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ADP Lightspeed: Make Dealerships ‘Addictive’

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July 20, 2011 by   Leave a Comment

The following article was authored by Adam Shiflett, marketing manager for ADP Lightspeed, examining ways that dealers can build customer loyalty.

Warning: Your dealership should be habit forming. Your customers should want to come back frequently and not want to leave. But forming those habits is going to take more than just having a Sales event.

Today your customers have more options than ever. They don’t need to go down to your lot to get unit specs, they don’t even have to leave their homes to buy. That means your store has to do more than sit and wait for customers, it has to be a habit that they can’t stay away from.

Customer Lifetime Value: Customer Study

In a recent study of over 150,000 Powersports customers ADP Lightspeed found that the average lifetime value of a customer was $14,000. Average customers bought units every two years, parts twice a year and service once a year. They’re yearly spending: $5,000.

Sounds pretty good, can we do better?

We divided the customers into fourths and focused on the top 25%. The top customers spent $29,000 in their lifetime, more than double the average. They’re yearly spending: $11,500.

Where did it come from? Not unit purchases. The top customers purchased units at about the same rate, once over two years. The difference was Parts and Service. They came in for parts and service almost twice as much as the average customer and spent 30% more per visit.

Now the question is: “how do I get more of those top 25%?”

Understanding the Customer Lifecycle

The first step to creating habitual customers is to understand their needs. Throughout a customer’s experiences they will have different needs. Parts, service, rental, storage and eventually a replacement unit. Focusing on building lifelong customers will give you the opportunity to take advantage of each of those needs.

But creating lifetime customers takes work and cooperation from every department. At every point of the customer lifecycle you need to be prepared. The focus needs to be taken away from one-time wins to long-term relationships at each step of the customer’s experience. Here’s how:

Acquisition

Most businesses focus on getting business in, keeping inventory turning and creating new customers. What they often miss is that the heavy focus on acquiring customers often loses customers after the initial sale.

When you focus on developing loyal/habitual customers the way you treat get new customers has to change. Two examples:

a. Limit Discounting – By pushing sales and discounts you may train them to only focus on costs, giving them reason to jump ship at the next best price.

b. Gather Customer Information – If you want to get the customer in often, you better know who they are. Data collection needs to be a priority.

Experience

Our industry is exciting. Your store should mirror that excitement. Your operations need to be organized and prepared to focus on the customers. It is difficult for your staff to focus excitement if they are busy tracking down a part that was supposed to be ordered last week.

Positive customer experiences don’t start with retail displays; they start with your back office. Without the right controls in place your business will squander its time in haphazard tasks instead of focusing on customers.

Wallet Share

The goal of a complete customer lifecycle focus is to capture as much of their total spend as possible. So how do you turn a one-time purchase into a lifetime customer? Proactive needs fulfillment.

To create loyal customers you cannot wait for a customer to show up with a shopping list of needs, you need to anticipate their needs. If they bought a unit from you, you’ve won the first battle. Getting the initial purchase and collecting their information opens the door for the next purchase.

Set up reminders to contact customers at key preventative maintenance intervals and purchase anniversaries. Share information about customers across departments. After years of experience you can predict what a customer wants even before they know it. Contact them before they even had the need and make a customer for life.

Loyalty

You don’t want them to think of your store as just the place they buy stuff, you want it to be a habit. Encouraging those habits means making your store and staff the perfect fit for your customers.

Reward loyal customers. Follow-up with them. Show them how important they are to you. One way to keep them is to get them to bring their friends.

Many CSI surveys have put a lot of their focus to one key question: “Would you be willing to refer a friend?” The reason? If someone is willing to refer a friend you have succeeded. So ask your customers for referrals. If they are not willing then you still have work to do.

Every customer has a lifetime value that is far greater that any one-time purchase. Your goal is to extend your focus past the short-term purchase to the long-term relationship. Keep your customers addicted to your store.

 

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