CDK's purchase of Auto/Mate may create a major disruption in the dealer management system (DMS) industry. Here is our take. DOWNLOAD
With NFL football fans gearing up for another season, DIRECTV is once again offering new customers the 2014 NFL Sunday Ticket for free along with deeply discounted prices and an upgraded DVR Genie on several of the programming packages. What’s the catch? The special prices are valid for only the first twelve months of a twenty-four month contract. And if you want to receive the Sunday Ticket for the 2015 season, you’ll need to pay regular price.
It’s a great deal for a new customer. but let’s imagine that two years ago you signed up for DIRECTV and have fulfilled your twenty-four month contract by paying $66.99 per month. You see the new customer incentives and you give DIRECTV’s “award-winning customer service” department a call and ask to be given the same attractive offer – a discounted monthly rate, updated equipment (that you have to lease from them as well for an added fee), and the NFL Sunday Ticket that normally costs in excess of $300. Your friendly customer service representative informs you that they appreciate your business, your prompt payments and for your interest in continuing to subscribe to their satellite service. Then they inform you that the offer is for new customers only and that existing customers aren’t eligible. There’s a moment of silence on the line as you scratch your head and wonder why your loyalty isn’t being rewarded with anything more than a thank you. You return to the line and ask for a manager. While waiting for your call to be transferred, you simply can’t wrap your head around the fact that new customers will save nearly 50% off their monthly bill for the first twelve months; obtain new equipment and the NFL Sunday Ticket - something that has been on your wish list since the Super Bowl. The supervisor takes your call and you state your case, but unless you have the negotiating skills of a criminal defense attorney, or threaten to cancel, you’re not getting the new customer deal. This sure doesn’t seem like the way to keep customers for long and perhaps one of the reasons DIRECTV seems to be looking for new customers all the time.
With shrinking margins on new vehicle sales, dealers are finding themselves more reliant than ever on service absorption, referrals and repeat business. In today’s world of information, price shopping and homogenization, it’s more important than ever before to focus on retention. You can kill the customer with kindness, provide convenient hours and build personal relationships with your customers through employee retention, but when it comes time to buy a new vehicle, every customer wants a good deal. Customers who have shown your business loyalty come to you with an expectation of reciprocity. Regardless of whether their first experience with you buying a vehicle was exceptional or frustrating, they will not only expect a better experience, but also demand it. They see your sales ads in the newspaper and online just the same as a potential new customer does. In our increasingly regulated business, whom would you rather sell your advertised loss leader to? The new customer you will never see again, or the one that’s been loyal to you for years? I know what my answer would be.
If you’re operating a car dealership on the DIRECTV model, you’re spending a lot of your efforts trying to lure the new customer instead of taking care of the most captive audience you have – your current customer. That loyal customer could be waiting to see just how much of a commitment you are willing to make to them. So whether your loyal customer pays cash for your loss leader, or buys the accessory-loaded luxury SUV and the premium maintenance package - make sure they feel special and experience the new customer treatment all over again.