Knee Bone’s connected to the Hip Bone!

Some kids on TV were singing this old song the other day and it stuck in my head. It got me thinking about all the different things we need to juggle in our daily workload. It’s easy to overlook those things that aren’t creating an immediate problem for us, but if we don’t pay attention to all the parts and how they are connected then the disconnection that results will likely be a big loss in our overall business.

The Mad Rush that can lead to Lost Customers

On a busy Monday trying to juggle a dozen impatient customers on the service drive, we decide to skip the tire checks to save time and better serve the customers. We blow through the rush and get everyone handled and happy, then relax with a coffee and pat ourselves on the back for a job well done. 

But what if one of the customers really needed tires? We didn’t check, and so we didn’t recommend their replacement. Later that week, or the next week, the customer has a problem and has his tires checked at the nearest tire store or independent service center. He ends up replacing his tires.

They service him well and even give him a coupon book for a free oil change and other service discounts. What do you think goes through (and is still going through) this customers mind?

·        Does he think you did a good job and serviced him well?

·        Do you think he will do his next oil change at your store?

·        Do you think he will have his car serviced by you in the future?

·        And where do you think he will buy his next car?

·        Do you think he will go on social media and recommend you to his friends?

·        Do you think he will ever tell you about his experience?

Oh well, it’s only one customer right? And no one complained so no harm, no foul right?

The truth is, this happens every day on service drives across the country. That’s why only 8% of replacement tires are sold at OEM car dealerships even though the OEM dealerships sell 100% of all new cars. 92% of replacement tires are sold by someone else. And 76% of consumers service their vehicle where they buy their tires. A study done by Wards Auto for Cars.com and GM shows that 86% of the customers you keep in the service department will buy their next car from you as opposed to 9% of the customers you lose.

So the simple math is:

·        9 out of 10 customers leave the dealership to buy tires

·        8 out of 10 don’t come back

·        You will sell 2 replacement cars (20%) to your original customers.

The moral of this story; Check Every Tire Every Time

The Penny Wise and Pound Foolish Ad Budget that costs you sales

When I was a buyer for one of the big chain stores, I had a sign in my office that said the following:

When business was good, he said he didn’t need to advertise.

When business was bad, he said he couldn’t afford to advertise.

For the life of me I can’t remember his name!

The advertising and promotion budget is necessary to ensure enough prospects/customers are coming in the door to meet the sales goals each month. I am a great believer in advertising and promotion, but what about advertising in house to the customers you already have.

Customer retention is cheaper and more effective than attracting new customers, and it usually generates more profitable (higher margin) sales. Furthermore in today’s social media environment, the customers you lose, and especially why you lose them, is often cyber shared, making new customer acquisition even more difficult.

Conversely, retaining happy customers leads to an additional sale 86% of the time (see Ward’s study above). And happy customers that share their positive experiences on the web help generate additional new customers too.

According to NADA, based on the national OEM Dealers’ advertising expenditures, the average cost to acquire a new customer is about $615. So a $5,000 ad is expected to generate about 8 car sales.

What would a $5,000 tire display need to generate in car sales to justify its’ cost?

If each retained customer represents 86% of a car sale and each lost customer represents 9% of a car sale, then each Tire Replacement Customer = 77% of a car sale. If we value the retained customer at the same rate as a new customer the value is $615 x 77% = $474. To recoup the $5,000 cost we would need to retain 11 additional customers. Since the average customer buys 2.8 tires, we would need to increase our tire sales by about 31 tires. Our average store achieves this incremental increase number within the first month or two.

And these incremental sales increases will continue for the life of the tire displays (at least 10 years). You do the math.

So how come some stores still tell us they don’t have any budget for a tire display.

The moral of this story; For the life of me I can’t remember their name.

When Your Customers Need Service, Do You Show Up?

As I discussed in my July/August article, it’s amazing to me that OEM Dealership websites don’t show up in the search engines when it comes to tires and other parts and service searches. I got a lot of response to this so here are a few updates.

Watch the Keywords. Most website developers like to put your brand in the keywords search. Most customers don’t. Your customer is likely to search for Tires or Tire Stores in the area, and not Buick Tires or Ford Tires.

Millennials now represent about 28% of the market and Gen X is close behind at about 23%. They are hard wired to their smart phones, 24-7. They eat up 3rd party endorsements and social media is their world. So make sure you participate to compete. Focus on Mobile. Use Hashtags, (a word or phrase proceeded by a hash or pound sign (#) and used to identify messages on a specific topic) on social media sites such as Twitter and Facebook. Hashtags have become even more important than keywords in directing traffic to your cyber messaging.

Ask every Millennial and GenXer to post a review for you. Make sure your sites and social media have an easy way for your customers to praise your work and generate a review. 

And start considering participating in these types of programs:

·        AutoMD

·        Repair Pal

·        Open Bay

·        Mechanic Advisor

You may not like it, but this is the future and it’s happening now. Think of it like Angie’s list meets the yellow pages a generation ago.