Are You An Advertising Addict?

Advertising is not an exact science. You spend thousands of dollars each month on TV, radio, newspaper, direct mail or billboards to attract ‘new shoppers’ to your store. I am not saying you should stop, or even slow down. All of the advertising I just mentioned is necessary and together it works. I am just amazed at the amount of money dealers have to spend just to attract ‘new shoppers’ into their stores. It just doesn’t make sense to me.

I know and understand the reason they spend so much (low or no customer retention), but it just seems so wasteful to have to spend so much to keep filling the pipeline with ‘new shoppers’ on the hope that they can maybe convert them into ‘customers’. And remember this, new shoppers are expensive to attract, beat you up on the price, give lower CSI scores in general and usually don’t buy on the first visit. They play you against the competition, they don’t know you, they don’t trust you and you usually end up making less gross profit on these ‘new customers’ than you do on your existing, retained ‘old customers’. The problem is that there just aren’t enough of those retained ‘old customers’ around. You have to keep spending and spending to get new ones and you just can’t stop; Face it: you are an Advertising Addict.

While this article is not designed to be a 12-step plan for advertising addicts, it is meant to make a point and at the same time give you some good news. Advertising, as you know, is not predictable and it isn’t an exact science. Everyone is looking for the magic mailer or the powerful TV or radio ad that will create tons of ups. What I want you to think about for a minute is your own database. The lists of hundreds of people that have shopped and become paying customers at your store, but for whatever reason have not returned. These people know you. They know where you are located, how you operate and they know if they want to do business with you again or not. What we are talking about here is Customer Retention.

This is no secret: Retained, satisfied customers are valuable income producers that are already in your store, already spending money, already supporting your lifestyle and the lives of your employees, and they are out there spreading the good word about you. They refer their friends, are easier to sell, easier to satisfy, easier to make a little more gross profit on and, here is the wild part, easier to keep. I said it –

easier and much less expensive to keep, but the sad fact is, most dealers do absolutely nothing, allocate not one dollar and make no real effort whatsoever, to keep their existing customers.

Here is the punch in the face, so get ready. I have said this before and I will say it again and again. If you want your existing customers to stay your existing customers, you have to show them. You simply need to ‘give them a reason to want to keep doing business with you’. You know you need to attract new customers (shoppers) and you go after them every day, so why don’t do something that will keep your existing customers – something that will give them that reason we are talking about to only do business with you?

My recommendation is simple. Do what other businesses have done. Create an owner loyalty club that gives shoppers a reason to buy their next car from you. Make them feel special, give them priority service and benefits and make them an elite member of your club and entice them to have all their service and maintenance packages done at your store with a special club member discount. Encourage them to have all the services documented and done in sequence with a trade-in bonus that brings them back to your store for their next vehicle and lets you get more gross for their trade when you sell it (vehicles with documented service records are worth more money.) Then reward them with points they earn for every customer pay purchase…points that can eventually be redeemed only at your store for future discounts on vehicles, service, parts or accessories.

This isn’t rocket science, folks. It isn’t. Virtually every business has an owner loyalty club of some kind – why not you?  An owner loyalty club for your dealership will increase customer retention, ensure your future, keep your existing customers, help you sell more cars and service and eventually help you reduce your advertising expense because you have increased customer retention. The bottom line, and you’ve heard this before – it is cheaper to keep her.