By some estimates, getting a new customer costs five times as much as keeping one you already have. And once you get a new customer, bringing them up to the level of profitability of existing customers takes time and costs even more.
Acquiring new customers is expensive but necessary. Losing existing customers is even more expensive. But it’s definitely not necessary.
Why do customers defect? Here are four of the most common ways dealers drive customers to the competition, along with ways you can keep them happy and coming back:
Don’t devote enough resources to customer experience
Customer experience is big. So big that 82% of consumers will stop doing business with a company based on a single poor experience. So if you really want to lose customers to the competition, start there.
If not, you’ll want to make sure you get customer experience—and the customer service at the heart of it—right. How? First, get out of the mindset that great customer service is somehow just about being “nice”.
Being nice to customers is of course critical: 73% of customers will seek out the competition in response to rude staff. But being nice is not enough. You also have to deliver. And you have to make it right, promptly, when you don’t quite deliver what customers expect.
Consider that 55% of your customers will jump ship if you don’t resolve issues in a timely manner. Or that 83% want to talk to a living, breathing person when there’s a problem.
That means having enough staff and empowering them to solve problems quickly, rather than simply passing everything through to a busy superior (or you—you have enough to do already). It also means a modern phone system that gets customers in touch with the right people without dropping their calls or getting them lost in a Byzantine phone menu. Increasingly, it means keeping an eye on Facebook and Twitter, too.
Great customer service requires not only giving employees the authority to help but also a way. If a customer needs an item replaced, that item (or an equal or better substitute) should be on hand or easily and quickly accessible. If a customer needs you to update or rework something, you should have enough employees and equipment to do it right away—before that customer gets away.
And don’t reserve all your best perqs and promotions for new customers only, which can make your loyal base feel snubbed. A great way to reward existing customers (and boost sales at the same time) is to hold periodic “preferred customer” financing promotions, such as 120 days with no interest and no payments. Check with your financing partner to see what’s available.
The benefits of all the above are obvious, but this may not be: 85% of your customers don’t mind paying more—up to 25% more—for superior customer service. This is why Apple rarely discounts its comparatively expensive gear: its customer experience is so good that it doesn’t have to.
Lose employees to the competition
To many customers, your employees aren’t just the face of your business; they are your business. When an employee, say a salesperson, customers have come to know and trust leaves, customers feel like something’s missing. When customers feel like something’s missing, they feel like buying somewhere else.
Why do employees leave? Money and benefits matter. Advancement opportunities matter. So does work/life balance, which is linked to 39% of turnover.
At the core of all the above is productivity. Higher productivity allows paying more and offering better benefits. Same thing goes for advancement opportunities. And when productivity increases, so does the “life” part of the work/life balance.
How can productivity be improved? Start by rethinking your processes. Over time, processes can fall out of step with current business realities for a dealer, gradually cutting efficiency and prompting employees to patch them up in ways that probably aren’t optimal.
Next, root out old or broken down equipment that’s slowing down employees and hurting your ability to serve customers. If you’re concerned about potentially large upfront costs, consider financing new equipment and software. Not only can this improve cash flow, it can make future upgrades much easier and more affordable, particularly if you have a master lease arrangement, which is something to also consider offering your customers.
Another benefit of up-to-date equipment is that employees see you investing in the business and that gives them confidence that there’s a future with you, leading to better employee retention and satisfaction.
Never say sorry
As hard as you try, you can’t entirely avoid negative customer experiences. Even if you do everything perfectly, some things just are not within your control. So you’re going to get an unhappy customer occasionally. But it’s what you do when that happens that makes all the difference.
Consider that the lion’s share of customers says they’d come back after a negative experience if they received an apology or correction from a supervisor. A discount helps, too. Think about that: simply saying “sorry” and offering to makes things right keeps most unhappy customers from defecting.
Seem a little too simple to actually work? Sometimes, it’s only the simple things that will work.
Take a relaxed attitude toward marketing
One of the best ways for a dealer to lose customers is to lose mind-share with a half-hearted approach to marketing. Dealers that fall into this trap don’t dismiss marketing entirely. Instead, they talk about “goodwill” and “word of mouth.” Why? Because goodwill and word of mouth don’t seem to require much, if any, dedicated marketing effort. And because of that, they’re cheap and easy.
Not to say that goodwill and word of mouth aren’t important; both are great ways to get and keep customers. But neither are magic that just happens while we’re off doing something else. And neither works well—or long—without devoting consistent, conscious effort toward nurturing leads and existing opportunities in the form of Web, email, print and other marketing.
Marketing does take resources and expertise, but it’s crucial to staying top-of-mind with customers. If you don’t have much set aside for marketing or need some help in this area, you can find some cost-effective ideas and advice here. Also, though it might seem counter-intuitive, ask your partners. After all, they have an interest in seeing you succeed and some will be glad to help with marketing. LEAF, for instance, offers an array of marketing services and advice at no charge to its partners.
Losing customers to the competition is easy. Keeping them, not so much. Loyal long-term customers don’t just happen. And they don’t stay loyal or long-term without constant vigilance and outreach, as well as up-to-date infrastructure and equipment that allow you to deliver the products, services and support that will keep them coming back for years to come.