When will I see you again? No, I am not talking about the 70’s pop song, although the lyrics just may fit the content here. I am talking about the continued trend in customer defections from our dealerships.
Customer’s defect for many reasons and the longer an individual owns a car, the harder it can be to keep that customer. It’s not necessarily because the dealer does a poor job of providing an acceptable level of customer experience. Let’s face it, everyone’s life changes. The college student who bought the entry-level economy vehicle graduates, gets married and, perhaps has children. And, while they may have been very happy with their vehicle, they may now need one that better fits their current lifestyle. Manufacturer lineups and vehicles also change. The simple fact that the customer chose a different brand vehicle doesn’t mean they were unhappy with you as a dealer.
A recent Automotive News article shared an Experian study concerning length of vehicle ownership and how it effects brand loyalty. According to the article, “consumers who owned their vehicles for 12 months would purchase their next vehicle in the same brand 57 percent of the time. But for consumers who owned a vehicle for 12 years, the loyalty to the brand dropped an additional 23 percent to only 34 percent.”
So, what can a dealer do about this trend? Well, according to Brad Smith, director of automotive market statistics for Experian Automotive, “the increase in time between dealer interactions, whether they are for sales or service, increases the probability of a consumer defecting to the competition.”
Mr. Smith hit the nail on the head with his simple statement. A consistent, ongoing relationship is vital to creating and retaining a loyal customer base. Absence doesn’t necessarily make the heart grow fonder. In fact, quite the opposite happens. A customer without continual, meaningful engagement is very likely to become an ex-customer.
The solution to keeping your defection rate as low as possible is quite simply quality, informative and timely communications. But not just any communication – and especially not those marketing communications that are sold to you as “retention tools.” In reality they are perceived by your customers as nothing more than advertisements. While they do serve a purpose in the marketplace, they are surely not going to engage and retain your current customers.
A bit more on this: Having just walked the NADA show a few weeks ago, I could not help but notice how many of the exhibitors claimed their products and services were now focused on providing the dealership with loyalty and customer retention solutions. While this may be a good marketing claim for companies that obviously feel the need to jump on the retention bandwagon, many of them have little, or possibly even a negative influence on your customer retention and long term customer loyalty. Why is that? Simply put, many of the products and services being peddled really don’t offer the retail customer any true value. And without real value, you can’t have meaningful customer engagement. Without engagement, you are only adding to the clutter already being received by the customer from the many marketing companies and OEM programs. The result? The customer becomes numb to your marketing efforts and your communications become more and more insignificant as time goes on.
So what is the answer? If we want to grow a customer’s loyalty and elongate their lifespan as a revenue producing customer, we must interact and communicate with them differently than we do when trying to attract a new customer to a weekend sales event. That’s where the engagement factor is a key and crucial element to keeping those customers on your team. Try connecting with your existing customers through different styles and types of communications. For example, this past Holiday Season, a Honda dealership created a Holiday cookie recipe contest that generated hundreds of entries. They then sent a dealership branded cookbook to each of the participants, which contained all their favorite recipes. From this point forward, every Holiday Season, hundreds of the dealership’s customers will get a subtle reminder of the dealership every time they use their cookbook. Now, that is real customer engagement!
Another effective tactic is from a from an Ohio Chrysler store that sends out a Thanksgiving recipe every year to its customers. Imagine sitting around the Thanksgiving table and your customer tells everyone that the sweet potato recipe came from her local dealer. Customers actually ask the dealership year after year when the recipe is coming out. They look for it with anticipation — you can’t buy that type of ongoing positive connection to your store.
There are many other communication components that can build a tremendous following. And they don’t all have to be expensive phone apps, or video text messages –they just have to be engaging and meaningful to your customer.