly.
  • Customer should be met during each service visit to reinforce relationship.
  • Customer contacted by salesperson 3 times by telephone during each of these years.
  • Contact customer regarding End of Term Process and look to see what their intent is regarding next vehicle.
  • Offer to give some pricing on current year models.

 

PHASE 4: (4 – 5+ Years) Next Car Phase or the “Shop / Divorce / Convert Phase”

 

  • Sales Manager contacts customer to ensure satisfaction yearly.
  • Customer should be met during each service visit to reinforce relationship.
  • Customer contacted by salesperson 3 times by telephone during each of these years.
  • It’s time to get serious with pricing new vehicles for customer and setting appointment to discuss next purchase if not recaptured already.  After all, you have earned every right to ask for the business once again after following the leading practices set forth during ownership.  The customer should have made more deposits into your “customer loyalty bank” versus “withdrawals.”

Not only will you have a better chance now to recapture the customer but will also give the dealership a reduced selling and marketing expense.  Many of us have heard the phrase, “cheaper to keep,” well it proves true in this case.  What else comes from recapturing the customer?  I can think of a few such as, improved closing ratios, improved preowned vehicle acquisition and an increase in fixed gross.

Whenever I hear the term, Customer Loyalty, I think of all that goes on during the phases of ownership from a dealership standpoint written above.  I don’t think of what can I have mailed to the customer that will hopefully make them come back and do business with me again.  It’s much more than that as you see and requires effort but not as much as you would have to put forth to a brand new customer altogether. 

Good Selling. 

Jessi Hales
Building lifetime loyalty is the primary purpose behind any good customer rewards program. The points should be easy to earn and be redeemable for a variety of rewards – rewards that are valuable to your customers. Members should be recognized, singled out and treated as if they were the most important customers out there – because the are! The more valued they feel, the better relationship you will be able to build with them – and that valued relationship is what will keep them coming back to your business for a lifetime.
Chris Costner
Well said Jessi, I agree. Just a little effort will result in big rewards. Thanks for the comment.

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