Driving Retention

PSA: Stop Thinking in the Third Person

To maximize customer loyalty, dealerships should focus on first-person data to identify and segment their customer base, and tailor their marketing and engagement activities accordingly...
Image to colored stick figures in three groups
Written by
Mike Gorun
Published on
August 10, 2019

Dealerships today are continuously seeking new ways to acquire new customers. Endless services and platforms pop up almost daily that offer businesses new ways to reach out to the world and attract new customers – whether that’s through online media, social media platforms, mobile ads or database mining. The problem is that many businesses concentrate far too much on leveraging other companies’ data to identify, segment and target potential new customers; but ignore the most important data in existence – their own.

Loyalty isn’t something that can be bought and a well-designed loyalty program shouldn’t be expected to do that. A great loyalty program, in fact, shouldn’t be viewed as a customer acquisition tool at all.  People shouldn’t start doing business with you simply because you have a loyalty program. If that’s the only reason they do, you’re probably having a tough time retaining customers in general. Loyalty begins with an interaction and then a soft relationship and is generally something that is earned and with proper engagement it will certainly grow stronger over time.

The best way to start earning customer loyalty is by focusing on first-person data – yours. The data you collect from your in-store systems can provide critical insights to drive better, and more frequent, marketing and messaging decisions. Mine it regularly and strategically. Your DMS and CRM are both full of information that will assist you in identifying the three main groups of people that you should be focusing on

  1. Your existing loyal customers: This is the group of people that have been doing business with you consistently over a period of time in some cases maybe even years. It may include people who have purchased multiple cars with you and/or people who are consistently servicing their vehicles with you, regardless of where they were purchased. Through your sales and service records, it is very easy to identify these people. These are your Tier 1 customers and the foundation of your business.  Lose a Tier 1 customer and it is very difficult and costly to replace them not to mention their lost revenue.
  2. These existing customers whose loyalty you will need to earn through timely engagement: This group of Tier 2 customers includes customers who have purchased vehicles from you but may or may not be utilizing your service department on a consistent basis. Identify these people by looking for service records of customers who are getting warranty work completed, but not regular service. There may also be customers who only get regular service when they bring their vehicle in for warranty work. Additionally, look for customers who have inconsistent service records with you. Maybe they have their 10,000-mile service completed with you, but did not visit you again until their 30,000-mile service.
  3. New customers that you can begin earning loyalty from: This group includes everyone who purchases a car from you, (new or used) as well as all new service customers. Pay close attention to customers with really low mileage vehicles that were not bought from you. Chances are that you are the closest franchise dealer to them, so they have a high-percentage conversion into becoming a loyal customer. You may not have earned the vehicle sale, but that doesn’t mean you can’t keep the customer.

These are three very different groups of people and you must tailor your retention marketing and engagement activities appropriately. Think of these three groups in terms of relationships. You’re married to the first group. You’ve been on a couple of dates with the second group. You’re on a first date with the third group. As any married person knows, interaction on the first date is much different than after you’ve been married a few years. It’s natural to act differently on a first date. You don’t know each other very well, but there is a potential for a relationship. As each date progresses – the first date becomes a second date then a third date – each party becomes more invested in the relationship and more familiar with how they should act with each other, and what to expect.

Sadly, a high percentage of loyalty marketing has messages that assume the customer has already married them. Segment these three groups and tailor your loyalty marketing to be appropriate for each stage of the existing relationship. This will help you find increased success in progressing a customer down the path to marriage.

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