When you’re looking for business, new customer campaigns abound. Mailers, AdWords, pay-per-click, pop-up ads and referral programs are just a few ways you can spend your marketing dollars. In August, I addressed five great ways to make your marketing stand out. This month’s focus is about retaining that new customer.
Your marketing strategy is to retain current and seek out new customers to replace lost customers and to grow your shop. The benchmark for new customer acquisition cost is 25% of your marketing budget. While you are looking to attract new customers, you shouldn’t target just any customer – you should work to attract your PRIME customer.
A prime customer is that perfect customer who fits like a glove. They are delineated by demographics – age group, age of children, house value and income, among other things. Distance from your shop and gender can be a factor too. By determining your prime customer, you will use your advertising dollars more efficiently and be able to focus on customers who are a good fit for your shop!
We define a lost new customer as one who hasn’t been in for 12 months since the first visit. Our analysis of sample shops across the U.S. has uncovered that even the best shop has a new customer retention rate of 49-51% and that is measuring only the first to second visits. If you haven’t measured your new customer retention rate, you may be surprised by what you’re missing.
Unless your town is experiencing growth due to people moving to your area, you likely have a finite pool of potential new customers to draw from. Whether new to you or new to your market, any new customer has a high risk of not returning unless you put in place a plan (process) for the second, third and fourth visits to your shop. On the first, they are simply checking you out; during the second and third, they’re getting accustomed to how you and your team do business – and, the magic happens on the fourth time in. They’ve said through their actions that they trust your shop and the work you do. Now, the customer is yours to lose.
Here are six ways to give your new guests a fantastic customer experience that will improve your chances of retaining a customer for life:
- Shop tour
- Underpromising and over-delivering
- Communication preferences
- Following up
- Pre-scheduling the next appointment
- Bounce-back offer
On their first time to your shop, chances are high that they’ll be in for an oil service or something small to check out your facility. It’s imperative you make a connection on a personal level. We’ve found there’s no better way than giving your guest a shop tour.
A guided tour will give them an opportunity to “peak behind the curtain” of a repair shop. Introducing them to your team while highlighting your shop’s capabilities makes a two-fold impact – your prospects make a connection with the person working on their car, and they see the vast array of services you offer, which increases their confidence that you are the shop for them.
Managing expectations by underpromising and overdelivering
The desire to meet the customer’s request is a core reason why we are so fulfilled by being a service provider. Unfortunately, this desire to please might cause us to sometimes make a commitment we can’t keep. Promising that the vehicle will be completed today, only to deliver it tomorrow, pretty much guarantees that you won’t see them again…simply because you’ve demonstrated you can’t fulfill your promises.
The methods of communication as well as preferences are varied and a “one size fits all” approach can and will frustrate your customers. Make a point on their first visit to find out how they prefer to be communicated with – that will show that you care and are willing to adjust your operation to fit their needs.
Asking the question about their preferences shows respect for them. We had several customers who explicitly stated that the only way to contact them was by text. Every time we would text, we would get a response promptly. But, a new advisor who hadn’t been trained on their communication preferences was frustrated by the fact they never returned his phone call. That was our own internal miscommunication!
Follow up Personally – It is Truly Time Well-Spent
E-friendly follow-up tools like automated text messaging and email operate seamlessly in the background to make a “conversation” quick and easy. Most shops use them and some even swear by them, but if you really want to differentiate yourself, take the time to simply call and say thank you! Most of the time you’ll get your customer’s voicemail, so just leave a brief message.
When you do get a live person, the call can last less than a minute. Let them know the reason for your call is to convey your gratitude for the trust they’ve put in you and your shop.
Pre-scheduling the next visit
As the vehicle progresses through the service process, it’s likely you will end up recognizing unperformed services that will eventually need to be addressed. The predictability of mileage services and oil changes are the perfect way to schedule subsequent visits, which increase the likelihood you’ll see them again.
Giving an incentive to bring in a second vehicle or dollars off the next service coupon increases your chances of another visit. Major retailers use programs like this to boost foot traffic, frequency and sales. One retailer is a drop point for Amazon, and at the completion of the return they always issue a certificate that is as good as cash at their store.
All the shops in my peer group issue certificates that are as good as cash on par with what they spent on the current visit. We’ve proven the value as we’ve tracked new customers’ subsequent visits and purchases.
Keep in mind, it’s easier to get a first-time customer in a second time, than it is to get a potential new customer to show up for the first visit. The reason is, the second time they know what the experience will be like and there is less of a mystery when they bring their car in.
The lifespan of a customer can range 30 to 40 years. Using conservative calculations, they will be in two times per year and spend $500 per visit, so each new customer has a lifetime value of $30,000-$40,000. When you consider that this calculation doesn’t factor in a second car or referral of family, friends and colleagues, that lifetime value is significantly understated.
Providing an excellent customer experience, along with fantastic followup and powerful incentive programs, will improve your chances that your shop will remain the “shop of choice” for your new customers. Those returning customers ensure that your shop will remain busy, profitable and a fun place to work for years to come!
Email me your contact information and I’ll send The Magic Number illustration to keep your team’s eye on the goal.