How Equipment Dealers Can Benefit From A Loyalty Program
Posted by
Raj Julka on Fri, Jul 15, 2011 @ 02:22 PM
Equipment Dealers - Generate loyalty and increase revenues by rewarding your customers
INTRODUCING:
In today's business environment, it is becoming increasingly difficult to differentiate yourself from your competition. As industries and products mature, choices become many and thus the price wars begin and your piece of market share begins to deteriorate. Let's face it, there are many good products in the market today. As a participant in the Construction Equipment Industry you face the same challenges as other industries. How does a consumer, in our case an end-user, go about making his or her decision to buy your product? More importantly, how do we urge that customer to continue to come back whether it befor a new piece of equipment, parts or service? Take a second and give some thought to what has worked in other industries to generate brand loyalty. Best Buy, for example, uses its "Reward Zone" to generate customer loyalty. Staples has a rewards program where a check is sent to you in the mail. What do these two programs have in common? The rewards you earn are only good if you use them in their stores towards future purchases. What better way than to give your customers a reason to come back to see you? Yes, you give them money (i.e., a discount) towards a future purchase, but if they don't ever come back or use it you don't spend a penny. There is a saying which has some truth in that, 80% of our business comes from 20% of our customer base.
The reality of this, is that, it is much less expensive to keep a current customer happy and coming back than it is to attract a new customer. That's not to say that we put our entire focus on current customers (our pipelines would eventually run dry) but to focus on a proven way to accomplish keeping our current customers happy while at the same time looking for the next customer that will move into our top 20%. What is the #1 reason customers switch brands? Because they can! Let's give them a reason to stay with us and take care of them while doing so. As a member of the Construction Equipment Community, a Loyalty Program can be an effective tool from both a sales and marketing stand point. Research from other industries, similar to the CE industry (in the sense they offer units for sales, parts, service and rental), have utilized this strategy with great success. If we focus on the service department, findings from that research show that total RO's increased anywhere from 20-35% while the average $/RO also increased. What does this all mean? If your goal is 100% service absorption, you are that much closer to obtaining that with a Loyalty Program than without one. If you decide to install a Loyalty Program, look for one which is seamless for you to manage (no scanners or other technology to purchase and upkeep), automated, and customizable. Give your customers the ability to look at their earnings totals 24/7. Though the idea is new to the construction equipment industry it is certainly not a new idea and has been proven in other industries. In fact, one equipment/truck dealership has acted as a pioneer for this in the northeast, Tracey Road Equipment. As with anything, do your homework when looking for your platform.
