What do you do for your best customers?


The Pareto principle – also known as the 80-20 rule – contends that “80 percent of the effects come from 20 percent of the causes.” If you subscribe to the Italian economist’s observation, and most of the business world does, than today’s application is simple: “80 percent of your profits come from 20 percent of your customers.” Gotta love that 20 percent!

It may not be exactly 80-20 in any dealership, of course, but the principle has proven essentially true in so many instances it is a solid basis to look at things like - who are your best customers? All customers are good – it’s just that some customers are better than others!

Many dealers may not currently track customer total spending but it’s not difficult (an excel spreadsheet or a customer management program can do it) and although it might take some extra effort to initially set up, it’s well worth it. That’s because upon identifying this special group, it’s now possible to recognize who should be the highest priority and keep them happy.

Oh, I know – right now you’re thinking “all my customers are the highest priority!” Yes, but this 20 percent are rightfully the top-of-the-heap priority. They should get No. 1 status, you should know their names, their kid’s names – they deserve your regular personal touch and your extra attention. Don’t assume because they’re loyal now they will always be. Treating them like the No. 1’s they are will go a long way.

Moreover, if any customers deserve to be recognized with such things as special customer loyalty rewards, this group does. Popularly called frequent shopper or rewards programs, well though-out loyalty programs motivate customers to keep coming back because they like doing business with you as well as being recognized with rewards.

According to researchers at the University of Pennsylvania and University of Southern California, people respond to being recognized for their loyalty. Moreover, the reward most popular with customers is a percentage discount on future purchases of items selected by the customer. Other popular rewards include discounts on items selected by the retailer and a free gift when a certain number or dollar value of purchases has been reached.

According to Dr. Bruce D. Sanders, a consulting psychologist at RIMtailing in Vacaville, Calif., retailers often overlook a significant selling point with the customer – his sense of prestige that he receives from the reward. It’s all about recognition. And, that makes it all the more important to develop a good program aimed very specifically at the top 20 percent - separate from any general customer rewards plan - making certain they recognize their program is exclusive and not for every other customer.

Customers come and go in the course of business. However, the extra effort to retain the all-important top 20 percent will always make the loss of some others a lot less significant.


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