“The customer is always right.” was coined and made famous by retailers including Selfridges and Marshall Field’s (now Macy’s) around the turn of the 20th century. It’s a phrase that most of our parents and grandparents had ingrained into their brains as children, and yet it somehow appears to have been lost in translation among the generations – and businesses – born within the last 20 to 30 years.

We are all human and we all make mistakes – businesses and customers alike, but if you want to strengthen the relationships you have with your customers and keep them loyal, then knowing exactly who is right and who is wrong doesn’t matter in most situations. The important thing to focus on is that the customer always deserves to be treated right and with a professional respect and courtesy.

As a business, you must decide where that line is going to be drawn, and then be consistent. When a customer crosses the “unacceptable behavior” line, your concern should not be for the customer so much as for your employee and your business. The Customer Service Point article explains that “when a customer actually does cross the line, you can tell them that you no longer want their business. And at that point, they cease to have the right to be right.

“The customer is always right. But not all customers need to stay customers.”

Do you think the saying, “The customer is always right” is still important for businesses today? Why? Why not?

Source: Excerpted from DrivingRetention.com and The Customer Service Point, February 2012.

In a recent article on Forbes.com, “The Final Frontier: Customer Expectations,” Robert Passikoff points to a shift in the past 15 years: customer expectations have increased significantly, rising 24 percent in all categories. After explaining how customer loyalty is measured and providing an example from the wireless carrier industry, Passikoff concludes, “…brands that are able to better meet – even exceed – growing customer expectations always end up on the top of the list.”

Tying customer loyalty scores to customer expectations is not the answer. Why? Loyalty scores are important, but they don’t take into account all the reasons customers stick with a company. The “how well” question is the field of loyalty. The “if/if not solved” is the field of performance.

Until we come up with a “complacency” or “frustrated and stuck” index and begin dissecting truly loyal, enthusiastic consumers from those who don’t have the time or resources to navigate the breaking of a contract, loyalty is one metric – but not the most important metric we can fully trust to drive improvements in customer experience and organization performance.

What is more important: exceeding customer expectations or solving customers’ problems?

Source: Driving Retention and Business2Community.com, February, 2012. Author, Linda Ireland.

Developing meaningful relationships with clients requires you to connect with them on a personal level. The more you know about a customer, the easier it is to sell them services and/or products that meet their individual needs. It also helps you determine which type of marketing the customer will be most receptive to.

Effectively engaging customers through direct marketing channels hinges on several key principles:

1. Start with the customer data.

Knowing how customers have responded to communications in the past allows you to better target them with your next communications. Use data to tailor your marketing to fit the individual needs of your customers.

2. Recognize and reward your best customers.

If your redemption rates are low, you are not giving the customers what they truly want or need. Find out what customers want and tailor your rewards accordingly.

3. Remain communication channel agnostic.

Combine the information you receive from customer data and your personal knowledge of the customer to choose the right communications channel. The best channels to use are the ones that are most effective.

How have you used your customer loyalty data to better target and reward your best customers?

Source: Excerpted from DrivingRetention.com and Direct Marketing Guide magazine, January 2012.

Prepaid Maintenance Plans (PPMs) have traditionally been used as a customer retention tool by dealers, and rightfully so. Paying up front for services is a guaranteed way to get customers back into the service lane. But the pricing and structure of many PPMs administered by third parties did not make the plans very profitable for the dealerships, and even more important, for the customers.

The new generation of self-administered, self-managed PPM plans offer many benefits beyond customer retention—mainly, more revenue. PPM customers frequently purchase additional customer-pay retail parts and labor services that boost profitability.

Boosting PPM repair orders by upselling an additional $150 to $350 of retail customer-pay business adds serious money to the bottom line. A dealer who plugs a basic three-product PPM plan into every one of the 600 used units he or she sells each year can expect to generate more than $1.3 million in total incremental service revenue, even after factoring in a 55 percent utilization rate and plan costs.

So, given these upsell profit opportunities, why are some dealers' prior experiences with PPMs disappointing? Many have said that customers simply won't buy these plans. However, this may not tell the entire story. When those programs are examined, it is clear why customers wouldn't be interested — they were loaded with services of low value to the customer yet priced quite profitably for the dealership. This is unfortunate, as the nature of these plans and dealers' inability to sell the plans cost dealers much lost service business.

Newer, redesigned PPM programs help to eliminate this downside. Today's programs offer a wide range of products and services and are completely customizable to each dealership. They are also software-driven, handling once time-consuming chores like plan registration, service claim and premium submission. Because dealers control these programs, any reserve or forfeiture is immediate and goes directly to their bottom line.

Retention vs. revenue? A PPM should deliver both.

In last week’s posting, we began counting down the top 12 strategies for building a successful customer loyalty program in 2012. In part 2 of this series, condensed from Driving Retention and from Customer Loyalty: How to Earn It How to Keep It by Jill Griffin, we continue our countdown of the top 12 action steps you can take to implement a customer loyalty program.

#6: Get Responsive and Stay That Way. More and more, customers are coming to expect round-the-clock customer service. Review all customer touch points and identify any area that produces a responsiveness bottleneck. Prioritize these areas, with highest priority given to those affecting the most customers.

#5: Aggressively Seek Out Customer Complaints. 90% of customer complaints are unarticulated and manifest themselves in negative ways: unpaid invoices; lack of courtesy to your front line service reps; and above all, negative word of mouth. With social media, an unhappy customer can now reach thousands of your would-be customers in a few keystrokes. Head off bad press before it happens. Make it easy for customers to complain, and treat complaints seriously.

#4: Serve First, Sell Second. Today’s customers are smarter, better informed and more intolerant of being “sold” than ever before. They expect doing business with you to be as hassle-free and gratifying for them as possible. They believe you earn their business with service that is pleasant, productive and personalized; if you don’t deliver, they’ll leave.

#3: Know Your Loyalty Stages and Ensure Your Customers Are Moving Though Them. A loyal customer cannot be created overnight; they become loyal to a company one step at a time. By understanding the customer’s current loyalty stage, you can better determine what’s necessary to move that customer to the next level of loyalty.

#2: Practice the 80/20 Rule. All customers are not created equal. When it comes to customer loyalty, the 80/20 rule is alive and well. 80% of your revenue is generated by 20% of your customers! A smart company segments customers by value and monitors their activities closely. Rank your customers by actual revenue generation, then rank your customers regarding lifetime value (you will probably have to calculate a formula to do this). Compare the two lists and make sure you are investing in customer appreciation programs that target high-ranking customers on both lists.

#1: Build Staff Loyalty. It’s a fact: any firm with a high level of customer loyalty has also earned a high level of staff loyalty. It’s darn near impossible to build strong customer loyalty with a staff that is in constant turnover. Why? Because your customers want to buy from people who know them and their preferences. To build loyal staff, hold regular meetings with staff and ask these questions: What makes our company a good place to work? What can be done to make it an even better place to work? Take action on what you learn.

Here’s to a loyal customer base in 2012!

Does your business strategy for 2012 include a customer loyalty program? On an annual basis, loyalty program members outspend other customers by as much as 45%. As you prepare your goals and resolutions for the new year, think about building a loyalty program that focuses on keeping a core group of customers coming back repeatedly as opposed to a marketing program that achieves short term results.

In part 1 of this blog, condensed from Driving Retention and from Customer Loyalty: How to Earn It How to Keep It by Jill Griffin, we count down the top 12 action steps you can take to implement a customer loyalty program in 2012:

#12: Store Your Data in One Centralized Database. Review your company’s current database situation. How many customer databases exist? For example, does each sales rep keep her own customer database? Does each department keep its own? Brainstorm with staff on how to start consolidating the databases, with the ambitious goal of moving to one centralized database over time.

#11: Collaborate With Your Channel Partners. Contact your suppliers routinely and ask them, “If you could change one thing about the way we do business together that in turn creates better value for the customer, what would it be?” Use this feedback to steadily improve channel partner collaboration.

#10: Give Your Front Line the Skills to Perform. Review your hiring policies for front line workers to ensure candidates are being screened for adequate communication skills, especially oft-missing writing skills. Consider making a writing test part of your screening tool.

#9: Use Multiple Channels to Serve the Same Customers Well. Whether a customer comes into your store, calls your service center or visits your web site, they should get the same level of customer service. Using customer feedback as well as formal customer research processes, monitor customer performance levels for every channel. Things to watch for: in your customer’s eyes, are you providing equal service in each channel? Is one channel preferred over another? Why?

#8: Win Back Lost Customers. Research shows that a business is twice as likely to successfully sell to a lost customer as to a brand new prospect. Yet this is an opportunity that is often overlooked. Do you have an official program to win back lost customers? If not, begin immediately to identify lost customers and research processes others are recommending to win them back.

#7: Know Your Customer’s Definition of Value. Review your company’s current knowledge base regarding what your customers’ value. Look for these insights: (1) What is it about your products or services that drives loyalty today? (2) Which product or service areas most need improvement? (3) Where are you currently over-investing? (4) Which areas deserve more study for potential future investment?

Stay tuned for next week when we count down the top six ways to build customer loyalty in 2012! 

Representing more than 1.7 billion consumers worldwide, of which 77 million are in the US, the so-called ‘Millennial’ generation (aka. ‘Generation Y’) is presenting marketers with some new challenges and changes as it comes of age and takes the reins of the global consumer economy, according to a study by Aimia (formerly Groupe Aeroplan).

To compare the attitudes and behaviors of Millennials (born between the mid-1970s and the mid-1990s) with older consumers, Aimia commissioned Harris Interactive to conduct an online study of more than 6,000 consumers in Canada, the UK and the US. The study – recently released in the United States as “Born This Way: The US Millennial Loyalty Survey” – concluded that Millennial consumers will certainly change the way companies and brands build sustainable customer loyalty.

Generation Y is bigger than the Baby Boomer generation, and is three times the size of Generation X. With Baby Boomers retiring, it’s critically important for marketers to understand how Millennial attitudes toward technology, data privacy and rewards will change the way brands build strong, profitable relationships with their best customers.”

Among the high-level findings are these important insights:

Loyalty Behaviors

Over three-quarters (77%) of Generation Y claim participation in loyalty and reward programs, compared to four in five (82%) non-Millennials consumers.

Over three-quarters (78%) of US Millennials are more likely to choose a brand that offers a loyalty or reward program over a brand that doesn’t offer one.

In unprompted responses, US Millennials rate loyalty rewards as the top incentive they look for in exchange for sharing personal information with marketers.

Nearly half of US Millennials (44%) are willing to promote products or brands through social media in exchange for rewards.

Mobile Technology

Generation Y is skeptical of the value of location-based marketing offers delivered via smart phone, with only one in ten (13%) claiming to have responded to such an offer.

Using a mobile device as a substitute for carrying a plastic loyalty card is the top requested mobile payment application for Millennials, (26% express interest); meanwhile, only one in ten (13%) express interest in using a mobile device as a credit or debit card.

Privacy

US Millennials are significantly less concerned than non-Millennials with data privacy and security overall. Of all named marketing channels in the survey, loyalty and reward programs are perceived as the most privacy-friendly by Millennials: only 14% of Millennial loyalty program members are concerned about sharing personal information with loyalty programs.

Nearly half of US Millennials (47%) agree that they are more likely to share personal details with a brand that offers loyalty and reward incentives.

This blog is condensed from Driving Retention and the Aimia report on Millennial Loyalty, “Born This Way: The US Millennial Loyalty Survey.” 

The week between Christmas and New Year’s is a busy time of year for many auto dealers. It can be challenging for salespeople to keep up with all the showroom traffic, but that’s no excuse to let extra revenue opportunities fall through the cracks! While the customer is still engaged at the sales desk is the perfect time for a salesperson to boost revenue with the following programs:

Pre-Paid Maintenance Program: What better gift to give than an entire year of worry-free driving? A pre-paid maintenance program is the perfect new vehicle “accessory.” These plans can be sold in both the F&I and service departments. To maximize revenue, dealers should look for PPM plans that require no third-party administration, no sharing of program revenue or forfeiture and no service claim submission requirements. Plans should be customizable and branded to your store.

Loyalty Card: If your customers accumulate enough rewards points, they may be able to redeem them for a gift (either for themselves or a loved one) next year! Rewards should be tailored to what your customers want, such as a free dinner at a local restaurant, spa service, or coupons to local retailers. A points-based rewards program is very appealing to most customers, with the majority of customers choosing to opt in when offered. It doesn’t cost them anything, and encourages them to return to your dealership for service and parts purchases.

What other ideas or recommendations do you have for maximizing revenue opportunities in your auto dealership during the busiest sales week of the year?

Facebook Marketing Solutions recently held a series of six marketing bootcamp webinars for Facebook business pages. In case you missed them, here are brief summaries of some of the highlights:

1. Why Facebook for Business? Besides the fact that 800 million people are on Facebook, word of mouth marketing is twice as likely to result in engagement and four times as likely to result in purchase than any other form of marketing.

   

2. Connecting with Customers: Facebook provides businesses with proven methods to connect with and engage their customers. By building out your business page, engaging with current customers and providing them with incentives to come to your store, you have the opportunity to both build customer loyalty and reward them for their loyalty.
3. Facebook Ads: Facebook allows businesses to target a very specific audience using demographic and geographic data, or by workplace, education, likes and interests. To create effective ads, use Facebook insights to see who’s already visiting your site.
4. Sponsored Stories: As any marketing expert knows, it’s better for someone else (especially a customer) to say something nice about you than for you to say something nice about yourself. Customers referred from others generate higher profit margins than other categories of customers. Sponsored stories allow businesses to turn their customers’ engagement into stories for those customers’ friends to see.
5. Insights & Optimization: Perhaps the two most important elements of good marketing are getting the right message to the right audience at the right time and optimizing future marketing efforts with effective result analysis. Insights is Facebook’s reporting and analysis tool designed to help you optimize your campaigns from both the creative and technical stand points.
6. Making Technology Social: Marketing is about pushing information out to your target audience and social media platforms have an unprecedented ability to reach deeper and further into your desired market. Facebook has built several tools that can help businesses make their technology “social” to achieve this depth of penetration.

To read more in-depth summaries of the Facebook weekly webinars, follow this link to our customer loyalty blog, Driving Retention: www.drivingretention.com

When a dealership offers a prepaid maintenance program (PPM) to its customers, what does the store hope to get in return? Customer affinity is one thing, but there are other benefits to this bottom line-driving F&I product.

Not only does a PPM plan deliver affinity, it provides dealers with profitable affinity. And experience shows that customers who use a dealer’s repair facilities are 17 times more likely to purchase their next vehicle from that dealer. As great as that is, the true long-term benefit is that PPM-plan customers frequently purchase additional customer-pay retail parts and labor services that boost repair order profitability.

To capture that opportunity, dealerships need to commit themselves to delivering a safety-and-reliability inspection to every vehicle owner. Doing so helps verify the needs that brought the vehicle into the shop. It also allows technicians to identify other legitimate maintenance and repair needs beyond those covered by the customer’s PPM plan.

Boosting a PPM repair order by upselling an additional $150 to $350 of retail customer-pay business will add serious money to the bottom line. When a PPM plan is built into used-vehicle prices, a dealer can bump after-sale service from about 15 percent to upwards of 50 percent.

A dealer who plugs a basic three-product PPM plan into every one of the 600 used units he or she sells each year can expect to generate more than $1.3 million in total incremental service revenue. This return is based on a $682 retail upsell per customer per service visit over the two-year plan term, even after factoring in a 55 percent utilization rate and plan costs.

PPMs Convert to More RO Dollars

Studies of current customers purchasing a PPM program reveal a remarkable statistic: While current industry stats indicate that roughly one in five customers return to the dealership for service, customers who opt for a PPM plan are visiting their servicing dealers at a rate of 72 percent.

Additionally, plan holders that return to the dealership to redeem their plan benefits purchase incremental retail service about 90 percent of the time. In addition to the increased visit frequency, those plan holders are spending an average of $128 per visit, which includes upsell products and services.

A dealer who writes 1,500 repair orders per month can easily sell 150 to 200 maintenance policies by simply asking customers visiting the service department. In the F&I office, it takes a 500- to 600-unit store to generate the same 200 maintenance policies.

Given these upsell profit opportunities, it’s difficult to fathom why some dealers have had disappointing experiences with PPM programs. Many have said that customers simply won’t buy these plans. But upon closer inspection, it becomes clear why customers wouldn’t be interested: the plans were loaded with services of low value to the customer yet priced quite profitably for the dealership. This is unfortunate, as the nature of these low-value plans – and dealers’ inability to sell the plans – result in lost service business for the dealer.

Newer, redesigned PPM programs help to eliminate those problems by offering a wider range of products and services. These programs – usually administered and managed to offer what is considered valuable to the dealership’s customers and market – seem to really work for both the consumer and dealer.

Next-Gen PPM Plans

Today’s PPM plans also are software-driven, handling once time-consuming chores like plan registration, service claims and premium submission. Because dealers control these programs, any reserve or forfeiture, or money remaining in reserve for plan services not redeemed by purchases, is immediate.

Every plan must also account for forfeiture, i.e., when a customer terminates the plan early or does not use the plan for whatever reason. For most traditional plans, the third-party administrator holds a dealer-funded reserve. It is from this reserve that the administrator could take up to 60 percent of the value of the cancelled services as part of its fee structure.

The new generation of self-administered, self-managed plans offers attractive advantages to today’s market and value-conscious buyer. Custom plan content really appeals to them, and it makes these plans more attractive. These plans also enhance the owner’s investment by having the vehicle maintained by the dealership that sold his or her plan. This, in turn, enhances opportunity for alert advisors to upsell additional services for healthier repair orders.

Originally Published in F&I and Showroom Magazine, October 2011