Driving Customer Retention
The winter season slow cycle is well under way for snow-belt retailers. Even for their sun-kissed dealer brethren, the challenge of driving customer retention and referrals in a down market appears daunting.
And yet, I would like to remind you that dealerships have an outstanding and often over-looked retention tool at hand. Customers who are repeat buyers and those who bring their friends to buy from you do so because they enjoy a positive financial experience every time they purchase a vehicle from you. They are so consistently pleased with each transaction that they prospect for you without a finder’s fee!
What leads to a pleasant transaction? Why would customers look at a used vehicle? Is it all about a budget? Or could it be that you have the piece of inventory that brings back wonderful memories? Perhaps your dealership has a relationship with a lender that will allow a customer to re-establish a line of credit after suffering through hard times. Whatever the draw, the best tool you can use is a solid service agreement on qualifying vehicles.
Sell yourself on service
When a used vehicle qualifies for a service agreement the customer knows that vehicle has passed inspection and meets certain criteria. The policies help to allay the customer’s anxiety about purchasing a vehicle without a “factory warranty”.
Many independent dealers have a service department with multiple bays and plenty of hands to take care of vehicle maintenance. When a customer returns to your dealership for vehicle servicing, you are building customer retention. Independent dealerships often rely upon their sales representatives to present service agreements.
Unfortunately, if you ask the sales team how they feel about additional products, they may confess their worry that additional items will push the price of the transaction well past a customer’s budget threshold. When fear sets in, conviction runs out. A lost opportunity does not give the customer a reason to return to the dealership.
Some sales consultants simply do not believe in the value of the policies. For those who are in doubt, let’s figure it out. Just compare the claims paid by the policies against the repair orders paid by customers who do not have a service agreement. The math makes the case for policy protection.
Factor out fatigue
While I support the road-to-a-sale process, I also advocate using time wisely. The sales process should not take everyone to the point of exhaustion. A streamlined sales process reduces fatigue for all involved. Many new car dealerships are now advertising “come in and get all the figures within 30 minutes after selection”. Do you know how long your process takes? The late, great Vince Lombardi once said, “Fatigue makes cowards of us all.” How do you plead?
When you streamline your sales process, believe in the benefits of service, and make a power presentation, your customer retention will be on the rise and your bottom line will reflect your customers’ loyalty. Can you think of a better way to turn up the volume?
NIADA Used Car Dealer Magazine, February 2006, p. 10