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We all want new customers. And it’s certainly mandatory to retain a customer to create a loyal one. But how we market our dealerships is increasingly important -- as each form of marketing will deliver different results. The three terms: loyalty, retention and acquisition marketing, all have their own distinct meanings and should be used to satisfy different goals and objectives. While they are often not distinguished differently within most dealerships, they truly have different meanings, and will generate different results.
According to the experts at the Cambridge Dictionary, the definition of customer loyalty is as follows:
“The fact of a customer buying products or services from the same company over a long period of time.”
According to Wikipedia, customer retention is defined as follows:
“Customer retention is the activity that a selling organization undertakes in order to reduce customer defections.”
And acquisition marketing is defined as the act of bringing in new customers. Sounds similar, right? Which one is more important to your store? Isn’t it true that the less customers you retain the more you must acquire?
It can be a never ending battle. But, it doesn’t have to be. And the real point is that retention and loyalty marketing should drive how much acquisition marketing you will need to do. All three should be an equal focus, hand-in-hand, one complimenting the other. It could be said that they are all dependent on each other.
Customer retention is about preventing defections and the preservation of existing customers. You can’t generate customer loyalty without having some form of retention. And you can’t have retention without first acquiring them.
Retention marketing is different than loyalty marketing. It involves looking at past customer behaviors and analyzing the transactional histories to identify and get customers who have been potentially lost, back in the door. Retention marketing examples include such things as identifying customers who used to come in regularly for service, but have not been in for a few months. Or identifying services that a customer may have previously purchased, but no longer does. In short, it is the act of getting a customer to purchase again, without the cost of acquisition.
In growing your retention, it is critical to be aware of who these customers are; to make the effort to reach out to them; identify why they are no longer coming in and take steps to win back their business. If you fail to do so, the chances are great that you will never see them again.
Loyalty marketing, or relationship marketing strategies, are designed to continue to earn the business of your existing customers while making it personal. For example, a hand written thank you card from the General Manager after a new vehicle purchase. A special occasion recognition, birthday or purchase anniversary -- again, hand written. Special offers, designed for a particular group or subset of customers, that are engaging and valuable enough for the customer to feel recognized. Whatever you choose, it should be engaging and have the purpose of making your customer feel valuable. Combine these actions with providing an excellent customer experience, each and every time, and you will watch your loyalty grow.
Loyalty and retention should go hand-in-hand. You cannot build loyalty without retention. And it’s nearly impossible to retain customers without creating loyalty.
Remember, your goal should be to keep your customers engaged and happy while spending and acting as advocates for your dealership. What more could you want?