Let’s Talk About Retention and Revenue

stan ribeiro newsletterWe have been hearing about customer retention for many years now, but do we really know what that means? What is customer retention? I can tell you, it’s not just another buzz phrase. It’s not an imaginary line in the sand.

Of course, it is a way to measure how successful we are. It is also the true constant denominator when making any type of business decision. That’s right, customer retention must be the one tracking method that drives our everyday decisions, no matter what. The days of driving results purely by sales are long over. Although advisors like the big ROs, it’s not just about the home run. It’s about the singles that keeps the game (business) going.

 Let’s start by asking ourselves what our definition of customer retention really is? First thing that comes to mind is “keep customers coming back.” Others say, “satisfying the customer” is retention. Customer retention is earning the right to serve the customer the second time; based on the level of service your staff provided them this time!” Retention is revenue.

If you were to ask your staff what they think the definition of customer retention is, I would guess they would have different ideas. As a matter of fact, asking them what they believe their role in customer retention is, they may come up with different answers. We should focus their energy towards what is important to you as it pertains to retention. Remember, the ultimate goal is to retain every customer. 100% would be a good number. Now that being said, any improvement over your current retention percentage is a step in the right direction.

It is important to understand the cycle of our customers; this should become your mission:

  1. Sell the Vehicle
  2. Warranty and Maintenance Customer
  3. Maintenance Customer
  4. Maintenance and Repair Customer
  5. Prospective Purchaser
  6. Vehicle Buyer
  7. Sell the Vehicle

 In order to accomplish this, there are several things we can develop to improve retention. It is necessary to hire people that genuinely want to help customers. Notice if they smile and notice the level of their listening skills. It is hard to teach someone to smile or listen, so starting with those qualities are a huge advantage. To help bring down apprehension and help the customer feel better about having to bring their vehicle to “the dealer,” smile! Spend some time in the service drive (or write up area), watch how your staff interacts with customers. Notice if they smile. Watch how they listen to the wants and needs of the customer. Are they trained in the “Exceptional Customer Experience?” Let’s agree that listening is the strongest selling tool we have.

Now, that brings up another important point. Do we know what the definition of selling is? Think about it! We learned at an early age, to be a sales person. We learned to sell ideas that get us things we want. Remember that cookie you convinced your mother to give you from the cookie jar? Remember that sleep over you sold to your parents?

 Sales is the “Transfer of information in a weighted fashion to influence a decision.” Our actions and body language, as well as our appearance can speak louder than the words we say.

Create, Communicate and Check the performance of your goals. Be sure to make them realistic and attainable. Nothing can discourage performance more than to have an unattainable target. You’ll end up with the “Why bother you’ll never get there” attitude. Wouldn’t it be better to have small attainable goals to keep your staff motivated and focused? Guide and train everyone to have the same long term objective. Have processes in place: Labor, Pricing, Write-up and Vehicle Inspection to name a few, for every customer every time. Develop non-tracking pay plans to obtain results. Know your customers’ expectations and do more than just meet them. Think about what drives you to a place you patronize. Make your store where the customers want to go.

This may have been a lot to absorb. If you have any questions or would like more information, please contact me or any of our M5 consultants for customized solutions.

 

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