This blog is the first in a series I plan based around how to better use dealer data in marketing to customers. There is a reason that ‘Big Data’ has been a hot topic in the automotive industry for the last few years. Many retailers in other industries are using it quite successfully to target their marketing and offers to their customers based on transactional and behavioral data. Aside from some off-lease marketing, most dealers aren’t even paying attention to the data they have, much less using it in combination with outside data. It is very difficult, if not impossible, to create customer loyalty by utilizing a shotgun approach in your marketing communications for your entire customer base.

However, this is what many dealers still do and what many vendors are still advocating. A perfect example of this “old school” mentality and outdated approach is in the continued use of service reminders. For example, I continually get service reminders from my local Ford dealer regarding a vehicle I have not owned in almost 5 years. Not only is it a waste of the dealer’s marketing dollars -- as I am sure I am not the only customer in his database that no longer owns the vehicle -- but it is also a contrary practice to building lasting customer retention though the use of meaningful interactions. It is proven that relevant messages to highly targeted groups of customers converts into more sales, while building significantly increased customer loyalty. Impressing upon your customers that you are paying attention to their specific needs and wants is far more effective than sending them a bunch of communications that don’t pertain to their individual circumstances.

Most major retailers track their customer’s behavior through the use of loyalty programs and other internal SKU tracking methods. Take Costco and Sam’s Club, for example. They track everything their customers buy from them. Through skewing and product codes, they know exactly what their customers have purchased and what they are likely to repurchase from them in the future. They also have the ability to calculate a profit margin for each customer, and to track their customer lifetime value to the dealership.

Why is this important? In the event you lose a long time customer with a high lifetime value, it may require the acquisition of many “smaller” customers to make up the revenue and profit loss of the one higher value customer. Most retail manufacturers know this. They work cooperatively with retailers to deliver relevant coupons and offers tailored for specific customers based on their past purchase behavior. Dealers have the same ability to utilize this data using parts numbers and labor operation codes to generate relevant offers for their customers. For example, with the recent increase in vehicle recalls, dealers should be segregating their recall customers from non-recall customers and communicating with them utilizing a different message. 

On the vehicle sales side, NADA publishes their formula as to how to identify what customers, based upon a number of factors that can be easily pulled from your DMS, are “in market” for a new vehicle. But surprisingly, many aren’t using the data. Even many of the vendors that dealers hire, which claim to use the dealers’ data, aren’t using it effectively. This is evidenced by the low ROI these communications generate. Vehicle OEM’s are notorious for using saturation marketing such as that utilized during the current NBA playoffs. This is being sent to audiences that are much less tolerant today than they were even five years ago.  Marketing needs to be about communicating useful information that is memorable and meaningful, not about the repetition of a non-relevant offer (remember your service reminders here).

Blasting a generic sales message to a list of customers that have not brought a car in the last few years will most likely only result in a couple of sales. And you risk the opportunity of alienating that customer for a lifetime.

A much better approach is to use predictive analysis – look at what the customer has purchased, the type of vehicle they own and the mileage on those vehicles, so that you may come up with a targeted, accurate analysis of when and what action the customer is pre-disposed to take. Through the use of transactional data dealers already have, they could instead create a more specific list of customers that would have a much higher propensity to respond. Such a list of segmented customers could be those who own a specific model with 90,000 miles or more, who have also spent more than $5,000 in maintenance costs, and are approaching a major service interval. A targeted mailer sent to this precise list will produce dramatically better results than the aforementioned blast to your entire customer base. The message delivered is more relevant, more meaningful and will generate a higher ROI.

In my next few blogs I plan a series to more fully cover why dealers aren’t using the data they have, show dealers how to get the data they already possess, what to do with it when they have it and how to measure the results after they’ve used it. Using your own customer data to target your message to the most relevant customer segment will produce better results, increase the likelihood that your customers pay attention to your message and take action. 

This blog is the first in a series I plan based around how to better use dealer data in marketing to customers. There is a reason that ‘Big Data’ has been a hot topic in the automotive industry for the last few years. Many retailers in other industries are using it quite successfully to target their marketing and offers to their customers based on transactional and behavioral data. Aside from some off-lease marketing, most dealers aren’t even paying attention to the data they have, much less using it in combination with outside data. It is very difficult, if not impossible, to create customer loyalty by utilizing a shotgun approach in your marketing communications for your entire customer base.

However, this is what many dealers still do and what many vendors are still advocating. A perfect example of this “old school” mentality and outdated approach is in the continued use of service reminders. For example, I continually get service reminders from my local Ford dealer regarding a vehicle I have not owned in almost 5 years. Not only is it a waste of the dealer’s marketing dollars -- as I am sure I am not the only customer in his database that no longer owns the vehicle -- but it is also a contrary practice to building lasting customer retention though the use of meaningful interactions. It is proven that relevant messages to highly targeted groups of customers converts into more sales, while building significantly increased customer loyalty. Impressing upon your customers that you are paying attention to their specific needs and wants is far more effective than sending them a bunch of communications that don’t pertain to their individual circumstances.

Most major retailers track their customer’s behavior through the use of loyalty programs and other internal SKU tracking methods. Take Costco and Sam’s Club, for example. They track everything their customers buy from them. Through skewing and product codes, they know exactly what their customers have purchased and what they are likely to repurchase from them in the future. They also have the ability to calculate a profit margin for each customer, and to track their customer lifetime value to the dealership.

Why is this important? In the event you lose a long time customer with a high lifetime value, it may require the acquisition of many “smaller” customers to make up the revenue and profit loss of the one higher value customer. Most retail manufacturers know this. They work cooperatively with retailers to deliver relevant coupons and offers tailored for specific customers based on their past purchase behavior. Dealers have the same ability to utilize this data using parts numbers and labor operation codes to generate relevant offers for their customers. For example, with the recent increase in vehicle recalls, dealers should be segregating their recall customers from non-recall customers and communicating with them utilizing a different message. 

On the vehicle sales side, NADA publishes their formula as to how to identify what customers, based upon a number of factors that can be easily pulled from your DMS, are “in market” for a new vehicle. But surprisingly, many aren’t using the data. Even many of the vendors that dealers hire, which claim to use the dealers’ data, aren’t using it effectively. This is evidenced by the low ROI these communications generate. Vehicle OEM’s are notorious for using saturation marketing such as that utilized during the current NBA playoffs. This is being sent to audiences that are much less tolerant today than they were even five years ago.  Marketing needs to be about communicating useful information that is memorable and meaningful, not about the repetition of a non-relevant offer (remember your service reminders here).

Blasting a generic sales message to a list of customers that have not brought a car in the last few years will most likely only result in a couple of sales. And you risk the opportunity of alienating that customer for a lifetime.

A much better approach is to use predictive analysis – look at what the customer has purchased, the type of vehicle they own and the mileage on those vehicles, so that you may come up with a targeted, accurate analysis of when and what action the customer is pre-disposed to take. Through the use of transactional data dealers already have, they could instead create a more specific list of customers that would have a much higher propensity to respond. Such a list of segmented customers could be those who own a specific model with 90,000 miles or more, who have also spent more than $5,000 in maintenance costs, and are approaching a major service interval. A targeted mailer sent to this precise list will produce dramatically better results than the aforementioned blast to your entire customer base. The message delivered is more relevant, more meaningful and will generate a higher ROI.

In my next few blogs I plan a series to more fully cover why dealers aren’t using the data they have, show dealers how to get the data they already possess, what to do with it when they have it and how to measure the results after they’ve used it. Using your own customer data to target your message to the most relevant customer segment will produce better results, increase the likelihood that your customers pay attention to your message and take action. 

I recently read a very thought-provoking article asking this very question; “Is the simple fact that the customer has money enough to make the purchase a determining factor for you?” Too often the customers dealerships try and attract aren’t necessarily the customers they really should be targeting.  According to the article, it’s solely the dealership’s fault. Retail automotive dealerships are known for throwing out all sorts of mixed messages trying to attract the widest audience possible.

No matter what dealership department you work in, you have those customers that take up a lot of your time, sometimes are difficult to deal with and that, in general, are customers you’d rather not have. There are countless stories of sales that were not made simply because the sales manager decided that it would be more trouble trying to get the deal closed than it was really worth. According to the article, while these troublesome customers “did indeed have the money [for services], they were hard on the staff, on occasion disruptive and were gone as fast as they came.”

You may be a dealer who specializes in special finance, obviously there’s nothing wrong with that. However, you must be cognizant of the simple fact that the message you put out there will dictate the type of customers you get. If you don’t want your finance department spending a lot of time trying to get financing, collecting stips and having bank fees eat into your front-end profit, then you may want to rethink your approach in attracting credit-challenged customers with your marketing.

If your marketing message is attracting un-loyal customers who are only doing business with you short term, this will detract from any sensible growth strategy and cause the very thing you don’t want; a shift in focus away from customer retention and an increase towards acquisition. If you’re a 100-car a month store, you’ll never be a 150-car a month store if you are continuously having to seek out customers, especially if those customers are the ones that have no intention of sticking around. There’s nothing wrong with deep discounting a car to a person who lives in your market and will be servicing their vehicle with you. At least there is an upside to that loss. If you’re doing the same thing for a customer who doesn’t live in your market and you will never see again; you’ve taken a loss with no opportunity for future growth. The same applies to your service department. If you are trying to acquire customers with $19.95 oil changes and find very little up-sell happening, chances are good that those customers won’t be back… that is until the next $19.95 oil change.

Many dealerships don’t know how to isolate or segregate the customers who are doing this when in fact, it’s a very simple process. Technology offers solutions to dealers that allow them to track purchases and customer interactions through sophisticated loyalty programs. The installation of a loyalty program would help you identify the customers that only come in for these deep discounts but also allow you to separate them from your marketing efforts. It becomes very simple then to not offer coupons or deals to those specific customers that are in reality actually costing you money. The opposite also applies. When you have a customer that you consistently up-sell when they come in for a $19.95 oil change, you can send them these types of offers on a more frequent basis. They are the predisposed profitable customer, and will in all likelihood make that same purchase again.

As the article states, “…in order to build a business that truly can thrive, you must understand who you are equipped to serve best and you must do everything in your power to attract, serve and choose them over all else.”

Next time you are contemplating marketing strategies, think about which customers you want to attract. Then tailor your message to them and ensure that you are equipped to offer those customers everything they need and want. By doing so, you’ll decrease the number of customers you don’t want, and position your dealership to choose your customers. Chances are good that if the choice is mutual, everyone will win in the end.

I recently read a very thought-provoking article asking this very question; “Is the simple fact that the customer has money enough to make the purchase a determining factor for you?” Too often the customers dealerships try and attract aren’t necessarily the customers they really should be targeting.  According to the article, it’s solely the dealership’s fault. Retail automotive dealerships are known for throwing out all sorts of mixed messages trying to attract the widest audience possible.

No matter what dealership department you work in, you have those customers that take up a lot of your time, sometimes are difficult to deal with and that, in general, are customers you’d rather not have. There are countless stories of sales that were not made simply because the sales manager decided that it would be more trouble trying to get the deal closed than it was really worth. According to the article, while these troublesome customers “did indeed have the money [for services], they were hard on the staff, on occasion disruptive and were gone as fast as they came.”

You may be a dealer who specializes in special finance, obviously there’s nothing wrong with that. However, you must be cognizant of the simple fact that the message you put out there will dictate the type of customers you get. If you don’t want your finance department spending a lot of time trying to get financing, collecting stips and having bank fees eat into your front-end profit, then you may want to rethink your approach in attracting credit-challenged customers with your marketing.

If your marketing message is attracting un-loyal customers who are only doing business with you short term, this will detract from any sensible growth strategy and cause the very thing you don’t want; a shift in focus away from customer retention and an increase towards acquisition. If you’re a 100-car a month store, you’ll never be a 150-car a month store if you are continuously having to seek out customers, especially if those customers are the ones that have no intention of sticking around. There’s nothing wrong with deep discounting a car to a person who lives in your market and will be servicing their vehicle with you. At least there is an upside to that loss. If you’re doing the same thing for a customer who doesn’t live in your market and you will never see again; you’ve taken a loss with no opportunity for future growth. The same applies to your service department. If you are trying to acquire customers with $19.95 oil changes and find very little up-sell happening, chances are good that those customers won’t be back… that is until the next $19.95 oil change.

Many dealerships don’t know how to isolate or segregate the customers who are doing this when in fact, it’s a very simple process. Technology offers solutions to dealers that allow them to track purchases and customer interactions through sophisticated loyalty programs. The installation of a loyalty program would help you identify the customers that only come in for these deep discounts but also allow you to separate them from your marketing efforts. It becomes very simple then to not offer coupons or deals to those specific customers that are in reality actually costing you money. The opposite also applies. When you have a customer that you consistently up-sell when they come in for a $19.95 oil change, you can send them these types of offers on a more frequent basis. They are the predisposed profitable customer, and will in all likelihood make that same purchase again.

As the article states, “…in order to build a business that truly can thrive, you must understand who you are equipped to serve best and you must do everything in your power to attract, serve and choose them over all else.”

Next time you are contemplating marketing strategies, think about which customers you want to attract. Then tailor your message to them and ensure that you are equipped to offer those customers everything they need and want. By doing so, you’ll decrease the number of customers you don’t want, and position your dealership to choose your customers. Chances are good that if the choice is mutual, everyone will win in the end.

A fascinating article in Forbes shared a concept that is increasingly winning over customers. In the article, the author described what he termed “anticipatory customer service” as “a customer experience that manages to serve even the unexpressed wishes and needs of your customers through the use of technology and automation.”

People are busy. A gesture such as an emailed service reminder that a customer can view when they have time in their hectic schedule, is certainly appreciated by many. However, Anticipatory Customer Service takes this to another level. Depending on the circumstances and the customer preferences, not only would you e-mail the customer, you would also call them, send a text message and then a letter as well. This method works well for customers who want this communication. When a customer drops their car off for service, they want to be kept up-to-date on progress and completion.  If they’re in a meeting, they might prefer a text message. While if they are working at their computer, an email might be their preferred method. Anticipatory customer service is all based on providing consumers information before they know they want it themselves.

The popular pharmacy chain Walgreens has refined the art of Anticipatory Customer Service and makes dealing with them easy and convenient. They allow you to refill prescriptions online or via a free app. If that’s too hard (or you forget), they will e-mail you. All you then have to do is reply, and they will refill your prescription. When it is ready for pickup, they will email you again. If you forget to pick it up they will then call you and remind you that it’s ready… multiple times. Once you pick it up, they thank you through their rewards program. No doubt this works to Walgreens’ advantage by decreasing the amount of time between a customer being eligible for a refill, and actually refilling it. It also decreases the time between when the refill is ready and the customer collects it. The pharmacy doesn’t make money until the prescription is picked up. By continuously reminding customers, they are increasing their revenue.  Of course, there is a fine line between using multiple methods of communication and badgering a customer. So businesses need to ensure that there is a way for customers to inform them of their preferences.  This is simple through opt-out links on email communication and the “stop” message for text messaging.

Parallels definitely exist in the automotive world.  For example, minor and regularly scheduled service such as an oil change. Walgreens doesn’t know how many pills you have remaining, just as you may not know how many miles the customer has driven since their last service. However, based on the customer’s visit history, it can be closely approximated.

Many companies send out one email and call it a day. The strength in Walgreens system is its repetitiveness. A service customer may get that e-mail reminder and not be ready for an oil change based on mileage; or perhaps think it’s a good idea but be too busy to make an appointment. By continuing to contact them via multiple methods, you give yourself more opportunities to reach the customer at the moment in which they are ready.  A scenario none of us want to happen is to remind the customer, have them agree to the service, then they become busy and forget. You fail to stay in contact, and on a future date the customer pops into a Jiffy Lube to get that convenient oil change, simply because they are near it. I’m sure Jiffy Lube thanks you, however.

Making it as easy and convenient as possible for your customer to do business with you is the key point here. There is no reason why you can’t text a customer and allow them to text you back to make an appointment. The same applies to email, or a phone call reminding the customer about their upcoming service appointment. According to the article, “it’s here that you shift your customers’ perception of your company out of the ‘they’re perfectly fine, for now’ to ‘they’re my one and only.’ It’s here that they become truly committed to, loyal to, the idea of working with you on a permanent basis.”

A more proactive approach and the use of technology to maintain contact with your customers about information they WANT to receive, can help builds better relationships and a more loyal customer base.

A fascinating article in Forbes shared a concept that is increasingly winning over customers. In the article, the author described what he termed “anticipatory customer service” as “a customer experience that manages to serve even the unexpressed wishes and needs of your customers through the use of technology and automation.”

People are busy. A gesture such as an emailed service reminder that a customer can view when they have time in their hectic schedule, is certainly appreciated by many. However, Anticipatory Customer Service takes this to another level. Depending on the circumstances and the customer preferences, not only would you e-mail the customer, you would also call them, send a text message and then a letter as well. This method works well for customers who want this communication. When a customer drops their car off for service, they want to be kept up-to-date on progress and completion.  If they’re in a meeting, they might prefer a text message. While if they are working at their computer, an email might be their preferred method. Anticipatory customer service is all based on providing consumers information before they know they want it themselves.

The popular pharmacy chain Walgreens has refined the art of Anticipatory Customer Service and makes dealing with them easy and convenient. They allow you to refill prescriptions online or via a free app. If that’s too hard (or you forget), they will e-mail you. All you then have to do is reply, and they will refill your prescription. When it is ready for pickup, they will email you again. If you forget to pick it up they will then call you and remind you that it’s ready… multiple times. Once you pick it up, they thank you through their rewards program. No doubt this works to Walgreens’ advantage by decreasing the amount of time between a customer being eligible for a refill, and actually refilling it. It also decreases the time between when the refill is ready and the customer collects it. The pharmacy doesn’t make money until the prescription is picked up. By continuously reminding customers, they are increasing their revenue.  Of course, there is a fine line between using multiple methods of communication and badgering a customer. So businesses need to ensure that there is a way for customers to inform them of their preferences.  This is simple through opt-out links on email communication and the “stop” message for text messaging.

Parallels definitely exist in the automotive world.  For example, minor and regularly scheduled service such as an oil change. Walgreens doesn’t know how many pills you have remaining, just as you may not know how many miles the customer has driven since their last service. However, based on the customer’s visit history, it can be closely approximated.

Many companies send out one email and call it a day. The strength in Walgreens system is its repetitiveness. A service customer may get that e-mail reminder and not be ready for an oil change based on mileage; or perhaps think it’s a good idea but be too busy to make an appointment. By continuing to contact them via multiple methods, you give yourself more opportunities to reach the customer at the moment in which they are ready.  A scenario none of us want to happen is to remind the customer, have them agree to the service, then they become busy and forget. You fail to stay in contact, and on a future date the customer pops into a Jiffy Lube to get that convenient oil change, simply because they are near it. I’m sure Jiffy Lube thanks you, however.

Making it as easy and convenient as possible for your customer to do business with you is the key point here. There is no reason why you can’t text a customer and allow them to text you back to make an appointment. The same applies to email, or a phone call reminding the customer about their upcoming service appointment. According to the article, “it’s here that you shift your customers’ perception of your company out of the ‘they’re perfectly fine, for now’ to ‘they’re my one and only.’ It’s here that they become truly committed to, loyal to, the idea of working with you on a permanent basis.”

A more proactive approach and the use of technology to maintain contact with your customers about information they WANT to receive, can help builds better relationships and a more loyal customer base.

Delta Airlines recently revamped its loyalty program changing how rewards are distributed to its customers.  In an article in Knowledge@Wharton, Peter Fader, Wharton Marketing Professor, applied the concept of customer centricity in reviewing Delta’s current loyalty program.

The concept is simply; “the recognition of differences across your customers.” Knowing that 4 percent of Delta’s customers accounted for 25 percent of their business, Fader found that a redistribution of rewards would truly allow Delta to better acknowledge their most valued customers. This led Delta to rethink their loyalty strategy so that it could be tailored more towards rewarding the customers that bring in the most revenue, rather than treating all loyalty members equally.

It’s actually quite innovative. It’s certainly easy to understand when illustrated by this example: A businessman who takes frequent short trips, on little notice and pays full fare, is rewarded less than the couple that travels infrequently, over long distances, books well in advance and at discounted rates. The article points out that, in the current state of many frequent flyer programs, it would be more difficult for the businessman to earn rewards and perks than it would be for the couple; even though he actually produces more revenue for the airline. According to Fader, “some customers deserve better treatment, and that should be decided on the basis of what they’re worth to the firm.” He further explains that when he’s defining “worth,” he’s not referring to what a customer has done in the past, but is basing it on a “projection of what we think this customer will be worth in the future.”

With the amount of data dealerships have at their disposal, it would certainly be possible to project customer lifetime value based on purchase trends and service revenue. Even Fader admits, however, that a healthy ecosystem will see some companies adopting customer-centric loyalty programs, while others continue to operate what he terms “performance superiority” programs, which reward people based on transactional frequency over revenue.

When considering net revenue during the initial transaction, a literal translation of this type of loyalty program to automotive dealerships might initially skew revenue (at least in sales) towards special finance customers. The customer with perfect credit, who negotiated you down to invoice less holdback, then brought his own financing, may not be the one who generated the highest gross of the day. But they may very well be the customer who brings the most revenue to the store over their lifetime. They are probably more likely to bring their car into your dealership for service than an independent auto repair facility, as price will be less of an issue.

On the flip side, sometimes, that special finance customer will be so thrilled with your assistance in getting them a vehicle, that they will bring you all of their friends and family to buy a vehicle. 

Delta’s new program is certainly an interesting concept and will be worth watching as its customers experience this program change. It will certainly experience some backlash from consumers who feel as if they are getting short-changed in the new system. However, no matter what happens, Delta will absolutely find out who its loyal customers are. Customers will make the choice to stay or defect to an airline that offers a more generous frequent flier program. 

Delta Airlines recently revamped its loyalty program changing how rewards are distributed to its customers.  In an article in Knowledge@Wharton, Peter Fader, Wharton Marketing Professor, applied the concept of customer centricity in reviewing Delta’s current loyalty program.

The concept is simply; “the recognition of differences across your customers.” Knowing that 4 percent of Delta’s customers accounted for 25 percent of their business, Fader found that a redistribution of rewards would truly allow Delta to better acknowledge their most valued customers. This led Delta to rethink their loyalty strategy so that it could be tailored more towards rewarding the customers that bring in the most revenue, rather than treating all loyalty members equally.

It’s actually quite innovative. It’s certainly easy to understand when illustrated by this example: A businessman who takes frequent short trips, on little notice and pays full fare, is rewarded less than the couple that travels infrequently, over long distances, books well in advance and at discounted rates. The article points out that, in the current state of many frequent flyer programs, it would be more difficult for the businessman to earn rewards and perks than it would be for the couple; even though he actually produces more revenue for the airline. According to Fader, “some customers deserve better treatment, and that should be decided on the basis of what they’re worth to the firm.” He further explains that when he’s defining “worth,” he’s not referring to what a customer has done in the past, but is basing it on a “projection of what we think this customer will be worth in the future.”

With the amount of data dealerships have at their disposal, it would certainly be possible to project customer lifetime value based on purchase trends and service revenue. Even Fader admits, however, that a healthy ecosystem will see some companies adopting customer-centric loyalty programs, while others continue to operate what he terms “performance superiority” programs, which reward people based on transactional frequency over revenue.

When considering net revenue during the initial transaction, a literal translation of this type of loyalty program to automotive dealerships might initially skew revenue (at least in sales) towards special finance customers. The customer with perfect credit, who negotiated you down to invoice less holdback, then brought his own financing, may not be the one who generated the highest gross of the day. But they may very well be the customer who brings the most revenue to the store over their lifetime. They are probably more likely to bring their car into your dealership for service than an independent auto repair facility, as price will be less of an issue.

On the flip side, sometimes, that special finance customer will be so thrilled with your assistance in getting them a vehicle, that they will bring you all of their friends and family to buy a vehicle. 

Delta’s new program is certainly an interesting concept and will be worth watching as its customers experience this program change. It will certainly experience some backlash from consumers who feel as if they are getting short-changed in the new system. However, no matter what happens, Delta will absolutely find out who its loyal customers are. Customers will make the choice to stay or defect to an airline that offers a more generous frequent flier program. 

I’m sure you’ve heard the phrase “Work your pay plan.” It doesn’t matter whether you held a position in sales, service, or parts, this advice has always been considered good. Towards the end of the month, when Sales Managers need those extra units sold on the weekends in order to hit bonuses from the manufacturer, they throw cash bonuses at the salespeople. The same thing happens in the service drive when it comes to tires or other service goals. It’s easy to see how a little extra cash might help motivate staff to work a little harder to achieve a sales goal. Recently a Nissan dealership in the San Francisco Bay Area provided a $30.00 incentive to the service writers for each pre-paid maintenance plan they sold in the service lane.  They quickly sold over 250 plans in one month generating over $50,000 in plan revenues. But just as importantly they easily retained those 250 plus customers for another two years of service. However, the next month there was no sales incentive and those same service writers sold only 14 plans.  So it is easy to see how engaged employees can either help or hinder a far more important goal... customer retention and loyalty.

The Temkin Group’s 6 laws of Customer Experience infographic contained two laws that, were they not next to each other, could be overlooked as being connected.

“#4: Unengaged employees don’t create engaged customers

 #5: Employees do what is measured, incented and celebrated.”

There are three types of employees: unhappy, satisfied and engaged. You notice that I left “happy” off of that list? It’s very simple, really. Your employees are either not happy with their job (whether you know it or not); are satisfied with their job (whether you know it or not); or are an engaged employee.  It’s fairly easy to identify a person who is unhappy with their job. They are typically going to underperform or perform at minimum acceptable levels; they may or may not have attendance issues… you see where this is headed? Hopefully, you know how to handle those types of employees. The trick is to be able to tell the difference between someone who is engaged with your company and someone who is simply satisfied with their position. The reason it’s so important is that, as the Temkin Group points out in their 4^th law, if your employees aren’t engaged with your company, they cannot create engaged customers.

The difference between someone who is simply satisfied with their position and someone engaged, is that an engaged employee will be a brand advocate. They are emotionally invested in the success of your business.  They work harder to make sure that the customer experiences the same feelings they have, and are just as disappointed when things don’t go right for the customer. They also go above and beyond to make it right. They may not have the best solution, but the fact that they are going to bat for the customer means that they care.

If you subscribe to the 5^th law described above, there could be an opportunity to include some incentives for customer experience. Many dealerships reward sales reps for perfect CSI surveys, so this idea isn’t foreign. It’s simply that once the perfect survey is rewarded, the incentives stop, so the salesperson moves on to the next customer. The same idea could be carefully implemented long term. Whereby excellent customer service experiences are rewarded or, at the very least, celebrated.

Identifying engaged employees, transforming satisfied employees into engaged ones, and turning around some of those unhappy employees, greatly increases the chance that your employees will then transfer that engagement to your customers. This creates better and more memorable customer experiences. Customer loyalty is based on the law of reciprocity. Provide those excellent customer experiences by having employees who want to give them, and your customers will reward you with their loyalty in return.

I’m sure you’ve heard the phrase “Work your pay plan.” It doesn’t matter whether you held a position in sales, service, or parts, this advice has always been considered good. Towards the end of the month, when Sales Managers need those extra units sold on the weekends in order to hit bonuses from the manufacturer, they throw cash bonuses at the salespeople. The same thing happens in the service drive when it comes to tires or other service goals. It’s easy to see how a little extra cash might help motivate staff to work a little harder to achieve a sales goal. Recently a Nissan dealership in the San Francisco Bay Area provided a $30.00 incentive to the service writers for each pre-paid maintenance plan they sold in the service lane.  They quickly sold over 250 plans in one month generating over $50,000 in plan revenues. But just as importantly they easily retained those 250 plus customers for another two years of service. However, the next month there was no sales incentive and those same service writers sold only 14 plans.  So it is easy to see how engaged employees can either help or hinder a far more important goal... customer retention and loyalty.

The Temkin Group’s 6 laws of Customer Experience infographic contained two laws that, were they not next to each other, could be overlooked as being connected.

“#4: Unengaged employees don’t create engaged customers

 #5: Employees do what is measured, incented and celebrated.”

There are three types of employees: unhappy, satisfied and engaged. You notice that I left “happy” off of that list? It’s very simple, really. Your employees are either not happy with their job (whether you know it or not); are satisfied with their job (whether you know it or not); or are an engaged employee.  It’s fairly easy to identify a person who is unhappy with their job. They are typically going to underperform or perform at minimum acceptable levels; they may or may not have attendance issues… you see where this is headed? Hopefully, you know how to handle those types of employees. The trick is to be able to tell the difference between someone who is engaged with your company and someone who is simply satisfied with their position. The reason it’s so important is that, as the Temkin Group points out in their 4^th law, if your employees aren’t engaged with your company, they cannot create engaged customers.

The difference between someone who is simply satisfied with their position and someone engaged, is that an engaged employee will be a brand advocate. They are emotionally invested in the success of your business.  They work harder to make sure that the customer experiences the same feelings they have, and are just as disappointed when things don’t go right for the customer. They also go above and beyond to make it right. They may not have the best solution, but the fact that they are going to bat for the customer means that they care.

If you subscribe to the 5^th law described above, there could be an opportunity to include some incentives for customer experience. Many dealerships reward sales reps for perfect CSI surveys, so this idea isn’t foreign. It’s simply that once the perfect survey is rewarded, the incentives stop, so the salesperson moves on to the next customer. The same idea could be carefully implemented long term. Whereby excellent customer service experiences are rewarded or, at the very least, celebrated.

Identifying engaged employees, transforming satisfied employees into engaged ones, and turning around some of those unhappy employees, greatly increases the chance that your employees will then transfer that engagement to your customers. This creates better and more memorable customer experiences. Customer loyalty is based on the law of reciprocity. Provide those excellent customer experiences by having employees who want to give them, and your customers will reward you with their loyalty in return.