CFS Blog

LIFT from CFS > Best Practices > Why the Fuss Over Customer Retention?

Why the Fuss Over Customer Retention?

Our world is certainly changing. Due to technology and the ability to access incredible amounts of information, the consumer purchase cycle is completely different to that of just a decade ago. And, the dealership market area has changed too. Technology now enables dealerships on each coast to compete with each other for new sales. You no longer have to simply worry about the competitor down the street. Naturally, this gives consumers great choice. As a result, we are seeing an industry-wide increase in awareness about the importance of customer retention.

Here are a few things I believe have contributed to the return of customer retention to the spotlight and how to use them to your benefit to stand out from the crowd:

Explosion of Social Networks –  Imagine if a news truck pulled up to your dealership and started broadcasting. It would definitely provide a sense of urgency to ensure that your dealership is presented in the best light. You’d probably be concerned and take immediate steps to find out what’s going on. You’d take action to put out whatever fire may exist to avoid any bad image in your community.

Well, the reality is that every customer with a smartphone now has a ‘virtual’ news truck in their hands. And it’s not just the community they can broadcast to… it’s the World. Consumers have the ability to reach mass audiences including their social networks through social media posts and live video… right at your dealership. As a result, the customer experience is more important than ever before. Today, it has to be a great customer experience for every customer, all of the time. News, both good and bad, travels fast. So, make sure it is good news. And keep up on your social networks. Make sure you know what is going on. Answer your customers’ questions and concerns on social media. Be a resource for your local community. Give them a reason to think AND talk well of you.

More Choice – In the past, consumers were limited to a small geographic region where they shopped for products and services. With the rise of the Internet, that geographic area is now limitless. With the simple click of a mouse, consumers can shop globally through marketplaces such as Amazon and eBay, with complete confidence. There is no way to combat that. It is the new reality. The one thing that has not changed is that customers will stick with businesses that deliver an exceptional customer experience. However, it’s no longer enough to deliver common courtesy. To stand out to the customer we must deliver “uncommon” courtesy. Take the time to establish what your customer’s want. What will make them drive by that other dealership onto your service drive, or into your showroom? What do you offer that is unique and different? Build up your image. Trust is extremely important to consumers, and that is one thing that is unlikely to change any time soon.  You can’t be everything to everybody and everybody isn’t who you should be worrying about. It’s your customers. Nobody understand them better than you. Figure out who your customers are and what they expect. If you don’t know, ask them.

Competition – An increase in consumer choice is logically accompanied by an increase in competition. It costs more than ever before to acquire new customers for the simple reason that the cost of marketing to them has increased. What is the cost of acquiring a new customer compared to the cost of keeping an existing customer? There is no definitive answer to this question, but most sources say the answer is that it costs between 4 and 10 times more to acquire a new customer than it does to keep an existing one. Where would you rather spend your money? Don’t forget, the lifetime value of a customer includes everything they will ever buy from you today, tomorrow, and in the years ahead. How and what are you doing to retain your existing clients and customers? Do you have a system in place that will make your existing clients and customers raving fans of your business and a constant source of referrals for your business?

Customer Lifecycle – It hasn’t always been easy to accurately track and visualize a customer lifecycle. Technology and analytics have completely changed that. The customer lifecycle is now real and quantifiable. We can draw the circle of life on a graph and actually see the lifetime value of a customer with confidence and assign direct attribution to our marketing sources. It is now possible to see how much each customer means right now, as well as their value in the future. How often will they service their vehicle and how much will they spend? When will they purchase their next vehicle? What is their real lifetime value? Technology enables you to go beyond simply tracking them. You can now find breaks in that customer lifecycle. For those dealerships that are paying attention, you can notice aberrations quickly and take steps to intervene and perhaps save that customer from being lost to the competition.

Legacy Sales – I am sure that every dealership has customers that are an excellent source of referrals from their friends, associates and family members. In the past, these types of legacy sales were mostly limited to generations and family members. You would sell a car to grandma, then to mom and then to daughter. With the explosion of social networks, legacy sales now have an incredible potential of reaching deep into your customers’ social networks. This shift has increased the value of each customer relationship and the potential quantity of referral opportunities. It is yet another reason to ensure that your dealership has a vibrant and active social presence. Be sure to interact well with your customers via social media. Post quality content. Watch, listen for and answer customer posts, questions and comments on your social media.

Commodities – Your products and services are commodities. It’s no longer realistic to rest on your laurels simply because you’re the only Ford dealer in town. Whether you are or not, the fact is that consumers now have a huge variety of sources where they can research, purchase and service their vehicles. Failure to continuously provide them with a great experience and a reason to return will quickly drive them to your competition. Be sure to stand out and differentiate your dealership from any competition. A great customer experience doesn’t mean that you have to install a Starbucks in the lobby, discount all of your services or give away the farm. Simply give your customers every reason to do business with you by removing any reasons for them not to. And, be creative. Be a resource for your community. Offer car care clinics for mothers and check child safety seats for free. Hold technology days where you go over all those new tech features in the car. Partner with the top charity in your community and involve your customers. Whatever resonates with YOUR customers and YOUR community. Find these partnerships and embrace them and your customers will appreciate it.

So, why the fuss over customer retention? It’s certainly much easier these days for customers to defect to the competition. Take steps to evaluate your customer churn, identify pain points that may be causing them to leave and make an effort to remove the reasons for defection. Utilize the data you have in your DMS to identify at-risk customers and reach out to them. It might be too late. But, then again, it may not be. The only way to find out is to reach out to them. Endeavour to create a customer experience where each customer feels valued and appreciated – in whatever manner you are able. Be creative! If you are exceptional to them, you just may find that they will be exceptional right back.

 

 


 

execs_tony

About The Author: Tony Orlando is CFS’ Vice President of Partner Development.  More than 15 years Automotive retail, OEM and third-party lead provider experience. Two years dealership sales and service experience and 13 years with both import and domestic OEMs. This is Tony’s second automotive startup company. He spent three years with TrueCar cultivating its business in the Southwest states. Maintains relationship with over 600 franchised automotive dealers and industry leaders. Tony has a Business Administration and Marketing degree from Mary Washington College Fredericksburg, VA.

 

Legal Disclaimer: The application generally takes 2-3 minutes. CFS will promptly fund the repair amount once repairs are completed and documents are executed. All loans are subject to approval pursuant to standard underwriting criteria. The CFS 60-Day Interest Free Program applies to approved customers who pay their entire loan off on time with no missed payments. Available amounts, terms and the Annual Percentage Rate (APR) will be based on an evaluation of your credit history and your state of residence. The interest rate is fixed for the life of the loan and could range from 9.99% to 36.00% APR.