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loyalty (10)

There are muffins, and there are great muffins. The kind we get our of a plastic package from a vending machine or at a continental breakfast at a hotel usually meets the hunger requirements, but it's usually not exceptionally enjoyable. Compare that to a muffin from your favorite bakery and the experience can be like night and day.

Why is that? They have the same basic ingredients. There's the freshness component, but even packaged muffins are usually not that old because the shelf-life is so short on them. It really comes down to the way that they're prepared and baked. It comes down quality.

The difference between muffins is like the difference between customer database marketing solutions. When I speak to dealers across the nation, there is a good number of you who have some sort of customer database marketing in place. Perhaps it's an automated follow-up system through your CRM. Maybe you have a BDC procedure that tries to cultivate the relationship over time. These are fine and they're (usually) better than nothing, but they're usually result in very little tangible value as far is increasing sales and service business.

They're packaged muffins.

A true customer database marketing strategy requires quality, care, and strategy. It requires taking your database and improving on it based upon referencing other data that is available. It's about appending the data to make it more accurate and therefore more effective.

It also requires proper messaging. One of the biggest mistakes that I see dealers and even other vendors make is that they separate out their databases to target service customers and sales customers. The reality is that you have customers. Your service customers should be buying cars from you. Your sales customers should be getting their cars serviced through you. The strategies that can take the two types of customers and turn them into a strong set of "whole" customers is something that simply cannot be done through standard automated systems.

The packaged muffins won't get the job done.

A great muffin means putting together the right recipe (strategy) to nurture them properly. It's about staying in front of them with the right messages and being relevant to their needs before, during, and after they're fulfilled.

As you think about all of this, ask yourself if you're taking full advantage of your customer database in a way that is translating into dramatic increases in business and customer loyalty. Today, the loyalty factor has been abandoned by many simply because customers in the digital age seem to be less willing to do business with the same companies over and over again. They've broadened their horizons thanks to the internet. You can take advantage of this by nurturing them appropriately and constantly. The most successful dealers in the coming years will not be the ones that are relying on getting new business. The most successful dealers will have a strong balance between acquiring new customers and keeping their current ones.

Look at your strategy and decide whether it's really going after your current and past customers with the fervor it deserves. If not, it's time to explore a new strategy.

It's time to bake a great muffin.

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Paul Long on Customer Loyalty Programs - Digital Dealer 10 Conference from Paul N Long

http://www.internetsales20group.com

Discover what frequent flier programs already prove: loyalty programs will give you the best ROI in your digital marketing strategy

Increase your repurchase loyalty, service loyalty and overall profitability. Learn what the airline industry, hospitality industry and the top auto dealers already know: loyalty programs increase bottom line up to 85%. Paul Long defines what customer loyalty programs are and dispels five major myths about them. From his experience in building national loyalty programs in multiple verticals, Long will share what makes a loyal customer and why you want them in your dealership. He will also provide valuable tips to help your business build a loyalty program that will create and keep customers for life. Loyalty allows you to reap the benefits from customers' ongoing relationship to your dealership: increased car sales and fixed operations gross profit.

Learn how to build a loyalty program that motivates action. This seminar will give your dealership the tools and know-how to develop a loyalty strategy that will increase car sales and fixed operations gross profit.

Customer loyalty is a big buzz-word in the automotive world today—in fact most automakers are moving away from CSI scores and focusing on CRS—or customer retention. After all, what good is customer satisfaction if they still don't buy their next vehicle from you? Customer loyalty and retention has a huge impact on profitability, and it's right to focus on it.In fact, as little as a five-percent increase in customer retention can improve a company's bottom-line profitability between 25 percent and 85 percent.

Long will give you an overview of what loyalty marking is and dispel five major myths about it. Then attendees will be shown practical ways to implement a loyalty program in your dealership, and how to track its success. By the end of our session, you'll walk away with both the knowledge and the excitement for building a loyalty program for your business that helps you create and keep customers for life.

After completing this workshop, the attendee will know how to unify sales and fixed operations marketing with a loyalty program

The attendee will be able to calculate the effect which customer loyalty has on bottom-line profitability. • The learner will be able to identify and track three main benefits of successful loyalty programs and loyalty marketing initiatives.

The attendee will be able to develop a loyalty marketing strategy that works for all levels of the organization.

Paul Long, president of re:member group, has been increasing customer loyalty for 15 years. He was integral to the development of the Northwest Airlines WorldPerks Program and has since used his extensive knowledge of and experience with loyalty programs to help businesses worldwide. Long particularly enjoys working with auto dealerships, and he has employed new technologies and cutting-edge strategies to create a state-of-the-art infrastructure for effective communications, member tracking, and rewards distribution

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Indicators of Dealership Loyalty

Many dealers ask me for help in retention measurement, and statistics surrounding Customer Loyalty Indicators.

Two important indicators of Automotive Dealership customer loyalty are the purchase of additional service after the sale by Members and multiple vehicle purchases.

In the automotive dealer sector, these are also sources for the greatest margin, so they’re critical not just as indicators of customer satisfaction but as profit drivers in their own right. Little profit is made on the sale of the first vehicle. Dealerships must rely on repeat service and additional vehicle sales to make the customer life cycle profitable.

However, most auto dealers haven’t the vaguest idea which car buyers are loyal service customers at their dealerships, or multiple car buyers (especially if they're a multi rooftop autogroup). On average, dealers retain only 30 to 40 percent of post-warranty service dollars on vehicles they sell. What’s more, remarkably few dealers track service purchases systematically. As a result, as little as 3% of vehicle buyers will purchase again from the same dealership.

While it may be necessary to keep sales separate from an organizational point of view, it is very important that their tracking systems be linked. One simple way to do this is through a digital loyalty solution like re:member group’s BEDROCK® and ASPIRE® platforms. While re:member group makes no claim in having a CRM solution (see DealerSocket for the best one in my opinion), our loyalty solutions do identify repeat buyers in all departments and can assist in determining a lifetime customer value to Members.

The information Service Advisors acquire should easily be cycled back to encourage salespeople to target buyers who have remained loyal service customers. In addition, incentive systems should identify the lift that dealerships receive as a result of implementing a loyalty program in both service and sales. The keystone measurement in this case should be repurchase loyalty, as this is the best possible indicator of customer loyalty.

The Walser Automotive Group in Minneapolis, Minnesota makes customer loyalty a significant part of their overall marketing strategy. Thirty-one Percent of Walser’s Customers purchased more than one vehicle between 2005 and 2009, representing fifty-six percent of Walser’s Total Vehicle Sales. In that time, Walser has increased their repurchase loyalty by four percent.

Furthermore, Sixty-nine percent of Walser’s customers continue to service their vehicle after the sale.

Recall what loyalty expert Fred Reichheld claims: a five percent increase in customer loyalty can yield an increase in profitability between twenty-five and eighty-five percent.

What are you doing to increase your customer loyalty? Or, what is your customer loyalty percentage?

 

Paul Long

President

re:member group

cell: 612.221.0463

email: paul@remembergroup.com

www.paulnlong.com

www.remembergroup.com

 

 

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The Perfect Storm: The Prequel Part 3

I met Randy McPherson for the first time in February, 2003, at the Interchange Building in St. Louis Park, MN. The interchange building was the “headquarters” for all the Walser Automotive Group’s affiliate companies, which Randy headed up.

I walked into the offices on the 18th floor and was greeted by a receptionist named Rita. Immediately in front of me was a large window looking into a board room occupied by (mostly) men in suits, obviously conducting a meeting. The board room looked out onto the Minneapolis downtown skyline.

I noticed one gentleman right away. He was wearing a pressed flannel shirt and slacks. he had a smooth head and a groomed goatee. Clearly a renegade. I took a seat in the waiting room.

When the meeting adjourned, the men in suits filed out. The gentleman in the pressed flannel shirt walked out, and greeted me warmly. “Hi, Paul, I’m Randy McPherson,” he said.

We went back to his office, and had a nice conversation. Among the family photos and hunting relics in his office, something caught my eye: an empty guitar stand in the corner behind his desk.

The interview went the way most first interviews go, which is to say pretty innocuous. We talked about the Walser Car Club, and how it was birthed. Since the inception in October of 2002, it hadn’t had solid leadership to spearhead enhancements, new partnerships, or growth to new dealerships. In fact, there wasn’t 100% compliance among Walser’s 10 locations in the Twin Cities, Randy said. They were looking for someone to build process, partnerships and new business.

We talked about my experience in sales, e-commerce and loyalty. I told about my experience in building loyalty partners. But Randy became particularly interested when I discussed points–the ability for Walser customers to earn points when they get their vehicle serviced, OR whenever they make purchases through participating merchants, like rental cars, hotels and retail.

This was the first of many conversations between Randy McPherson and me in scoping out what is today the products the re:member group offers.

“What I’d like you to do,” Randy said, “is to put together a business plan and meet with my CFO and me in two weeks. There’s another candidate that we are considering.”

As I left, I mentioned the empty guitar stand in the corner. “Do you play?” I asked.

“Oh yeah,” Randy said. “Do you? What kind of guitar do you play?”

“I play a Martin D-35 that my wife gave me for a wedding present,” I said. “How about you?”

“I play a McPherson,” Randy said.

It was mid February but as I walked out of the Interchange Building that late afternoon, I think it started to rain.

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The Perfect Storm: The Prequel Part 2

“Yeah, you should meet with Randy McPherson. I think you could help Walser Automotive out with Loyalty.”

I’m not really sure why Chad Dufault met with me over Davanni’s. Sure we were friends, and still are very close. But to this day I don’t know if he wanted to talk about loyalty in his mortgage company, or have me vetted for Randy. We never really accomplished anything for Chad’s mortgage company that evening, so my guess is that it’s the latter. That’s the way Chad rolls–he usually puts others before himself.

My life was already hectic. A newborn, a stay-at-home mom, and a realization that the choices I make are no longer affect only me (that was never the case anyway, but I was made aware of that fact pretty quickly once Henry was born). I had enough on my plate, and was enjoying life.

“Sure, I’ll meet with him.”

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The Perfect Storm: The Prequel Part 1

In early 2003, I had a great job at Northwest Airlines, managing partnerships for their award winning WorldPerks program. I worked with a great team of people and loved what I did. I had finished my MBA from the University of St. Thomas in Minneapolis, MN in the summer of 2002. And my wife had just given birth to our first child in November 2002. Life was great, if not hectic.

I was privileged to work with some of the best loyalty marketers on the planet. My primary WorldPerks partner was U.S. Bank, which issued the WorldPerks Visa, and I handled a $200 million book of business for this partner alone. And since U.S. Bank was such a behemoth, I was able to develop co-partnerships with all the other partner categories, including car rental, hotels, communications, and the WorldPerks Mall.

My Pet Project, my passion, the WorldPerks Mall. The WorldPerks Mall gave me the opportunity to work with merchants in all categories, and gave WorldPerks Members the ability to earn miles by doing the things they did every day. I built partnerships with hundreds of “non-traditional” merchants in categories like department stores, clothing, electronics and toys. And then there were services that allowed Members to earn points…

MilesAbove was WorldPerk’s answer to small regional merchants who wanted to play in the mileage game. You’re a plumber? Give miles for Members using your service. Own a Co-op? Give miles to your patrons for their business. We had three “no go” categories: alcohol, fur, and auto racing. Other than that, partner development was fair game.

Originally managed by Carlson Marketing Group, MilesAbove proved too expensive to have an outside vendor manage it’s partner development. I brought it in-house, and automated the purchase of miles for companies wanting to play. An unintended benefit allowed Members looking to “round-out” their accounts to buy miles. The best professional development benefit was having the privilege of working with people from one of Mark Lacek’s companies, MilePoint, to build the first ever Buy Miles engine. We sold $1 million dollars in miles in the first 6 months after revamping MilesAbove. Carlson, a trusted marketing partner, was instrumental in process and collateral development. It was a team firing all pistons, and a high point of my tenure at NWA.

All of the merchant partnerships we built required a form of payment, which brings me full circle. WorldPerks Visa was an “anchor store”. It’s what every other partnership revolved around. My team and I loved building co-partnerships and finding creative ways to allow Members to earn miles without ever having to get on a plane.

Life was great. I loved my job, and the people I worked with were among the brightest and most creative I had ever met. I was having fun with my young family, traveling wherever and whenever we wanted.

“Marry me, fly for free.” My wife still reminds me of the promise I made to her.

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The Birth of the Walser Rewards Program

The Walser Rewards program was birthed in October, 2002. It consisted of a card, a gas discount, a AAA new member discount, and a car rental discount. Buy the car, get the card.The first time I caught wind of the Walser Car Club (what it was called back then) was from a full-page ad in the Minneapolis Star Tribune. A card, gas discount, AAA and car rental discount. And a simple message: buy the car, get the card.The Walser Car Club was the brainchild of Randy McPherson and Paul Walser of the Walser Automotive Group. Randy and Paul had a unique relationship in the early 2000s, in that they partnered to build affiliate companies to the Walser Automotive group, including an insurance company, mortgage company, real estate company, leasing company, and a marketing company. The marketing company was set up to run the Walser Car Club, and possibly build additional “clubs” for other auto dealers.The marketing company was called WAM Advertising & Marketing. WAM is an acronym for Walser Advertising & Marketing. So, in reality, the full name of the marketing company was Walser Advertising & Marketing Advertising & Marketing.October 2002. Star Tribune ad. The “Walser Car Club”, the only product of a company with a bad name and one client.
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Conversation over Pizza

I met Randy McPherson in early 2003. But I’m getting ahead of myself.

 

My good friend Chad Dufault and I were having a conversation at Davanni’s, sharing a pizza. I think it was January 2003, but something tells me it may have been late 2002. I was working for Northwest Airlines in WorldPerks partner marketing, and he was VP of a mortgage company that Randy owned alongside Paul Walser of the Walser Automotive Group. We were talking about how to build his business, and how to retain customers. Since Loyalty was my focus at NWA, Chad was picking my brain. And we were just enjoying a pizza.

 

“You should talk to Randy McPherson,” Chad said out of the blue. “Walser is building a loyalty program, and they could use your help.”

 

I had never heard of this Randy McPherson before. “Who is this man,” I asked myself.

 

Location:Davanni’s, Edina, MN

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A great question was asked just over 24 hours ago, and I would like some of our "phone ninjas" to give opinions on how they address the issue of "price" without giving a price...? As we know, we can create value in ourselves, and our dealership value package to make price not the most important thing in the whole mix if we have other things to offer to ensure it's the BEST DEAL! 

 

We also know that most customer won't be leaving the dealership with the exact vehicle that they originally inquired about, so chances are details about pricing, options, color, etc...are going to change a few times before our customer's buying process is over.  Having said that...

 

http://automotiveinternetsales.com/group/customerloyaltyownerretention

 

Please join the group and post any feedback/comments in the Group Discussion, and be sure to look at which other groups listed interest you!  Happy Selling!! (and New Year!)

 

Andy Fedo

VP of Training

andy@dealersynergy.com

 

www.dealersynergy.com

www.internetsales20group.com

 

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http://www.dealersynergy.com http://www.internetsales20group.com This article was first published in Digital Dealer Magazine September 2006! The thrill of gambling is exhilarating. Am I going to win? Am I going to hit it big? Let me put it all on the line and see what happens. Since living close to Atlantic City, NJ, gambling has always intrigued me, but I must confess I am not a gambler at all. I am a realist; I am a numbers person. I don’t feel comfortable just hoping on the long shot. So, where am I going with this? Well, this is exactly what is going on in our industry today – gambling. Dealers are advertising on a long shot. There is no science, no reason – just hope that our initiative sells some more cars. It’s all in the statistics, but is anybody listening? You head down the road of spending tons of money to bring new customers into your dealership or to your web site, and then you do not do a value proposition for the dealership. From there you sell the vehicle, have no plan to bring that customer into service and you do very little to create a relationship that will lead to valuable service business and the inside track to the customer’s next vehicle purchase. Let’s talk about some numbers. NADA tells us that the average store spends over $500 in advertising for each new vehicle sold. That number is actually incorrect because we know a large percentage of sales are repeats, referrals or came to us because of our location/brand. This means you probably spend closer to $800 to $1,000 for each vehicle you sell from your advertising. You only close at 22 percent on your ups; 40 percent of those never create a cash RO and a full two-thirds of these customers are gone by the time they truly become valuable – which is when the vehicles reach 30,000 miles. Oh yeah – by keeping them loyal you also pick up amazingly profitable service business. The customer that does remain loyal is seven times more likely to repurchase and on average will have a gross of an additional $900. Let me break it down further. Smart Tech Enterprise research states that a prior customer closes at 60 percent versus 22 percent for a fresh up, with a gross profit increase of over $900. But most dealers don’t allocate any budget for owner retention efforts and the dealerships that do only allocate minimally. Let’s say you should at least spend 10 percent of your ad budget on loyalty for your customers. Create a custom value proposition, leverage it during the sales process and apply it to customers to keep them happy in service and then allow your customers to earn toward their next vehicle purchase. Airlines, hotels, rental cars, grocery stores and thousands of retail establishments already know what you refuse to learn. Any one transaction has little value compared to the loyalty of a customer. In working with CRM and database marketing for years, it is also amazing that you ignore your database. You do garage predictors to try and find people who may or may not have the money, inclination to your brand or even be in the market for a vehicle, yet you ignore a gold mine in your own database. Again, it goes back to a dealer’s gambling mentality. You choose to take a shot in the dark versus science and math. NADA again tells us 2 percent of the people in your database purchase a vehicle every month. A typical store has an active database of 6,000 to 10,000 customers. Think about the potential and then get sick over the fact that you have not created loyalty with these people. One hundred twenty to 200 people from these stores purchase every month and you have done little to say, “Buy from me,” unless they get that generic mailer via the garage predictor. Claim your customers as our own. Glue those who have been in within the last six months with a rewards program. Aggressively go after the inactives for service and let everybody know you want to sell them their next vehicle. The good news is you can do all of this for the 10 percent of the ad budget discussed earlier. I am always amazed when I talk to dealers who will not commit 10 percent of their ad budget to what makes the most sense. It goes back to gambling. I am not a gambler, however, if you are, at least be a smart gambler, and play the odds. What makes more sense? Putting all of your money on a 22 percent shot or at least some of your money on a 60 percent shot with the opportunity to make $900 higher gross profit per unit? I was going to end this article at this point, but I was thinking about a conversation I had recently with another industry expert. We were discussing that a lot of articles are written that have good surface content. They explain the issues, but do not go too deeply into the “how” to solve or the “how” to actually take action. In my opinion, that’s for two basic reasons: They don’t want to give away the farm for free. After all, we are all here for business. Or, they don’t want it to look like they are trying to plug their products and/or services. I hope you would feel that I have covered some useful content and information, but now I am going to take it to the next level. I want to give you some strong takeaways – things that you can put into effect immediately at your dealership and see some great results. Let’s start with an example of a customer loyalty program: • Free lifetime state safety inspections • Free loaner vehicle with a 30,000 mile service • Free body shop estimates • Free shuttle service • Free car wash • 10-15 percent discounts on installed accessories • Loyalty pricing • Referral program • 10 percent toward your next vehicle purchase • 5 percent toward major service • 5 percent toward body shop • “Frequent Flyer Miles” program The idea is to reward your customers for their actions. Anything that they do at your dealership gets them rewarded. For example, there are companies out there that have loyalty cards with smart chips in them that allow the customers to earn “points,” like airlines have frequent flyer miles. So, anytime the customer goes into your dealership to buy parts, have service work done or to purchase a vehicle, they will earn points on their card for future activities. The more they do in your dealership the more they earn for future visits. Okay, now you have an idea of what a rewards program looks like. How do you utilize this information at your dealership(s) immediately? One idea is your web site. Remember, over 85 percent of people who buy cars go online first to do research before they ever step foot into your dealership. There should be a section on your web site that is clearly defined “Customer Rewards” or a button that says something to the effect of “Click here for Customer Rewards.” The idea, again, is to call attention to this section. Remember most dealers do not have this on their site. This is an opportunity to differentiate your value package proposition for your dealership from any other dealership around you. Remember, the average prospect researches three to five web sites before choosing yours. If your competition is giving cars away at invoice or there are other price factors, why should they pick you? If you are a little farther away than your competition, why take that extra drive to your dealership? Because you have something they don’t… a customer rewards program! One last idea – what about your lost opportunities? I mean all of those leads you don’t close? Let’s say you buy or generate 400 leads in a month. You sell 40 units; that’s 360 leads left over. Some are bogus; some don’t respond; some bought elsewhere or just changed their mind. You can contact all of your dead leads, let’s say your “bought elsewheres” for example, and let them know you wish them the best with their new vehicle and even though you didn’t earn their business they can call you whenever they’d like to ask you any question they might think of… and oh, by the way… as a token of appreciation for them letting you have the “opportunity” to earn their business you want to give them a gift… an “owner’s reward” card. Explain all that the card does and contains. You will be surprised how many people will use this card. The benefit here is that you are going to turn a lost opportunity, somebody who bought elsewhere, into a service customer, and remember, a service customer is seven times as likely to purchase a vehicle from where they have their service done. Keeping all this in mind, my aim is to help you sell more cars more profitably and more often! Sean V. Bradley
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