With dealership margins shrinking as quickly as sales are slowing, you’ll have to get creative if you want to stay profitable this year. Fortunately, the best way to grow revenue during a sales slump doesn’t require nearly as much effort or expense as new customer acquisition. Plus, it uses tools that you’ve already got at your disposal.
The best way to grow revenue in 2017 is to focus on the customers you already have. It’s not only 50 percent easier to sell to an existing customer than it is to acquire a new one — it’s also six to seven times less expensive. The key is to connect with customers in meaningful ways — ways that offer them value while keeping you top of mind.
I have had a few calls from people about last month’s article about using the “Apple Experience” in your dealership’s service drive to retain customers. The main question that kept coming up was how to set up this type of program. This month, I will try to outline the steps I would take to develop this experience in a dealership.
One of the things I suggested was to get more Millennial and newly graduated college students into our business. How would you create a “wow” buying experience for the customer after they purchased their car? How would you set up a brand new profit center by developing a public relations manager? How would you get better penetration on F&I products? And, finally, how would you pay for it all? Let’s drill down on some of these things in a little more depth.
Competition to attract car buyers is as great today as in any other time. Transparent lead providers are arming price shoppers with all the information they need to squeeze almost all the profit from car deals. Car buyers have plenty of dealers to choose from when shopping for a new car, so what makes them decide to buy from you? There are car buyers out there who are looking for more than just the lowest price. Many want greater value and a relationship with a dealer that will help them maintain a safe and great-looking vehicle.
I visit about 250 dealerships a year and, from time to time, I hear different complaints about things that are not working the way we would like them to. Some are the usual — not enough sales, can’t find techs, heavy turnover in the sales department, etc. Sorry, no answer for these. However, I think I’ve found a way to address the “customer retention is too costly” problem in a unique way.
I was in an Apple store the other day buying a watch for my wife. She is Apple to the core, no pun intended. She has an iPad, iPhone, iTunes and a Mac. To say she is a loyal customer would be an understatement. The person who waited on me was fabulous. She had great product knowledge, sold me the watch, three different bands, plus a charger for my car and a new, upgraded iPhone 7. As I was leaving, I wasn’t thinking about the $1,000 I had just spent, but instead, “Wow, what a great experience!” This got me thinking about our business, how we can create the same type of experience for our customers.
Every year brings a new list of New Year’s resolutions. Make 2017 the year you significantly improve customer retention. Keeping satisfied customers returning to your dealership will not only make you more money in the long term; it will also have a positive impact on your standing with your OEM. This resolution may appear on your list every year, but this year you have access to more technology than ever to improve customer retention and revive lost service customers.
Anyone who has been in the business knows that a satisfied service customer will eventually buy a new car. Ask any sales professional — selling to a previous customer is a lot easier than closing a fresh up. Most dealers have ignored this fact and have lost precious service revenue to substandard competitors that now profit off of every car you sell, from routine oil changes to more-costly transmission repairs.