Article originally posted in Fixed Ops Magazine's January/February issue.
It’s 2013. Happy New Year! The holidays are finally over, everybody has reflected on the past and sobered up – or at least I hope everyone has by now. It’s time to get back to work and oh yes, it’s time to try and keep those New Year’s resolutions you made. You know the ones – to lose weight, start exercising, and stop smoking? Unfortunately, most of us don’t actually even begin to put any of it into place I think it’s because the gratification is not immediate enough. You will be healthier if you stop smoking, you know you will, but you really feel pretty good right now, right? You need to lose weight, but that slice of cheese cake just stares at you until you finally give in and eat it, right?
The same is true when it comes to your dealership and customer retention. You know improving customer retention makes sense, you know it will make you more money, and you know that it is the right thing to do but you just keep on putting it off every month. I imagine it’s a combination of things, partially because you’re ‘too busy’, partially because you don’t really know where to begin, and partially because it’s too long term with little immediate gratification. After all, it doesn’t have that same instant sex appeal that big tent sales do. It isn’t nearly as cool as hanging a truck from a crane outside of your dealership and it won’t knock your socks off like an inflatable gorilla. Don’t get me wrong, I’m not making fun of any of it. They may sound silly but I guess they work (or at least we convince ourselves that they do).
The point is, increasing customer retention can be just as fun and a lot more rewarding if you make it to be. Like all good things, the sooner you start the faster you will see the results. In 1986 Delta started their Sky Mile Rewards Club. Other airlines, hotels, and various businesses have followed suit and now grocery store pharmacies have loyalty programs – almost every business has one. Business owners know that customers have more choices today than ever before and they found out that consumers like to feel special, like being a member of an exclusive club. Customers like to feel valued by getting rewarded for their loyalty. The best part about all of this is that studies show that in return, customers visit more, spend more, and defect less. How’s that for sex appeal?
That’s why it still amazes me when the same automotive industry experts that have been preaching loyalty programs for dealerships are the people now pointing at scary declines in customer retention percentages. I think the lack of focus on this may have a lot to do with the unrealistic expectation dealerships have for customer retention solutions like loyalty programs. You can’t possibly expect a single solution to fix your store. A loyalty program will not grow your business if you aren’t doing the little things that make customers want to do business with you. In other words, if you have pissing off customers down to a science, advertising to bring more in or implementing retention programs to keep them there will not help if you’re not willing to go the extra mile everywhere else in your business. Customers aren’t stupid, they want to be treated right and get the reward, not just get the reward and settle for the lack of service. Think about that for a minute, if you’re a member of some loyalty club, do you keep going there if the service absolutely sucks – even if you get a reward?
I’m not the only one pushing customer retention guys, the factory knows it and they’re pushing it too. Customer retention, the two words that you’ve heard for years but rarely ever do anything about, are now at the top of the list for the factories. They used to be all about the CSI game (and some still are), but now the trend is (and I think it’s a good one) to focus on how well you retain your customers. Honestly though, isn’t the best way to measure customer satisfaction by if they come back again or not? These days with all of the tracking, geo-locating, database digging, and tweet monitoring it’s easy to get caught up in all the hype. Guys, customer retention is what will ensure your long-term success or failure. It is what will make you profitable or drive you into bankruptcy. It’s the only thing that you should be focused on this year.
If you don’t believe me and you don’t want to listen to the factory, concentrate on your customer pay service business and let the numbers paint the picture. You know you have to increase your CP business to survive and you have to be competitive, attentive, and actively engaged with your customers to do so, right? Is your store’s CP going up, down, or staying the same? Get accurate numbers, anyone can run a report for the last year and make the data look good – really look at the trends for the last several years. If you know what to do to increase your CP business, you know what to do to improve customer retention and owner loyalty. It’s simple really; you just have to give customers reasons to want to do business with you. Enticing lost customers to return, rewarding service customers, and giving car buyers reasons to buy the car at your store today have never been easier and there are more tools at your fingertips then ever before.
Right now over 50% of your new and used car buyers don’t return for customer pay service work after just one year and 80% don’t return after two years – that’s a sad statistic considering every new car sale starts with the potential for 100% retention. If you want to get your future new and used car buyers to use your service department exclusively for all of their maintenance and repairs, ensure they see your store as the right choice and that taking their vehicle to your service department will yield a stellar experience they can brag about. Reassure them that you are competitive and that you really want to be their only home for anything to do with their vehicle, make them know you care. The same is true for your existing customers and database of lost customers. If you want them to come back you have to do something to really give them a reason to return. Keep in mind though, customer retention is all encompassing, it’s affected by everything. Consider this:
If you don’t answer the phone when a customer calls, they will go elsewhere and in turn, lower your customer retention percentage.
If you make customers stand in line to pay at a cashier window like it is 1955, they eventually won’t come back.
If your service team doesn’t greet customers fast enough, explain the work that was done well enough, or fix the car right the first time, your customer retention will drop.
If your restrooms are dirty, the TV in the lounge is too loud, or the chairs are uncomfortable, your customer retention will suffer.
If your technicians don’t do a thorough inspection of a customer’s vehicle, you can bet it will affect your customer retention.
If you don’t suggest and change wiper blades, I assure you the customer will not come back when they leave and are faced with a monsoon.
As silly as it sounds, yes, offering to change old wiper blades can be the determination for a customer whether or not they return. I had my car in for routine service maintenance at a local dealership recently and a few days later it rained on my way home that evening. Now, I just had it in for service, paid almost $300, and they obviously didn’t check the wiper blades or recommend replacements. I would have gladly paid for them if they had just asked. Here I am, navigating my way home on a dark road in the rain, furious about the condition of my wiper blades. Meanwhile, I naturally begin wondering what else they “didn’t do” and like any other customer would do in the same situation, I made a plan to go to a different place for service the next time I need it.
In other words, pay attention to detail and take a look around. Mystery shop your service department. Walk through and inspect the restrooms, the lounge, and the write-up area. Check your multipoint inspection reports. See if your customer service team are dressed as professionals. Look at things through a customer’s eyes and ask yourself this scary question: “If I came here today, would I come back the next time I needed service?” I don’t expect it all to get fixed, but I do suspect you care enough to start paying closer attention to the little things that have a big effect on the bottom line. Improving customer retention is as simple as doing the right thing for the customer and supplementing it with some form of dealership loyalty program can help hedge the odds your customers will continue to visit your store instead of deciding to stop by one of the 27 independent repair shops they pass by every day.
What are you going to do in 2013 that you didn’t do in 2012? What are you going to do to increase your service business and improve customer retention? What are you going to do to make sure 2013 is a banner year?