Creating a loyal customer is sort of like getting married. The introduction is followed by a period of courtship and, if all goes well, commitments are made. Loyalty in the automotive world is something that everyone battles from the OEM level to the dealership. Did you know, however, that the longer you’ve had a customer the harder it is to keep them?

Logic would dictate that you would need to focus more on creating customer loyalty in the beginning than after the marriage. However, according to R.L. Polk, “loyalty rates decline after the third year of ownership and continue to decline after the fourth year, and every year after that.” Polk attributes this fact to “boredom”. Their studies show that the longer a customer owns a car, the less exciting the ownership experience becomes.

Just as in marriage, there’s what is referred to as a “honeymoon” period. You’ve taken the vows and began your new life together, and everything is wonderful. Apparently, according to Polk, a similar period exists when it comes to customer loyalty and retention. As we consider ways to increase customer retention, it seems as if length of ownership is extremely important. It certainly makes sense that, no matter how long you’ve had a customer and no matter how great of a relationship you’ve had with them, if they get “bored” and switch to a new make, you’ve definitely lost a sale but chances are probably very good that you will lose them as a service customer.

The fight against “boredom” is something that OEMs take on by introducing fresh models with new features, more powerful engines, sleeker more modern looks and technological advances. They encourage leasing by offering low residuals and money factors with the hopes that the customer will stay loyal by returning to lease another vehicle.

How do you help buck this trend and insure that your customers stay loyal? One way is certainly by making the customer experience exceptional. People certainly love excellent customer service, and it is one of your greatest weapons in creating loyal customers. Another way is by implementing a dealership loyalty program that incentivizes customers to keep doing business with you.  There’s a reason that almost every major retailer in the US has a rewards program of one form or another. It allows you to track how your customers are spending money with you which then gives you the data to create offers better tailored to them. 

No matter what you do, make sure that you’re retention strategy isn’t focusing solely on creating loyalty in new customers. Analyze your sales history and shift some of your focus to customers who purchased 24-36 months ago and you’ll be well on your way to helping your OEM increase brand retention while insuring that you’re giving your dealership the opportunity to intervene with your loyal customers before they get bored.

It’s not a new idea to have one of your salespeople working the service drive. Opportunities and circumstances exist where it may be beneficial for the customer to trade-in their car that needs to be repaired. Having someone who can not only identify those opportunities but who also knows how to present it to the customer properly is rare.

That being said, have you ever considered having your F&I manager work the service drive? Most F&I managers have been in sales at one point in their career, so they are well equipped and have the skills to take advantage of every opportunity.

An F&I manager can see opportunities everywhere. If he and the service advisors work as a team, there are many more circumstances, which could lead to additional revenue for the store.

Consider this:

1. An F&I manager can present pre-paid maintenance plans and extended warranties to customers with the knowledge and sales ability to explain the features and benefits.
2. An F&I manager also has the ability to determine when it may be beneficial for both the store and the customer to investigate whether it makes sense to trade-in the current vehicle for a new one rather than make costly repairs.
    

Except for the most ambitious salespeople, most consider having to work the service drive as being sent to work in the Arctic Circle. They aren’t able to watch for or help any walk-in customers and they aren’t able to take any incoming phone calls; both of which are what they would consider their bread & butter that leads to a sale.

Don’t get me wrong, your F&I manager is busy (hopefully), and likely will not be too pleased at the idea of working the service drive. However, he may be not only one of your BEST people to put into the service drive but he also has the most to gain from it as he would get the commission and penetration from the sale of any maintenance plan or warranty. If he were to convert a service customer into a sale, he would have the opportunity to make more money by being able to type the deal and present the whole F&I menu to the client. In this situation, the F&I manager would benefit from additional income.

There are many opportunities that exist in the service drive to increase revenue for your store, and having someone looking for these opportunities is a great plan of action. I’m not talking about having them all day – try it for an hour or two. I’ve heard of a couple of F&I managers that picked up 2-3 additional deals a day by doing this.

Dealerships today spend most of their marketing budgets on acquiring new customers. Those ads in the newspapers aren’t really meant for current of past customers, they are meant to attract new customers. The cost of customer acquisition ranges from 6 to 10 times more than the cost of customer retention, so what can your dealership do to increase customer retention?

Here are five great places to start.

1. Processes –Are your processes customer-friendly or are they focused on efficiency? What parts of your processes are your customers complaining about? Examine your processes and put yourself in their shoes. If this were a process you had to go through, would you like it? No matter what the process is for, make sure that your customers know what it is in advance and listen to them when they tell you which parts they don’t like, then make changes accordingly.
2. Reciprocity – The law of reciprocity states that people “respond to a positive action with another positive action”.  In business, reciprocity as related to customer retention usually refers to going above and beyond for your customer. In return, they will reward you with repeat business. Positive actions don’t have to cost money. They can be anything from a kind word to opening the car door for them when they arrive. Have crayons & coloring books handy for the parents bringing their children in with them. Small things sometimes make big impressions. Use this to your advantage in all departments of your store.
3. Exceptional customer service – Ensure that your customer’s experience is world-class customer service from the moment they become your customer throughout the entire relationship. This will keep your customers loyal. Emphasize customer service in all your processes, in every department and to every employee. Make no mistake; the smallest error can cost you a customer. Train your staff the importance of providing exceptional customer service and hold them accountable. There is no easier way to increasing customer retention than providing an experience that customers cannot get anywhere else.
4. Quality Is Better Than Speed – Many businesses assume that the faster the service, the better the customer perceives it. According to an article by Gallup, “If the goal is to create strong bonds that ensure customer retention, companies must focus on activities that create and sustain the customer relationships, not just on those that enhance company efficiency.” Slow down and take time to really listen to your customers. They will be the ones that inevitably decide whether your business thrives or not. Make sure that your work is top-quality.
5. Know Your Customers – As simple as this sounds, it’s the one area where many businesses fail. There is nothing more impressive than going into a business and being greeted by your name. People like to be remembered. It makes them feel special. There is no easier way to prove to a customer that you value their business than by knowing who they are. Encourage your employees to take the time to get to know your customers. Make them more than just a name in your computer. They will notice and will be impressed. In today’s busy world, everyone is in a hurry. Be the business that’s more interested in getting to know them than the one looking to get rid of them the fastest.

There are other ways to increase customer retention including customer loyalty programs, customer appreciation events and special offers. However, by focusing on these five areas, you will improve your customer retention rate simply by being a place customers want to visit, rather than a place they need to go.

In today’s world of constant noise, it’s more difficult than ever to market your dealership. Dealers are constantly trying to guess where the best ROI is when considering how to spend marketing dollars. How much money do I invest in traditional marketing? Online marketing? Direct mail marketing? The rep from each medium will tell you that their media is the best to use for your dealership marketing. Dealerships are in competition with their competitors within their DMA for airtime and attention, and even their OEM.

With the cost to acquire a new customer increasing each year, how you choose to spend your dealership marketing budget becomes even more important. I know dealers that have chosen very different routes. Some chose to have no traditional marketing and are all digital. While others are at the opposite end of the spectrum with no digital marketing at all and insist on “old school” methods of marketing. I’ve actually heard stories of a dealership that seriously debated whether they should get rid of their website and buy an inflatable gorilla for the building.  And I am not joking; I really did hear this.

Marketing your dealership is always going to be tough. The key thing is to know what method is getting results and returning the best ROI for your dealership. With a little investigation, and with proper tracking, it is possible to zero in and be much more accurate about what’s working for your dealership.

By utilizing your own reporting and learning some easy tricks, the process is actually quite easy to manage.

Here are three things that you can do to get a more accurate idea of what’s working for you.

1. Use call tracking. I’ve yet to see a dealership that does not have a pretty busy switchboard. There are still many consumers who opt to pick up the phone rather than submit a lead online. Many advertising sources will provide some tracking statistics for you. However, even if they do, have your own service. Rely on the statistics that your own service provides you.
2. Have different offers on each medium. It’s okay to have an oil change coupon included in your dealership marketing plan. However, don’t fall into the trap that many dealers do and have the same offer on every media. Change up the offer. By having different offers, you can better track which offers are working and which of your advertising mediums are actually generating business.
3. 3.    Make the coupon printable and required. Too many dealerships that have offers, either online or in traditional print, are not requiring the customer to present the coupon. In addition, I’ve seen many service advisors who will actually offer the coupon to the customer who doesn’t even know it exists. By allowing this, you completely negate your ability to track which offers from which ads are actually working. You may also be unnecessarily costing yourself money. If you want an “offer” specifically available to that service customer who inquires about one in the service drive or over the phone, create some specifically for those people. Make your advisors and cashiers accountable for the redeemed offers during the end of day cash reconciliation.

By implementing these three items into your dealership marketing plan, you’ll be able to easily monitor the results. This includes not only tracking your offers; but also the mediums in which those offers were delivered to the customer. With this information, you’ll be able to make better decisions and be able to shift money to the offers and mediums that deliver the best ROI.

Can efforts to capture customer loyalty be thwarted by employee loyalty?

Evidence gathered from top retail groups, including auto dealerships, indicates that employee loyalty directly affects customer loyalty and thus business results.

Dealer operators and their managers do their business, their stakeholders and their shareholders disservice when they fail to foster, develop and reward employee engagement. Get this loyalty driver fixed first. Then watch the ROI on customer loyalty improve.

According to customer experience researchers Temkin Group, engaged employees are key to engaged and loyal customers.

“Engaged employees deliver a better customer experience; a better customer experience creates customer loyalty; puts employee engagement; and, customer loyalty leads to more profitable business results,” Bruce Temkin, managing partner, told Direct Marketing News.

Among auto dealership franchises, Toyota does the best job at this, according to Temkin’s Experience Ratings report, just released.

Is employee loyalty killing your dealership?

When employees are taken for granted, not given clear direction, rarely cheered on and viewed as utilities, don’t expect them to engage customers in positive ways.

Absenteeism, water cooler huddles and high turnover are signs employee loyalty is in bad shape.

The good news is that developing employee loyalty is not rocket science, but a good dose of the Golden Rule, treating others as one would like to be treated.

Here are some ideas for engaging employees so they can deliver better customer experience:

• Hire the right people. Look for those possessing the required job skills – as well as having the heart and desire to serve others.
• Lead with vision. Employees who can articulate the dealership’s guiding principles and reflect them in their engagement with others have bought into leadership’s vision. Wall plaques cannot adequately convey this vision. Ongoing cheerleading sessions and desk side chats will.
• Equip staff to master and own their jobs. Only when employees know their jobs and are comfortable performing them will their attitude and actions allow them to focus more on others and their needs than their own. Provide training on both hard job skills and soft attitude skills.
• Care for their families. This is a tough business, given the hours, competitiveness and personality types it attracts. Nothing tells employees you care about them like paying attention to their personal life and family. Include families in company events. Send flowers or other forms of condolence when an employee’s family member is ill or otherwise struggling. Can the dealership fund a scholarship program for employees’ children or sponsor a kids’ day program during summer months? Might a letter to a spouse of a hard-working member of the team encourage both employee and spouse?
• Link their loyalty to customer loyalty: Some people get it naturally, that warmth, helpfulness and personal interest in others, that sparks social interaction. Most of us need a few clues. Consider an all-staff event to talk about the link between customer loyalty and employee loyalty. Help them see clearly that their behavior and attitude on the job (as well as off) either bolsters or undermines efforts to build customer loyalty long-term. If you need outside expert help, make the call and the investment.

“Most industries earn their reputations,” Temkin told Direct Marketing News.  “What happens is industries end up cultivating their mediocrity.”

What reputation is employee loyalty cultivating for your dealership and your customers?

​When did you last share with someone important why you enjoy him or her? We’re fast to convey disappointment or dissatisfaction with others, but uplifting the attributes in them we like feels rather strange.

Yet when it comes to building loyalty, whether in customers, coworkers or family members, nothing will engage their attention – and draw them to us in response – like taking the time to consider and then share positive observations about them.

You may be thinking that an idea like this has no place in the rough and tumble world of auto sales, when in fact, you wouldn’t be further from the truth. Anytime that there is any interpersonal friction, misunderstanding or a feeling of ingratitude, an uplifting and edifying discussion about the values you perceive in someone else will carry the day for a long time to come.

The hardest challenge for most of us is identifying specifically what it is we like about someone else – and then being courageous enough to share these observations with them. You don’t want to spin an attribute that’s not exhibited in someone, but you can identify qualities in him or her worth mentioning. This means though taking time to observe your employees/coworkers and learn their interests.

When you build up others, both you and the recipient should experience a lift while building the working relationship.

If your goal is to build a loyal customer base, there’s no better place to start than by building up your employees’ loyalty and engagement by making sure they know how they are valued.  Properly timed sharing of encouraging remarks like “things I like about you” is the most cost-effective means for improving employee morale and loyalty.

Here’s how this might work in the dealership. Chatting with a service advisor in the break room, the service manager says, “You know, Larry, I’ve known you now for what, three years? You know what I like about you? I like that you’re always punctual. I like the way you greet our customers and always have something to say to them that makes them smile. I like it that when you talk about your kids your stories are always upbeat; it’s obvious you love them very much.  I’m glad you’re on our team, Larry. Thanks for your commitment and loyalty. It means a lot to me.”

How would such words shared sincerely with you make you feel about your employer, your job and yourself? The fact that someone else took the time to recognize these qualities in another speaks volumes.

Life can beat us down, and no one is immune from life’s trials. We can’t do much about those matters, but we can learn to speak grace into others’ lives. Why not choose today to be a deliverer of grace to those who labor with you.

98% of Customers Who Join a Rewards Program Provide an Email Address

Email Open Rates for Reward Members are 300% Higher Than Non-Members

Dealerships That Provide an Incentive for Customers to RETURN After a Visit Have a 20% Increase In Sales

Statistics Show a 35% Service Visit Increase with Rewards Members

Members Spend 11% More Annually on Service When Participating in a Rewards Program

I think it’s pretty obvious after seeing those numbers that having a Rewards Program in place can more than triple the overall profit for your dealership.

Customers are always looking for the best deal and the best ways to save money. When you offer a rewards program, you are giving your customers what they want. The upside for you? You create loyal, repeat customers that will return to your dealership time and time again and spend more money while doing it. What’s not to love? By contacting a third-party provider, like LoyaltyTrac to help you setup a successful rewards program, you can increase your customer base and profit.

Also, there is a huge marketing potential for your rewards members. With statistics showing a 300% increase in email open rates, you better have a marketing strategy in place to reach your rewards customers.

Offer special incentives to only your rewards members – like an extra 15% off their next service visit or double their reward points for that entire month.

It is important not to SPAM your reward members. Each customer’s email address is like gold, so don’t blow it by dumping ten or more emails a month into their mailbox. They won’t appreciate it and neither will your bank account. Instead, offer thought-out marketing campaigns each month that have a specific focus and offer real value to your rewards members. Take time to sit down and plan out your marketing strategy for the next two months, or even the whole year and craft engaging content.

By utilizing your rewards members through your email marketing, you will more than triple the ROI for your efforts.

What are some of the successes you have had with your rewards program? How are you utilizing your rewards program to grow your dealership?

​With service departments finally getting the credit due to them for contributing to the growth and profit of dealerships, pre-paid maintenance programs (PMP) are starting to make a huge impact on the overall profit of dealerships as well.

I think it is well established that most PMPs are being sold in the F & I department. But is that the only place that they can make the dealership money? Pricing your pre-paid maintenance program is a big part in whether a customer will even consider purchasing a plan.  Recently we noticed that dealerships were overcharging their maintenance plans, arguing “what’s the point if we can’t make profit on the program?”, which made us realize that some dealerships are taking the wrong approach to their PMP.

When selling a maintenance plan to a customer, you tell them that they are saving money in the long-run and that they will not have to worry about the maintenance on their vehicle for 2 -5 years, depending on the length of the plan they choose. But when looking at the benefits from a dealership standpoint, there are several things to look at, and not just the profit. If you are concerned about losing your shirt when selling PMPs, then consider building your own PMP through a third-party provider like UltraCare and keep more profit for yourself. By cutting out some of the costs associated with most PMPs, you can lower your prices and still come out ahead.

What should you consider when looking for a pre-paid maintenance program?

Pre-Paid Maintenance programs, when delivered effectively, increase customer loyalty and create repeat business for your service department AND sales department. A customer is seven times more likely to return to your dealership if they have purchased a maintenance program from you. In addition, customers are 83% more likely to purchase their next vehicle from you if they visit your service department regularly.

Try to keep the bigger picture in mind. By stepping out of the box of profit and stepping into the one of loyalty, you can start to see the forest and not just the trees right in front of you. PMP are a great tool for dealerships, but if not used correctly, they will be unsuccessful and can actually hurt your reputation with your customers.

So, it is not just about adding to the profit of the sell. It is about adding a loyal customer that will return multiple times and more than triple that number. Price your programs competitively and to the advantage of the customer. In the long-run you will make much more profit. Not to mention you will have a happy customer who will bring more customers to your business through word of mouth.

What successes have you had with your PMP? What are some of the frustrations you have with the PMP that you offer?

Creating loyal customers starts with a loyal team. It is important that your employees feel valued and motivated on a daily basis. When your team is at its best, then you can be sure that your customers will be getting the best service.

Here are 5 communication tips to make sure that you and your managers are being effective communicators and motivators.

1. Plan for Success: Hold weekly and monthly meetings for plan for success and go over what goals have been achieved and what you are still reaching for. Stay focused and ask your team to write down their ideas and suggestions for a “Creative Meeting” to go over the growth of the company. Before your meetings be sure to have an outline sent to everyone that will be in attendance at least two hours beforehand and encourage your team to be prepared for brainstorming.

2. Know Your Employees’ Strengths: When hiring an employee, do a personality and strengths profile. This is important because you can learn what position they are best suited for and how they communicate. When implementing a new strategy or idea for your company or department, hold a strategy meeting and go over what you are planning to do with your company or department. Then ask your team to write down who they think would be best suited for the new task or position and ask them to explain why. Your team works with one another on a weekly, daily and hourly basis; they know each other’s strengths in much more detail than you will.

3. Have Clear Processes in Place: If you do not have a clear process for every task that needs to be done, there will be inconsistency and failure. So set your team up for success, and make sure to always anticipate anything that may come up. Have someone create a manual for each position and have processes in place so each employee will be able to be self-sufficient and confident about their position.

4. Be Proud of Your Employees: Set goals for your individual employees and your team. Have prizes and bonuses in place that let them know that you are proud of what they have accomplished. Encourage them to be self-starters, and thank them when they have stepped out of the box to help grow the division or company.

5. Turn Mistakes into Learning Experiences: When a mistake happens, take the time to determine what caused it, how it can be fixed and how it can be prevented in the future. Create a process write-up and hold a training meeting to use the mistake as an example to improve your department or division. Don’t focus on the employee; turn every mistake into a learning opportunity for your team.

It’s important that you take the time to motivate and communicate with as many employees as possible on a daily basis. By sticking to this consistently, you will encourage them to do the same. Over time you will have a team that is motivated and working together to grow your business and build loyal customers.

We want to know you best management tips for boosting employee morale. What have you done to help motivate your team?

When we hear the term “Fixed Ops” we think of something that cannot be changed. The concept of Fixed Ops is that they depend on the result of the variable operations within a dealership. The goal is that as car sales rise, so will service revenue. However, your service revenue can move up the charts without having to depend on your sales. Here’s how:

By marketing your service department to existing customers AND new prospects you can increase customer retention and gain new customers through what might have been a lost sale through your CRM.

Here are 6 Tips to make your fixed ops not so fixed:

1. Offer a Loyalty Rewards Program. Reward Members Spend 11% More Annually On Service When Participating In A Rewards Program. By rewarding your customers for returning, you let them know that they are valuable and they feel better about the fact that they are getting a discount for returning. 98% Of Customers Who Join A Rewards Program Provide An Email Address. What better way to build your email database for marketing specials in the future?

2. Offer a Pre-Paid Maintenance Program. By offering your customers the option of a pre-paid maintenance plan you take away the anxiety of the service bill and gain on average, a 35% Service visit increase.

3. Offer Monthly Specials. When a customer comes in for service and finds out that they need a timing belt and all fluids replaced, they may have a semi-meltdown at your desk. But if you have a special coming up the next month that will offer them some relief, they will be more likely to return for a major service.

4. Send Service Reminders to Your Customer Base. Set up automated messages that go out to your service customers who have not been in for 3, 6 and 9 months. Be sure that you are not emailing the same customer multiple times. Also, track what emails are working and which ones need revision. It is important that anytime that you market your company, you track the results.

5. Send monthly special emails. Send out monthly specials to your service customers AND Sales prospects within your CRM. Most sales leads purchase AFTER 60 days, which means you have time to build a strong relationship with them. By converting a slow buyer to a service customer you will build a relationship of trust and secure a sale in the future.

6. Coupons. Women make up 73% of service customers. We all know that women love coupons. Some women will buy something JUST because they have a coupon. So, give your customers a 10% off coupon when they spend a certain amount to use on their next visit and be sure to include coupons on your service page and in all of your email communications.

By taking the time to strategize a marketing plan for each month of the year, you can optimize your service revenue and continue to grow your customer base.

What programs have you implemented to help grow your fixed ops revenue?