Mapping the Road to Lifelong Customer Loyalty

An Eastern Pennsylvania auto dealership group recently implemented a service reminder program for its car buyers and saw it grow to average 50 percent per campaign, meaning 50 percent of mailings resulted in some type of customer action. The industry average response rate on direct mail is comparatively much lower — 3 percent to 5 percent.

Ward's Dealer Business reported in June 2002 that just a 5 percent increase in service customer retention can increase a dealer’s operating profit 25 percent. Considering this fact, it is likely the service reminders are making quite an impact on this dealer group’s overall revenue. By implementing a simple customer relationship management tool, the group has met with incredible success, and they are not alone. Similar success stories are cropping up at hundreds of auto dealerships across the country.

The automotive industry offers compelling models and CRM case studies that can benefit all marketing professionals. New CRM tools are allowing auto dealers to reach and retain customers more easily and efficiently, helping them achieve significantly higher ROI as a result.

The most developed automotive CRM tools enable dealers to turn prospective customers into lifelong clients through the coordination of multichannel marketing, an increased level of personalization and establishment of consistent points of contact with customers during a purchasing cycle that extends beyond the initial sale.

Using “lessons learned” from the automotive industry, the following ideas address how customer loyalty can be improved for all customer-facing organizations.

Using multichannel, personalized marketing. This is the age of multichannel marketing — consumers no longer rely on one medium to receive their marketing information. The rapid growth of the Internet as a research, marketing and communication tool makes it a key tool in the arsenal of all marketing professionals. In fact, in the case of the auto industry, the Internet has begun to surpass print and television in influence over purchasing decisions.

Based on this news, automotive dealers are realizing that coordinating online communications with traditional marketing can be the difference between a lost prospect and a happy customer. While they may have been initially slow to adopt the Internet, many dealers now have Web sites, comprehensive e-mail outreach programs and departments devoted to keeping Internet customers engaged.

Effectively using the Internet, and combining those initiatives with traditional forms of outreach, is more likely to capture the attention and purchasing rhythms of today’s more discerning, more distracted customers who are receiving more messages from more mediums than ever before. For instance, marketers should follow up customized e-mail offers with phone calls to have a better chance of getting a prospect's attention.

The important thing is to communicate to the customer that his or her interests and needs have been taken into account and that they are not just a part of a general mass mailing. Successful retailers in all industries have always sought different ways to distinguish themselves from the competition; personalized communication that leverages the multiple channels available today, including e-mail, telephone, Web sites and print media can be a key differentiator.

Marketers can employ sophisticated CRM tools that generate demographic information, which can be used to reach consumers based on their specific needs and purchasing habits. The following hypothetical example illustrates how addressing an online customer’s specific needs can result in a sale.

A 26-year-old single consumer living in Southern California goes online and requests price quotes for a moderately priced, fuel-efficient vehicle. He indicates that he is just at the beginning of his research process and isn’t looking to make an immediate purchase. He is subsequently approached by several dealerships that send him the same e-mail repeatedly.

However, one dealership is different in its approach, specifically because it has begun segmenting its e-mail and direct mail outreach based on demographic information. After the prospect’s data is further analyzed, it adds him to a list of customers targeted to receive information periodically on several models of hybrids and other fuel economy vehicles within a fixed price range.

After receiving that type of service, it is easy to see how the customer will then most likely choose to go to that dealer a few months down the road, when he decides it’s time to make the purchase. Because of the special attention he received early on, there is a good chance he also will refer several friends to the dealership.

Staying in touch after the customer has made an initial purchase is not an easy task, but dealers who do this are much more successful over the long term. Customers typically feel as if those dealers “care” more about them, and are thus more likely to return to them. Offering perks — such as personal Web sites for customers to use however they’d like — will keep them happy beyond the initial sale, increase customer loyalty and improve chances that the customer will make additional purchases. As with marketing in any industry, consistency is the key. Dealers are realizing that loyalty is best achieved through focused marketing executed at the right time on a continual basis.

Dealers have leveraged emerging, advanced products on the market that enable users to reach customers with different customized strategies. For example, the latest offerings include capabilities to set up personal Web pages for customers, with graphics of each vehicle, detailed service history and the customer’s own login and password for self-administration.

Other features include service reminders customized with vehicle mileage and needs, and personalized e-mails with a salesperson’s picture and signature. Retailers who use these types of tools can achieve higher levels of repeat business and referrals, similar to what today’s tech-savvy dealerships are now enjoying.

Understanding the purchase cycle. Keeping in touch with customers after they buy a vehicle has helped dealers develop lifelong customer relationships. Like many industries, the automotive industry is experiencing flattening sales and diminishing brand loyalty, so maintaining happy customers that keep returning to buy is more important than ever. In the automotive industry, the cost of keeping a customer is generally lower than gaining a new one, according to marketing information services firm J.D. Power and Associates.

Just as dealers aim to keep customers happy once they drive off the lot, retailers and marketers should aim to engage customers with relevant targeted outreach beyond the point of sale of any product. Frequent, personalized follow up is important in building a long-term relationship, but keeping customer databases updated and manageable is no easy task.

Personnel charged with sales, customer outreach or marketing can turn to available customer retention tools to sustain effective, lasting CRM strategies. Consider the following hypothetical example:

A mid-level professional submits a purchase request for a new Audi A4. The dealership she contacts responds by sending her photos of models in the colors they have on their lot, in addition to feature advantages. She changes her mind about the car after visiting the dealership for a test drive.

After discussing her options with the dealer, she expressed that she would go elsewhere to shop around for a more affordable sedan, though she really wanted an Audi. The dealership began sending her color photos and comparison information of older, yet more luxurious Audi models that were within her price range. She was very impressed by the dealer’s attention to her needs and purchased a high-quality used model within a few weeks.

To keep outreach tasks manageable, efficient and cost-effective, marketing professionals must analyze their needs and those of their customers, and then select the appropriate CRM tools to ease the task. The road to developing lifelong customers is paved by multichannel communication based on customer preferences, personalization and well-timed communications.

Features of effective CRM tools:

* Visually stimulating e-mails.

* E-mails that are customized, targeted to recipients' needs, and automatically generated.

* Web-based for easy start-up and access.

* Enable quick response to customers' requests.

* Data segmentation based on customer spending, purchase and visitation habits.

* Multichannel marketing using mail, e-mail, Web sites and phone.

* Personalization capabilities, such as individual customer Web pages.

* Able to generate daily schedules, activity reports and track outreach.

* Enhanced precision in ROI measurement capabilities.

* Online dealer tools and reporting.

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