I was recently online looking at Fender electric basses (yes, I play the bass in a church band.) What happened after I looked at basses on the Sweetwater site is a good case study in building relationships and increasing customer loyalty.
The next day I received a call from a sales engineer, Will, at Sweetwater in Ft. Wayne, Ind. He said he was just touching base (no pun intended) in case I needed any more information. Bottom line, after discussion, his follow up made the sale I didn’t expect to move on, at least not at that time. How he closed the deal and the follow up after that is a case worth studying, even if it cost me serious dollars to bring it to you.
First, his friendly conversational opener about what kind of music and where I play rather than a sales pitch was most welcomed. Eventually, the discussion turned to the actual bass I was considering and that’s when he was able to bring in key points like: the bass I choose would be put through a 55-point inspection to assure its proper setup and quality; there’d be a 2-year warranty; fast two-day shipping would be free; and if I didn’t like it I could send it back. Sold.
What happened after the sale is equally worth study. First, I received a thank you email from Will. The next day, I also received an email from the Sweetwater president. This was followed by another email from Will with pictures of my new bass, along with shipping and tracking details. I was very impressed with the picture idea and couldn’t help thinking that boat dealers could steal that one, send photos of a customer’s new boat being prepped in the service department or water tested, and so on.
Then, I received notice of about what day and time to expect the bass to arrive, and it was on time. Unpacking it, there was an impressive initialed checklist of the 55-point inspection, another thank you card, and even a small package of candies with the message: “Our sweet way of saying thank you.”
The entire process clearly gave me a feeling of relationship with Will and, more important for Sweetwater, made me feel important to them and that will lead me to become a loyal customer. Bingo, isn’t that what every business, every boat dealer, should be striving to achieve - loyal customers?
Why is customer loyalty (retention) so important? Simply, loyal customers are more profitable for a business, any business, than new ones. Fred Reichheld, a fellow of Bain & Company and author of “Loyalty Rules! How Today’s Leaders Build Lasting Relationships,” explains it this way: “Across a wide range of businesses, customers generate increasing profits each year they stay with a company. In financial services, for example, a 5 percent increase in customer retention produces more than a 25 percent increase in profit.”
Another great example is seen in the fast food space. Chick-fil-A has so effectively mastered the economics of customer loyalty it can afford to pay store operators double or triple its industry’s average compensation, stay closed on Sundays, and still give 10 percent of profits to charity. Essentially, loyal customers increased sales at a lower cost. Think about all the cost and effort it takes to get one new customer. According to a sales statistical report in the Harvard Business Review, it costs anywhere from 5 to 25 times as much to acquire a new customer as it does to retain an old one.
One key measure of customer loyalty is found in the frequency a customer gives your dealership business in any area – service, parts, accessories, storage, fuel, etc. Another consideration is what’s called the “churn rate.” This measures how many customers leave and don’t come back at all. It will take some effort but study your records and determine if a customer didn’t return after making his first big purchase or suddenly stopped after regularly doing business at the dealership for some time.
Once identified, reach out to those customers by sending them a card, email or text message that says, in effect, we know we haven’t seen you for a while and we care about that. Consider giving them a special offer such as a limited-time discount, some courtesy service or an invitation to a closed special event to reinvigorate the relationship. You can also send them different types of targeted messages that tell them you have new products they might really like and that could make their boating times even better.
Finally, another big benefit of identifying and nurturing loyal customers is that they will help build your dealership through word-of-mouth. And, there are most likely to remain loyal even in the event of some unusual snafu or mistake that’s negatively impacted them.
Most of all, make certain your entire team is always aware that customer loyalty is a daily goal in all the dealership’s operations. It is not just a buzzword, it’s serious business. In return, loyal customers will give the dealership a lower cost avenue to increase sales and, subsequently, better profits.