Over the last few months, I have attended and spoken at six national dealer meetings for various manufacturers. I can say without a doubt that the common thread that ran through those meetings was the importance of attracting new customers and working hard to make those customers both excited and satisfied. That means getting them excited about the product they invested in, whether it be a tractor, UTV or lawnmower, and making sure they are satisfied with the experience they had, both the people and the purchasing process.
I agree that it is good to always look for new customers to pull into your dealership, but the big mistake I find everyone making today is not focusing on retaining the customers you already have.
A few years back, a consulting group studied the importance of customer retention. They found that a 5% increase in customer retention resulted in a 75% increase in a company’s profitability. It became clear to me that I needed to get the dealerships I consulted with to focus more on reaching back out to those customers who had purchased from them and to work on moving them from just a customer to a loyal customer.
Let’s face it, I think we would all agree that the price of keeping an existing customer engaged in our dealerships is less expensive and more profitable than spending time and energy going after new ones. I know from our own experience that when we work hard to build and cultivate a loyal customer base, we are rewarded by an increased amount of business from them. Just like your dealership, the dealers we consult with have many options outside of my business. My goal is to keep them focused on what we are doing and continue to make it simple for them to come back and do more and more business with us.
I know that for many of you, the internet has created a market squeeze that has some dealerships recklessly giving away margins that are needed to provide a great customer experience at their store. Again, dealers who focus their energies on building relationships with their existing customers, those who work hard to maintain and nurture a strong loyal following, enjoy a reprieve from the “rat race.” They end up growing a customer base that is less likely to buy something that might cost a little less from a dealership they have never done business with before.
“The big mistake I find everyone making today is not focusing on retaining the customers you already have…”
I have found from personal experience that another important benefit is the cost savings you will achieve by focusing more energy on retaining and building a loyal following. When it comes to marketing today, there seems to be an almost unlimited number of ways to reach out and touch new prospective customers. And while I am confident that every salesperson that represents one of those methods will tell you that theirs is the best way to achieve results, the reality is that the best way to attract new customers has never changed. It existed before Facebook, Twitter, Instagram, websites and even before telephones and the internet. The best approach is “word of mouth” marketing from a happy, satisfied, loyal customer.
Let’s face it, if you are selling great products, providing the right parts and giving great service, your customers will talk about your dealership. There is no greater, more effective marketing tool than your customers telling others about how good you are. By keeping your customers loyal, you keep them away from your competition and strengthen your position in your marketplace.
I understand that when the pressure to sell is on, it becomes easy to overlook the value you have in your existing customer base. Yet, it is those customers who will continue to generate the largest portion of your profits.
As you make the transition from 2016 to 2017, I encourage you to rethink your marketing strategy and consider that rich base of customers that are sitting in your business management software that have been all but ignored. Consider investing just 25% of your total marketing budget to reaching out and reengaging them into your dealership. Remember, this group of customers not only represent your dealership’s past, but if marketed to in a meaningful way, will take your dealership into a bright and profitable future.