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Will Michaelson

Will Michaelson Sales Associate

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What's your Customer Value Proposition?


Good afternoon,


I wanted to share another blog post Paul Long wrote, in regards to the value customers find in staying loyal to your brand. 

Have a look, and see what your customers may be thinking when they walk into your dealership.


What do I get for staying loyal to your organization?


Have you ever heard that?  Maybe, maybe not.  But customers are thinking it all the time.  Shrewd customers can quickly tally a Pros/Cons list in their heads, and determine why they should do business with you instead of your competition. The good ones will even calculate the Value Proposition.


The Customer Value Proposition is an important piece to the puzzle which is your loyalty initiative.  If the Customer sees no Value in your Proposition for doing business together, they will shop elsewhere.  However, if they see a strong payback, they will likely stay loyal, or at least consider the cost for defecting.

For example, during a recent $200 hotel stay, I earned about 2,000 rewards points, or 10% payback for my business.  I choose to be loyal to this hotel chain because I feel the payback is pretty strong, plus I get airline miles—a double payback.  That’s a good Value Proposition to me.

On the same trip, I earned about 3,000 flight miles for a $700 ticket—a 23% payback.  In addition, although I felt the ticket price was high, I thought about my costs for defecting—losing Elite status, not adding to my bank of miles, and bag fees (I don’t pay bag fees on this airline because of my loyalty).  Adding up everything, the Value Proposition was there for me to drop the $700.

What’s your Customer Value Proposition?  Is it tangible? When you add all the elements up, does it pass your personal smell test?  Would you stay loyal to your organization if you were a customer, or would you be shopping around?  At minimum, your Customer Value Proposition should be 3% of what a customer spends with you.  If a customer spends $20,000 with you, their payback should be at least $600 over the life of your relationship together.


In addition, the incentive or reward should be easily attainable, and within a realistic time period.  For example, I can redeem my hotel rewards after only four stays.  That’s attainable.  If you require a $1,200 threshold before a Member can redeem for a reward, and your awards go away after 1 year, you’ll have high breakage (non-redemptions), which can be good.  Then again, that $600 Customer Value Proposition is no value at all.  And that’s bad.

That’s extreme, however, designing a loyalty program is a delicate balancing act between Customer Value Proposition, Redemption and Breakage.


Start with your Customer Value Proposition, and I’ll repeat my question:  “What do I get for staying loyal to your organization?”


What do you think? Are you offering attainable rewards for your customers, and giving them great reasons to come back to your dealership? I've heard many dealerships that don't offer much in return for their customers, but some don't realize they're already giving value (whether it's a free oil change after four changes, or free tire rotations). Sound off in the comments, and let me know your thoughts.



Will Michaelson

Sales Associate

re:member group

Phone: 952.224.8002


Chris Costner
Great view Will on customer loyalty. I certainly agree that a monetary "payback" certainly helps but on the other hand I see a completely different checklist regarding "moments of truth" or "touch points" that clients use to determine loyalty to a brand or dealership over their ownership period. I believe loyalty is fragile and it certainly takes much more than bonus points or any flashy rewards program to keep a client loyal to any certain brand or dealership. What do you or anyone else think of my point of view?
Jim Bell
Great points from both of you guys. I think it all comes down to the experience. If you give the customer a great experience and have the right programs in place like a loyalty program and/or referral program, it will pay back 10 fold. Chris, I think that maybe it comes down to the brand. I think and have seen that the customer is more dedicated to the brand than the dealership. That is why the experience will make you stand out more so and get them back for the service and parts sales.
Malinda Terreri
I'm curious if there are some recent industry stats that crunch the numbers on the lifetime value of a dealership customer. Something that factored in the average number of years a customer stays with a dealership, value of referrals, etc.
Will Michaelson
Chris and Jim, I totally agree with you. In order for a customer to stay loyal to your dealership, you need to give your customers a compelling reason to keep coming back. There are more options customers can use besides your dealership, so why would they do business with yours? Give them a reason to visit you, and then make sure they've been treated well throughout the experience. Whenever I visit my dealership for routine maintenance or oil changes, the salesperson that sold me my car will meet with me and talk hockey with me. He found a common bond with his customer, and makes sure my needs are met every time I'm in. Give your customers an incentive to come to your dealership, and once they're in, treat them like friends in your home and make them feel appreciated. Malinda, I know there's some information regarding customers over a lifetime span. If I can find some recent information on our dealerships, I'll be sure to send it to you. Thanks for the comments, everyone!

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