How many times over the past 10 years have you heard the following words/phrases…. customer loyalty, owner loyalty, customer retention, reward programs, loyalty programs?
The folks at Twitter use the term “trending” to describe popular stories or tweets that are heavily followed. Without question, the most popular phrase “trending” in the automotive space for the past 10 years is “customer retention.” Everyone from your manufacturer to every marketing and salesperson you run into talks about customer retention and how important it is in today’s automotive industry. However, building loyalty with your customer base is also more challenging than ever these days. With sites like Groupon, Living Social and Facebook, new offers and discounts arrive daily in your customer’s inboxes, making customer loyalty to your store even more difficult. In today’s economic climate, it’s not uncommon for a customer to drive clear across town to save a dollar or two on anything. The obvious things like fair prices, great service, clean facility, convenience and location just aren’t enough anymore to retain your customers.
I speak with thousands of service directors, managers, GMs and dealer principals every year – each typically gives me a different answer as to what constitutes a successful loyalty program and what defines customer retention. No question this is because customer loyalty “experts” are coming at them from every direction. When your newspaper rep shows up, they claim their paper will help you with customer retention. Ten minutes later your direct mail company knocks on your door with their answer to owner loyalty. Later in the day, your local cable station walks in with their solution to customer retention. Unfortunately, these are not true loyalty programs or customer retention solutions.
Customer loyalty programs started 40-plus years ago with American Airlines frequent flyer program. The airlines still have to use traditional advertising; TV, radio, billboards, and newspapers to reach their customers . . . but none of these are true loyalty programs. A newspaper ad does not make a customer “loyal” to your store. Today’s loyalty programs come in all shapes and sizes; from key tags you put on your key chain, to wallet cards you keep in your purse, to apps you load on your smartphone.
In my 15 years experience working with dealers, I have learned there are five things you must do in order to maintain an outstanding reward program and truly increase your customer retention numbers:
1. Everyone loves membership and being part of a community… just ask any of your kids who belong to Facebook. Give your customers a reward card as part of the delivery as well as the service process. Every time I hit the checkout line at my local market, the cashiers have been programmed to ask me — “Are you a member of our rewards program?” Start doing the same with your customers. Make them part of your community.
2. Build a sense of momentum. Provide a jumpstart to your new members. If you have a punch or points program, start each customer off with a free punch or 200 bonus points upon joining.
3. Make your rewards levels easy to reach. No one these days is going to sign up for a buy six oil changes get the 7th free program. It will take them three years before they get a reward! Make sure they can reach their first reward within 90 to 120 days.
4. Gather data from your customer in return for the new membership. “Hey Mr. Wolfe, can we get your email address so that we can send you exclusives offers and updates about our reward program?” Use a simple sign-up form and drop that form in a fish bowl and later draw out one winner for some prize.
5. Promote the program in all your adverting. Remember, this new program will set you aside from eight out of 10 of your competitors. If you don’t promote the program, how will your customers know if even exists? Include something about your new loyalty program in all of your traditional and new media advertising. If you build it, they will come.
Today every single one of your competitors advertises in old traditional media; newspaper, radio, TV, and on billboards and is dipping their big toes in the area of new media; Facebook, Twitter, LinkedIn, etc. Creativity and budget are the only things that separate you from your competition. Today, roughly 20 percent of dealerships have a true loyalty program in place. As we are in the summer months, it is now time to get out the sunscreen and do a little bit more than dipping your foot in the loyalty pool. The weather is great . . . jump in with both feet and watch your customer retention numbers soar.