Customer Retention Drives Dealership Growth in 2019
Who doesn’t want more customers? Attracting new business is how you grow your dealership, right? Well, yes. But no business can survive, let alone grow, without repeat business. For dealerships that sell construction equipment and/or heavy trucks, post-sale business is even more vital than it might be for some other type of company. Your “peripheral” revenue streams – parts, accessories, service, body repairs, and rentals – aren’t peripheral at all. They’re essential.
That’s because you can sell only so many big rigs or wheel loaders to a given customer. Since your primary product lines represent expensive, infrequent investments, you also need to secure follow-up and related business from each customer.
And there’s the problem with a marketing program that focuses too heavily on prospecting for new customers. With only so much time and money available, you wind up neglecting the customers you’ve already secured. If they don’t see your dealership as their best long-term choice for all their truck or equipment needs, they’ll choose one of your competitors instead. Then, when they’re ready to buy that next expensive machine, who do you think they will turn to?
Focusing on Retention Makes More Sense
As a marketer, you know it costs much more to acquire a new customer than to retain an existing one. So why is it so tempting to budget “upside-down”? One recent study revealed that a mere 15% of businesses focus more on customer retention than they do on acquisition. So if you put your marketing effort where it belongs – on strengthening relationships with existing customers — you could automatically raise your dealership’s brand value above 85% of your competitors.
Putting yourself in the top 15% makes you a pretty savvy marketer. What an opportunity!
Furthermore, whatever the details of your targeting and content strategy, the cost of online marketing is rising. Unless you have an unlimited budget, your only choice is to continuously refine your spend to ensure maximum effectiveness.
Add It Up
No one wants to be taken for granted, especially after they’ve spent money with your dealership — a lot of money if they’re purchased a new or used piece of equipment. For your dealership, there’s more on the line than you may think. You can prove that to yourself by measuring customer lifetime value (CLV).
A lot of people talk about CLV, but do you actually know what a long-term customer relationship is worth to you? It’s easy to compute an average over 5, 10, even 20 years, and you may be shocked at the total.
In order to reach those numbers, though, you’ll need a deliberate customer loyalty strategy. One that recognizes that each customer’s buying journey is not a line, it’s a circle. What we think of as the “end” – closing a sale – is really the beginning of the next cycle. Or, it should be. —
Here at ADI Agency, we call that PEER – four clear steps that seamlessly attract and convert prospects and keep your dealership top-of-mind with them, continuing the engagement that leads to repeat business to generate an upward spiral:
What It Takes to Develop a Customer Retention Strategy
First, you need to identify your best customers – not necessarily by name, but by traits and buying behavior. “Best” could mean:
- Longevity as a customer
- Most money spent
- Most purchases made (or frequency of purchases)
- Broadest range of purchases products/services
Defining your “best” customers also defines your most-wanted prospects, because these are the prospects most likely to convert and join the ranks of your most loyal customers. The kind of content and offers you will use in a retention-oriented marketing strategy will also appeal to the high-value prospects you have identified, so your dealership can benefit doubly from your efforts.
Customer Loyalty Is No Accident
We know you love your customers and appreciate their business, but you have to do more than tell them. (That said, when was the last time you personally and sincerely thanked a customer for their ongoing loyalty?) A few folks might continue to do business with your dealership simply because you’re the closest and most convenient, but they won’t bring you enough business to sustain or grow your dealership.
A successful retention strategy requires a long view. Once you develop retention goals, you will need to identify specific marketing and customer service tactics designed to achieve those goals. In our next article, we’ll walk you through some proven, actionable steps you can take to get 2019 off to the strongest start.