By John Traver, CEO, Traver Connect
It’s a word that is tossed around often and much, but “retention” is still “THE word”.
How else can our industry sum up the simple business principle of repeat purchases with the same customer? Whatever the answer to that question, I’d subscribe to the standby of former great Yankee ‘Closer’ Mariano Rivera, which was “simple is best”. Once a vehicle has been sold, the entire dealership’s objective is retention of that vehicle in service.
So what stands in the way of retention for most dealers today? It can be a number of things. Let’s start with a few falsehoods or myths that I too often see.
Myth #1: CSI = Retention
Customer satisfaction can improve retention, but it isn’t the same as nor will it equate to retention. Let that sink in. Happy customers do not equal loyal customers.
Harvard Business Review wrote a piece on this a few years back around the concept of having to “delight” each and every customer. It’s a great objective, but it might not be realistic for every dealership. Their question was simple: How often do you patronize a business simply because of its over-the-top service? You’ll probably think of an example or two, but you won’t likely come up with many.
But… If I ask you when the last time you cut a company loose because of its bad service, that answer will come quickly. Was it an airline that lost your luggage? A dry cleaner that didn’t understand what “rush” meant when you clearly told them?
Consumers are punitive – that is, they punish bad service all the time. And here is the comparator, they punish bad service MORE than they reward great service. We have loads of data on this and the information is compelling. But most of us won’t need to see the data because our instinct already has confirmed this is true.
The “Churn” Highway
Churn happens in many channels of business exchange and support. For Zappos, one area of churn they manage against is to allow returns of shoes to be made at any time and at no cost. That’s putting all your chips on the table in my opinion.
The trend of churn across virtually every industry plays itself out in two areas more frequently than all of the others. So let’s look at those two and see if they impact automotive service and our hope for retention.
The first area is any industry where a service is provided in a phone-call related channel. For automotive service, this means when the customer calls to schedule service and the service delivered is perceived as helpful, friendly and prompt, the service will be perceived as positive and acceptable. But if this service channel contains perceived friction, such as long hold times, inattentive personnel or even a low-value exchange, the customer becomes a high risk to choosing a different vendor. In automotive service space, you’ll need to execute a plan that gets your service calls answered properly, professionally and consistently in order to limit churn.
The second channel that sees a very high level of churn in any industry is one that involves face-to-face service. This essentially becomes the next moment of truth where your customer is now with your service advisor and they are making assessments, either good or bad based upon how they are being handled. If service advisors are still taking calls in the drive while trying to assist customer, this can be a put-off.
Also, when they communicate and drop the vehicle off, is the communication exchange easy for the customer? Texting is the preferred form of communication by customers for updates on their vehicle while in service. Do your advisors have a texting tool or do they play phone tag still?
And when it comes time to pay for the completed repair or maintenance, have you made this easy? Do you offer mobile pay or do you lean on your cashier to do this?
The easiest way to measure churn is look for the obvious friction points first.
Is your dealership missing service calls? Better check.
Does it have hold times when trying to reach service? Again, better check.
Is the show rate of appointments being tracked and is it acceptable? Again, look for this metric.
Is there value being provided to the customer on the call or is it a low-touch experience? Make a call and listen to your own product-you’ll know quickly.
Retention is best measured in repeat visits. Make sure you are tracking this metric. Retention drives market share or absorption, whichever side of the aisle you look at this from. Either way, it will mean more RO’s. And more RO’s will tee-up the next vehicle sale – without an additional acquisition cost.
Retention deserves attention.