Every dealer wants a nice healthy portion of their market share. But what if it was only 2 percent? Would that be good enough? Probably not.

Well, according to a recent interview in Automotive News, North American chief for Mazda, Masahiro Moro, thinks it is… However, in the article he states that there’s a difference between 2 percent and a “good” 2 percent, which mainly ties back into higher transaction prices and lower incentives. With a better customer experience, Moro feels Mazda can lower vehicle inventories and increase dealership profitability.

Of course, that’s not his ultimate goal. Mazda has seen brand loyalty grow from 30 percent in 2011, to 39 percent in 2016 – and that’s just the beginning. Moro would ultimately like to see it surpass 50 percent, but his current focus is on small milestones along the way, his ultimate goal being Mazda having the highest brand loyalty in the industry.

While certainly an admirable goal, it’s a steep hill to climb given Mazda’s limited models. That being said, he has the right idea… one which applies to any business seeking to increase customer loyalty, revenue or retention -- and that is small steps. Setting any goal too high without a plan to accomplish it can overwhelm employees and will more than likely fail.

However, don’t misunderstand me, knowing the destination is important. But, if you don’t know how you’re going to get there, and lack plans for each stage, it will be hard to accomplish. Society is constantly changing, as are your customers. What may work to improve customer loyalty and retention today, may look different five years from now.

It would be great if we could all simply make a business plan that played itself out to completion -- but life intervenes. So keep your mind open, your ears to the wall and eyes on the prize and be willing to change and adapt when and if it’s necessary. You’ll find that perhaps that 2 percent IS really enough… for the moment.

In the wake of the backlash from the recent United Airlines incident, it has been widely reported that many airline CEO’s salaries are, at least in part, connected to customer satisfaction scores. In the case of United’s CEO Oscar Munoz, poor customer satisfaction ratings can cost him about $500,000 in bonuses. The CEOs of Southwest Airlines and Delta have similar contractual clauses.

On top of that, one poor experience – especially if it’s perceived by many as being egregious – can, by itself, ruin an airline’s entire quarter, or even the year. In fact, in the case of United Airlines, at one point their valuation dropped about $1 billion, according to USA Today.

But what about an industry closer to our hearts, that is similarly hyper-competitive and also has financial repercussions for poor customer satisfaction scores?

Yes, I am talking about the automotive industry.

Manufacturers penalize franchisees that fail to meet customer satisfaction expectations through loss of revenue including stair step money and other incentives. And some dealers even include CSI expectations in their managers’ and salespeople pay plans. Failure to meet these goals can have a trickle-down effect that costs everyone in the dealership money.

Poor customer satisfaction can also lead to outraged customers who defect to your competitors – taking friends and family with them. This can then force your dealership to increase spending on acquisition, which is much more expensive than retention.

As consumer choice continues to expand, customer experience is increasingly more important. Customers are no longer willing to put up with a bad experience – and they are more than happy to share that poor experience with the world via online review sites and social media.

It really doesn’t matter whether the customer is right or wrong. It’s about how the experience is perceived. That specific United flight needed four volunteers to leave the plane. Three complied without incident. One customer chose not to. While it’s probably safe to say the other three people also had a poor experience and were inconvenienced, we don’t know their story. However, because that one person was treated extremely poorly, and it was captured on video by several customers, we know what happened on that flight. And, because of that, while it did not happen to them directly, other United customers are cutting up their United loyalty and branded credit cards. They are outraged that a company they had been loyal to would allow such a poor customer experience. A single bad experience – and arguably poor employee handling at that time - put United at risk and became the catalyst for a mass defection.

While your dealership probably doesn’t have to worry about an incident of this magnitude, it’s all a matter of scale. The United incident is simply a good illustration of the backlash that can happen due to a poor customer experience, along with poor employee decisions and actions in the heat of the moment.

In the end, it’s far less expensive to suck it up and fix the problem and/or apologize, than it is to take the chance that a customer chooses to share their experience with the world.

Customer experience has grown into one of the biggest differentiator for any business– so the choice is to either embrace that change and ensure a great customer experience, or watch your customers flock to competitors.

The title of this blog post originated from a thought-provoking interview with Chad Mitchell, senior director of digital communications at Walmart. In the interview he lays out a philosophy that every industry – especially automotive – should embrace. The main point he makes is that our digital and physical world is evolving at light speed and, the car business especially, tends to find itself far behind leading brands when it comes to customer experience, communications and… well, adopting new things.

As an industry we tend to sit back and wait for “new” things to be proven before we even try them. That “sit back and watch” strategy typically finds us scrambling to catch up when that new thing punches us between the eyes and we realize that we need to be doing (or adopting) this “thing.”

Think about it -- there was a time dealerships didn’t believe they needed a website. Now we’re arguing the effectiveness or necessity of social media platforms, advertising, online sales and F&I transactions -- along with in-store technology designed to expedite transaction times. And while we do that, the competition is embracing these new tools and attracting consumers.

Mr. Mitchell isn’t suggesting that businesses drop their tried and true core processes, but states that they should, “try things quickly and be willing to shift and go in a different direction. Don’t be afraid to take chances and learn.” For a leader in an organization as big as Walmart, one would think that perhaps caution would be the better part of valor and, the most prudent business decision. One can only imagine the challenges an organization as large as Walmart experiences when it comes to customer experience, loyalty and reputation. With so many locations, customer touchpoints and the sheer volume of customers, Walmart has challenges on a store-by-store level and overall as an organization. It’s certainly possible that employee interaction and the customer experience at one location can differ from another, simply due to management, staff, location and resources. Well, the key to success, according to Mitchell, is to determine what new endeavors require more care. And, in the retail business, he states that the one thing which should be at the top of the list is customer experience and loyalty.

As consumers get groomed by major brands to expect certain types of transactional experiences, they naturally expect those same frictionless experiences from other retailers they do business with, including auto dealers. Conquesting the competition is sure to become more prevalent for forward-thinking organizations that adopt new technology and offer an easier customer experience and transaction. That’s why most major automotive groups produce and roll out technology, products and services designed specifically to nurture customer loyalty.

It would be a wise decision for us all to pay attention to what’s going on in the world and not drag our feet when it comes to trying new things. While change can be scary, it’s also inevitable. It’s much better to be leading the pack than trying to catch up with it. This doesn’t mean that you should abandon the things that have earned customer loyalty. Core values and tried-and-true processes that your customers love should always be handled – and changed – with care.

Mitchell makes a great final point in the article where he states, “We don’t want to break the heirloom china; we want to break the paper plates.”

Don’t be afraid to try new things, adopt new technology or change processes. Just be prepared to react and alter paths should you find something either failing or succeeding. By doing this, your business should be more future-proof and in-line with customer expectations and, in turn, enjoy greater customer retention, loyalty and acquisition.

It’s no surprise that Disney has created one of the largest groups of loyal customers in the world. Of course, this isn’t by accident. Everything Disney does is by design. According to an article in Automotive News, and another one by DrivingSales, Porsche wants to do a similar thing and create its own brand loyalists by bringing a little Disney magic to its dealerships.

Porsche has enlisted the Disney Institute to help train all of its customer-facing dealership personnel. It has also asked dealers to create a new position in their stores, Customer Experience Manager, responsible for ensuring staff embrace customer experience. The Customer Experience Manager will also watch and analyze customer satisfaction in their stores at each point of contact.

Customer loyalty begins at the first point of contact a customer has with a dealership. Regardless of if the first experience is in service, via the Internet, by phone, or in person, if this first experience is poor, it’s much harder to win over their loyalty. Through creating a company culture that focuses on the customer experience, similar to Disney, Porsche is on the right track to increase their Customer Satisfaction scores, along with dealership and brand loyalty.

The Disney Institute is a world-renowned training group that has ongoing relationships with other manufacturers, including GM. It has trained dealers in several areas, including leadership and management skills, and attendees largely have very positive things to say about the training.

Low CSI scores can cost your dealership thousands of dollars in lost OEM incentives, to say nothing of the loss of sales and service revenue and the scramble to replace those customers, along with high acquisition costs.

Take a look at what Porsche is doing and consider analyzing your customer experience at every touchpoint. Strive to improve areas that are lacking and reward any staff that perform well. Whether you choose to send your staff to the Disney Institute or not, an internal program designed to improve the customer experience at your dealership can certainly mean future business and revenue growth.

It’s great to see a manufacturer take this move to improve the customer experience and thereby loyalty. Hopefully, other manufacturers and dealerships will follow their lead. It can only mean an improved perception of dealerships by consumers. And that will lead to more business for everyone.

A recent article in Automotive News tells the story of Carlos Liriano, a car dealer from New Orleans who migrated his dealership to Texas and brought with him a passion – gumbo. Initially, it started as a way to show appreciation to and treat his employees every month. But, at his dealership’s 5-year anniversary, he decided to invite the community, and they came. And, not only did they come when it first started, the community has kept coming to the point where customers are actually scheduling service appointments on the day gumbo is served.

What started with a couple of gallons of gumbo has grown into 25 gallons, feeding over 250 people. This dealer’s passion – and tradition – is increasing service business along with the top thing that every dealer wants - selling cars.

But why is his gumbo tradition so successful? Serving food at dealerships isn’t a new thing. How many dealers serve hot dogs, drinks and such on weekends? A lot.

What makes this so successful perhaps begins with the fact that his family’s gumbo recipe is good. Secondly, and most importantly, he chose to share that with both his staff and his local community – and it paid off. Even his digital marketing and social media efforts are reaping the rewards and endearing his dealership to the community.

Community involvement is a vital component in branding, in building trust and the DESIRE for local residents to do business with your dealership. Building trust with consumers isn’t always an easy task – especially if you’re a car dealer. The stereotypes and poor consumer perception can be an uphill battle. The big gorillas and wavy tube men do nothing but attract attention – and most of the time that attention simply confirms that the dealership is “just another car dealership.” There are many ways to stand out in your community and every community is different. Mr. Liriano simply embraced HIS passion for gumbo and then involved his community.

Consider exploring opportunities to embrace and involve your dealership in the local community. Keep in mind that you may not see results right away. But whatever your passion is, share that with your primary customers. Don’t use it as a selling gimmick, but as a genuine way to reach out to your community, share your passion and build rapport and trust. If you build it, service and sales will come.

Discover your passion and build it.

It’s a logical conclusion that customer retention and loyalty are important to the survival and growth of any dealership, yet many dealers focus on growth by intangible metrics, simply looking at numbers – 100 units last month vs. 125 this month, or $125,000 in service revenue last month vs. $175,000 this month – without knowing whether that growth was influenced by customer acquisition or retention.

Most dealers spend a lot of money on marketing every month and it’s very easy to attribute any growth to successful marketing campaigns, technology or vendors, when, in fact, it could very easily be coming from successful retention strategies.

An excellent article on Customer Think spells out precisely why loyalty in the automotive industry is incredibly important, and how you can better leverage retention, loyalty and acquisition strategies to increase growth, revenue and volume.

The article suggests the use of data to predict when sales are ripe as one way to help your dealership thrive. Your CRM has many data points which can help indicate that a customer is ripe for a new vehicle based on things such as marriage or kids, along with many others. Hopefully, these customers are coming to you for service, which gives you a running profile on what has changed in your customer’s lives. This allows for more targeted, personalized and relevant offers which ultimately will convert into sales.

Of course, service plans (pre-paid maintenance) are also huge retention drivers, with a retention rate of close to 60 percent, according to the article. Pre-paid maintenance keep customers visiting your dealership for years. Assuming they’re having a good experience, this also helps them decide to get their next vehicle from your dealership, rather than a competitor.

You can’t always rely on your customers to tell you when lifetime changes occur that could indicate they are ready for a new vehicle. Pro-active marketing and continual, relevant communication with your customers is imperative to retaining their business – for both service and sales. Without a continuous conversation, it’s very easy for the competition to conquest away your customers. This worst-case-scenario, when it happens, means it’s too late, in most cases, to continue the customer relationship. It may not even be that anything went wrong, simply that a customer was attracted by a competitor’s offer. However, it’s very hard to win them back. So, keeping in touch, being relevant and anticipating your customer’s needs, rather than reacting to them, is incredibly important.

Also, be sure that your dealership always offers a superior customer experience. It’s much harder to conquest a loyal customer than it is a satisfied one. Don’t mix the two up because they aren’t the same. A satisfied customer simply means that they are fine with the service they are receiving, but are still vulnerable to competing offers. A loyal customer, on the other hand, is much more likely to stick with your dealership.

In the end, it’s important to develop a way to measure, manage and cater to both new and existing customers. If you can’t differentiate between the two, growth is easily attributed to acquisition efforts, while retention gets ignored.

Remember that it’s much less expensive to keep an existing customer than acquire a new one.

When it comes to customer loyalty programs, customers like to feel appreciated and recognized for their loyalty. And, if they are not, it doesn’t take much to turn them away from being loyal customers into brand advocates.

I recently came across an interesting story about an Uber customer who wrote an open letter concerning his experience with the company. He wasn’t just any old Uber customer. According to Uber’s leaderboard (yes, apparently they have one), he was the TOP customer in the world, as he had utilized Uber for more rides than anyone else.

In his letter, the customer shared that, while he still loved Uber’s service, he never felt special, recognized or even rewarded for being Uber’s top customer. He stated, “I’ve more rides in an Uber than anyone else on Earth. Has your company once thanked me for my undying loyalty? Not even once.” He went on to state that he feels as if Uber is “missing the boat when it comes to fostering great relationships with its customers…your faithful clients are your biggest potential evangelists… treating them with a special touch would turn them into brand advocates who would spread good cheer about the company on their social networks.”

According to this customer, when he tells friends that he is Uber’s top customer, they inevitably ask what perks he receives. However, he has none he can tell them about.

Let’s translate this into the automotive world. Think about that loyal, repeat customer. The one that has purchased the most vehicles, referred the most people and made the most repeat visits to your service department.

What if they were never thanked, recognized, or rewarded for their loyalty and support. I’m pretty sure that eventually that customer will go away. Sure, they may, if asked, still tell people that they’ve been doing business with you. But the real value lies in them proactively inserting themselves into conversations, encouraging their friends, relatives and networks to check you out first – whether that’s for sales or service.

Customers nowadays may be used to loyalty programs – and some retailers think that the mere fact that they are used to them makes them less valuable. But think about this for a minute: the loyalty program may be why they came to you in the first place. However, that experience quickly fades if you do not look after them and maintain an exceptional customer experience with each visit. If that customer is not acknowledged and appreciated for their loyalty, they may still leave satisfied, but don’t necessarily feel like their business is appreciated, valued or rewarded.

And that’s where loyalty programs come in.

Loyalty programs offer your dealership a way to recognize and reward those customers who have supported – and continue to support you -- through sales, service or both.

Dealerships have no problem offering coupons and discounts for customer acquisition efforts -- low price offers with disclaimers that state “for first time customers only.” How do you think that makes your loyal customers feel?

Loyalty programs can incentivize future visits, increase the volume of visits per customer and the amount of money spent per visit.

Consider the argument by Uber’s top customer: Even though he’s a loyal customer and continues to love the service, he wrote a letter and published it online simply to share with Uber how unappreciated he feels.

Lack of customer recognition and a less than exceptional customer experience will certainly fail to attract new customers or increase the loyalty and frequency of visit of existing customers. It only serves to show that no matter how often they spend money with you, they’ll continue to be treated like any other customer.

A recent McKinsey podcast shared that when it comes to loyalty programs, a large part of the population is being ignored: elderly customers.

The podcast featured Jaana Remes, partner of the McKinsey Global Institute, and coauthor of the report “Urban World: The global customers to watch.”  According to Remes, the elderly population will grow by more than one-third in the next 15 years, totaling about 222 million people, and account for approximately 51 percent of urban consumption growth, which is equivalent to more than $4 trillion.

That’s a pretty large base of consumers with some hefty spending power that many fail to market to.

According to the McKinsey podcast, the elderly consumer (60+ years) has some attributes that Millennials don’t have and that are very attractive to retailers.

1. They were raised in a time of loyalty. This is the demographic that would shop someplace because of a great customer experience, they like doing business there and have developed a relationship with the company. Millennials, on the other hand, have more fragile loyalty ties to businesses and will defect much more quickly.
    
2. The elderly generation has much more financial stability and, in many cases, has the credit and disposable income to make large purchases very easily should they desire to. Millennials are more likely to make less money, be saddled with student loans and have less disposable income.

All generations have buying power but simply make decisions in different ways.

Dealerships are well known for their involvement and participation with local communities and many different charities. From sponsoring little league teams, to larger charity initiatives, dealerships have supported and given back to the communities they serve for a very long time.

Cause-based efforts have become increasingly important to consumers, especially to the younger consumers now joining the spending force. For example, General Mills’ “Box Tops for Education” initiative. Founded in 1996, the brand has raised over $719 million nationwide. Of course, the schools themselves aren’t out buying all of these products, the consumers are.

While it is certainly distasteful to always “toot your horn” about how great and charitable your dealership is, there is a right way to do it. Consumers DO want to know what you are doing to give back, it is important to them. Just how important is cause-based marketing to consumers? Let’s look at some statistics from CauseGood,

1. When choosing between two brands of equal quality and price, 90 percent of U.S. shoppers are likely to switch to a cause branded product.
    
2. 97 percent of marketing executives believe cause-based marketing is a valid business strategy.
    
3. When quality and price is equivalent, social purpose is the number one deciding factor for shoppers globally.
    
4. 42 percent of North American shoppers would pay extra for products and services from companies committed to positive social and environmental impact.
    
5. 64 percent of shoppers say simply giving money away isn’t enough; they want businesses to integrate social impact into their business models.
    
6. 88 percent of Americans want to hear about businesses’ social responsibility and the most preferred place to hear about these efforts is on the product’s packaging or label.

Feel free to browse all of the statistics. The fact is that our younger generations increasingly seek to do business with companies that support causes. Of course, it’s difficult for companies to market those efforts. In fact, 70 percent of Americans find companies’ communications about their social responsibility efforts confusing.

So how are you supposed to communicate your charitable and community support efforts to your customers?

Whatever cause your choose, be it perhaps supporting and pledging to donate a percentage of sales and/or service revenue to a valued cause, it is not enough to just simply do it. As stated on the statistics from CauseGood, 88 percent of consumers want to hear about these efforts.

Integrate your charitable cause message into all your marketing efforts including in-store signage and in the service drive. It should be tastefully done and the point is to make it widely known that your dealership supports the cause.

In the end, once it becomes common knowledge within your community, and consumers learn about it through all of your marketing channels, they may well start choosing you over your competition. All while you are make a difference in your community. And that’s a great way to differentiate your dealership from the competition and earn customer loyalty.

Auto dealers are well known for their huge support to local communities. Especially around the holiday season when they do many good deeds including toy drives, donations to food banks and a variety of other activities that have special meaning to those particular dealers. It’s noble not to “brag” about the great things we do as businesses. In fact, many repeat good-deed offenders prefer to stay anonymous. And that’s OK.

Sometimes, however, the smallest of deeds are the ones that touch the most lives.

Take for example, the story of a boy that has been going viral this holiday season. There’s nothing spectacular about him that has been reported. He doesn’t have a life-threatening illness that we know of. He’s simply a boy being a boy… who happened to like playing video games. He liked playing them so much that he visited his local Best Buy every day to play his favorite video game in one of their demonstration kiosks.

If you worked at the Best Buy, it would be hard not to notice the same boy visiting every day, playing video games at your store’s demo kiosk for the Nintendo Wii U system. But, in most cases, that would be the end of the story.

Well, this holiday season, the employees decided to act. These are just normal people working at a retail store. This wasn’t a corporate level marketing play. This was simply a group of employees, at a local Best Buy, who decided that this boy deserved their attention.

What they did was special. In fact, it was so special that the video (one version of it) has been viewed over 7.5 million times on Facebook and over 2 million times on YouTube (again, only one posting of the video). What did those employees do? They all pitched in and bought the boy a Wii U console and a copy of the game he came in to play every day (Super Smash Bros.) as a surprise Christmas gift.

Nobody has mastered the recipe for a “viral video” as of yet… and chances are nobody ever will. This was an act of goodwill by employees at a local business in order to make a boy’s holiday that much better. It turns out that the boy really wanted this game but his family could not afford it. I bet this boy remembers this act of kindness for his lifetime, becomes a loyal customer and passes that along to any children he may have, simply because these employees cared and gave him a luxury that he couldn’t afford.

You don’t have to be a mega-corporation. You don’t have to have a huge in-house marketing department devising acts of goodwill. I’m sure you see this frequently this time of year: That flat tire that can’t be repaired but the owner can’t afford to replace or any numerous acts of kindness that dealerships make.

This act of kindness cost Best Buy nothing, and cost the employees around $400. Eight million views later (and counting), that $400 act of goodwill has paid off for this individual store and for the brand.

It’s not how much you do, but whether you do it at all that counts. Happy Holidays!