Sean V. Bradley, CEO of Dealer Synergy "Customer Loyalty and Database Mining" (First Published in Digital Dealer Magazine September 2006)

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

Blog

Google AIS Custom Search

Sean V. Bradley, CEO of Dealer Synergy "Customer Loyalty and Database Mining" (First Published in Digital Dealer Magazine September 2006)

Comments

SPONSORS