If you are asking whether customers are satisfied with your service—you’re asking the wrong question.  If you are measuring and trying to increase your customer satisfaction—you’re measuring the wrong thing. Eighty percent of satisfied customers will still shop around to your competitors.  So don’t grow your number of satisfied customers. Grow your fan base.

Measuring your fan base is quite easy, and is determined by asking one simple question: “How likely is it that you would recommend this company to a friend or colleague?” This one question, when measured properly, offers a more accurate way of gauging customers’ real loyalty to a company, instead of mere satisfaction in the services it provides. Because really, what is the ultimate act of loyalty, but to place one’s reputation on the line and recommend a company to someone else?

Now that you’ve got the question, ask it of all your customers, every time they do business with you. Determine a simple, unambiguous scale so that managers can make customer loyalty a strategic goal.  Below is a scale developed by Fred Reichheld, author of numerous books on customer loyalty:

According to Reichheld, “clustering customers into three categories—promoters, passively satisfied, and detractors (as noted above)—[provides] the simplest, most intuitive and best predictor of customer behavior; it also [makes] sense to frontline managers, who can relate to the goal of increasing the number of net promoters and reducing the number of detractors more readily than increasing the mean of their satisfaction index by one standard deviation.”

The real number you want to grow, however, is your Net Promoter Index. This is calculated by taking the percentage of your “Promoters”, and subtracting the number of “Detractors.”  For example, let’s say you surveyed 100 people. Forty answered the question above with a 9 or 10, thirty answered with a 7 or 8, and 30 answered with 1 through 6.  Here’s how you calculate your Net Promoter Index:

Don’t be surprised if your score is lower than you expect. The median score for companies is just 16%.  The point is that now you have a baseline to improve your score. Start thinking of ways to foster fans of your organization, and implement with your staff and through your organization. Don’t forget to promote your organization, so your fans know how to promote you too.

I've posted a few articles on this site, touting the benefits of customer loyalty, and the ways dealerships can use these programs to prompt interaction with their clients.

I was reading this article at CNBC.com, and felt I needed to share this. Here are a few ways you can damage your relationship with your loyal customers.  (I did not write this, Carol Roth of CNBC.com did.)

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3 Ways To Get Customer Loyalty Wrong

Guest columnist Carol Roth explains three things business owners might overlook when they are trying to build customer loyalty.

Customer loyalty is a topic that is more important than ever, as technology has created more consumer fragmentation, as well as creating message and brand overwhelm.

While it’s a critical strategic endeavor for every company, even some of the largest brands in the world make significant customer loyalty mistakes. As a small business, you may have even more at stake.

Here are three key ways that companies get their customer loyalty efforts backwards.

Not Respecting Your Existing Customer: As a company or brand, your existing customers are your most valuable asset. However, in the quest for business growth, many businesses are so focused on new customers that they often forget how important their existing customers are to their business. This means that you should never offer a mass-marketed special to new customers that existing customers don’t have access to (think the cable companies who offer great rates if you switch, but won’t honor them if you are already a subscriber).

This has become more pervasive of an issue with social media, as agencies that are paid to create a Facebook or other social media campaign are often not focused on the bigger picture of customer loyalty. This means that certain campaigns meant to get more “likes” or “followers” make existing customers jump through hoops to get benefits or even to purchase products, ignoring the pre-existing relationship with the customer. When we design customer loyalty programs for clients at my firm Intercap, we always place a tremendous value on existing customer relationships and work any social media and other tactics around that.

Focus instead on getting the most from your existing raving fans. This could include selling more products or services to meet their needs, giving them a perk for introducing a new customer or giving them exclusive access to products or services before you make them available to the masses.

Rewarding Spenders but Not Senders: Another way that companies miss the mark on customer loyalty is by designing programs and strategies that reward spenders, but not senders. Spenders — those who spend a large amount of money with the company directly — are obviously valuable and programs that grant rewards by the amount that a customer spends are fairly easy to implement. But that misses the value of another critical segment of your customer base, which is the senders, otherwise known as influencers and mavens who are raving fans and let others know about your brand. They may not spend as much money directly, but indirectly, they are critical customers that spread the word to other customers. This means that in the aggregate, a sender may be just as valuable as a spender, if not more so. Understanding who these senders are and finding ways to reward them is critical to a strong loyalty effort, particularly given the amplifying effects of social media.

Creating a Loyalty Program vs. Brand Loyalty: Whether it’s a formal program (like get one point per dollar spent) or a singular campaign (buy two and get the third free on a specific item), many customer loyalty strategies and tactics forget to focus on linking loyalty to the brand or company in question. When you forget to do that, you end up creating loyalty to a program, which is effectively the same as competing on price. If your loyalty driver is a rewards program, you are vulnerable to customers switching if another competitor offers a superior program. For example, if you offer buy 9 and get the 10th free and another competitor offers buy 7 and get the 8th free, you aren’t creating true loyalty to your company and risk customers fleeing to get the better discount.

Remember that true loyalty comes from customers feeling that you care about them or that they were treated like a king or queen when dealing with you.

Carol Roth is a business strategist and a  New York Times bestselling author of"The Entrepreneur Equation."

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So, what do you think? Have you done any of these things at your dealership? What are you doing to avoid these potential relationship barriers? Let me know in the comments.

Will Michaelson

Sales Associate

Re:member group

Phone: 952.224.8002

I have another article I wanted to share today. It’s all about making sure your customers are coming back to your dealership after the initial sale. Oftentimes, customers will make a purchase, and you won’t see them again for a while, if not ever again.

“Customers really don’t become customers until they have bought from you at least twice. The first time they buy, they are merely visitors looking for the value in what you offer.”

One of our current clients, Frank Leta in St. Louis, understands those words. They have been very successful and very deliberate when it comes to attracting – and retaining – customers. Check out a commercial spot to see one of the reasons why (which happens to be a program we built and manage for them). 

If you spend thousands of dollars to get new customers in the door, they likely won’t come back if you don’t wow them or reward them. You have to supply the “wow,” but we can help with the rewards.

Think about it. One-time-only customers are the most unprofitable – and expensive – you will ever have. Whether someone buys one car from you, or half a dozen, your initial marketing investment is roughly the same. The only thing that changes over time is your Return on Investment.

The Proof Is In the Pizza

A couple of years ago a national pizza chain began to gather insight to identify customer behavior patterns in the wake of a system-wide sales decline, and decided to launch a loyalty program. The result? A 65-percent increase in sales company-wide. Read more.

Even the world’s largest pizza purveyor, with an astounding 48% market share and millions to spend on marketing, realizes that sometimes it takes something more than just another ad or marketing message.

Obviously the price point of a new vehicle is exponentially higher than a pizza, but there are still some takeaways.

What's Your Story?

We’d love to hear some case studies or best practices for you. Contact us and we can continue the conversation.

Until then, here are a few numbers for you:

-It’s 7-10 times more expensive to acquire new customers than it is to keep existing customers coming back.

-Over 75% of consumers have at least one loyalty card.

-Repeat customers spend 33% more than new customers.

-Having an up-to-date and working customer database can double the value of your business.

-60% of consumers in a recent national survey say they “try to avoid advertising”

-Shoppers are spoiled. They have to come and ask “If I give you my business, what will you give me in return?”

-Studies show that customers who belong to a loyalty program visit twice as often and spend 4 times more than those who don’t.

If you would like to hear more, please  contact us today.

Sincerely,
 
Paul Long
President
re:member group

What success have you seen in getting your customers back into your dealership? Let me know in the comments, and tell me what you think you could be doing to improve your customer retention rate.

Good morning,

I wanted to share an article written by Paul Long, explaining the way companies can express their appreciation to their customers, and how inexpensive it can be. Take a look, and see how you can thank your loyal customers in an easy and effective way.

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‘Putting a Lid on Loyalty – Little Things Can Mean a Lot’

Since we are in the business of loyalty marketing – and indeed it is our only business – we are constantly on the lookout for best practices and case studies about how businesses or organizations are rewarding their customers and how the business in turn earns its own reward.

We recently came across a post dated January 9 on a blogsite called B-A-M, a.k.a. Bust a Myth: Delivering Customer Service in a Self-Service World.

A woman by the name of Mary Jane Grinstead writes about her husband, a lifelong Chicago Cubs baseball fan, and more to the point, a Cubs season ticket holder for the past couple of decades.

Since a new Cubs ownership group paid over $800 million for the privilege of buying the team last fall, they raised ticket prices to raise revenue.

We’ll let Mary Jane pick up the slightly edited story from there as she describes the reaction of her husband, Phil, upon opening a package from the Cubs front office.

“Last week, a UPS box from the Cubs showed up at our front door. The box contained a baseball cap.  I figured the Cubs had sent one more. Then I heard a ‘Wow, this is pretty cool.’ Phil was standing in his office, turning yet another Cubs blue baseball cap over in his hands with this goofy grin on his face. ‘Check this out,’ he said. Stitched on the back of the baseball cap that those lovable losers sent was the following:  "Season Ticket Holders, 20+ Years".

It was a little thing, and yet it was huge. As the new owners of the Cubs seem to know, a little appreciation goes a long way.”

So, what is the moral of this story? That you should go out and get baseball hats with the number of years someone has been a loyal customer or the number of vehicles they have purchased?

No. The point is that someone who is spending literally thousands of dollars on an organization’s product, was thrilled when the organization recognized the customer’s loyalty and rewarded it with something that had an actual value of $2.13 (or $4.40 embroidered).

We opine that the perceived value of that cap on the part of the guy who received it literally is priceless. He just wanted to be loved – and appreciated! Same as your customers.

If you would like to learn more about how to love and reward your customers, contact us today.

Regards,

Paul Long
President
re:member group
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What’s your best story of a business showing them you care? Have you given your customers personal care by letting them know they’re appreciated? Let me know in a comment below.

Will

Will Michaelson

Sales Associate

Re:member group

Phone: 952.224.8002

Email: will@remembergroup.com

www.remembergroup.com

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.

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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?”

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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

email: will@remembergroup.com

www.remembergroup.com

I wanted to post an article, in regards to the partnerships we develop. Paul Long wrote this a while ago, and I wanted to get the opinions of the DS community. 

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 Customer Partnerships Create a Better Future for Both Parties

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Ok, we admit, the subject line is a bit high-minded. And that's not a bit surprising considering the source of it is Dr. Emmett Murphy, New York Times best-selling author of 
"Leading on the Edge of Chaos: The 10 Critical Elements for Success ...." 

We get the main point though: the customer is the foundation of your organization's success.

Given today's environment of rapid, unpredictable, constant and chaotic change, "no force is more grounding and stabilizing than a partnership with customers." (again Dr. Murphy)

Creating a partnership with customers can help your organization maintain the focus you need to make good decisions and harness the power and commitment you need to weather these tough and volatile times. 

We all know by now the process of creating customer partnerships is more than merely "putting customers first", or finding solutions to problems, or "dedicating your staff to excellence." It’s more sophisticated than that.

Is your relationship with your customers a 'partnership'? Why? Why not? Sound off in the comments below.

Will

Will Michaelson

Sales Associate

re:member group

Phone: 952.224.8002

email: will@remembergroup.com

www.remembergroup.com