Why Customer Loyalty Matters More Than Ever: Rethinking Sales-First Strategies

In the world of business, sales figures are often seen as the ultimate measure of success. Companies spend a large portion, if not most of their marketing budgets focused on sales campaigns in the hopes of driving up their revenue and increasing market share. However, this single-minded focus can be detrimental to customer retention.

Whatever gains are being made with new customers, if the company is losing a higher % of current customers, long term revenue will decline or flatline. Therefore, businesses must implement successful strategies focusing on customer retention through personalized marketing, as well as improving the customer experience in their physical locations.

Why do organizations focus on increasing sales at the expense of retaining current clients?

There are several reasons why many companies prioritize sales over customer retention. For one, sales are an easy metric to measure. Companies can track their sales figures on a daily, weekly, or monthly basis and use them to evaluate the success of their marketing campaigns and their internal sales teams. This makes it easy for organizations to set concrete sales targets and measure their progress toward those targets.

In the automotive industry, dealerships operate in highly competitive markets where gaining market share is critical. These sales metrics may be the focus of their manufacturer and can influence their allocation of vehicle inventory or access to more desirable products. ?As a result, dealerships often place a significant emphasis on sales and new customer acquisition.

However, this focus on sales can come at the expense of customer retention. By focusing on sales and potentially not keeping in contact with their current customers, dealers run the risk of losing them to competitors. Furthermore, the cost of acquiring new customers is often much higher than the cost of retaining existing ones.

Why is an ongoing customer retention strategy important?

Customer retention is crucial for the long-term success of any business. Loyal customers are more likely to make repeat purchases, refer new customers to the company, and leave positive reviews. This can help to create a positive brand image and increase the business’s reach into their desired marketplace.

Furthermore, retaining existing customers can help companies to reduce their overall marketing costs because retention campaigns should be more targeted. Another plus to a strong retention strategy is by focusing on building strong relationships with their current customers, dealers can instead rely on word-of-mouth referrals and other cost-effective strategies.

Think back to when our parents or grandparents made choices of who to do business with. It came down to someone they felt they had a relationship with or took care of them regarding service. Think of your favorite business you frequent. Much of this decision is based on a relationship driven by excellent service and support.

Recently I had dinner with a friend who brought me to a restaurant he frequented. When he made the reservation, they knew who he was, how many time he had visited and informed him a long time employee, who he knew, was retiring. Which he shared with me to demonstrate the quality of the service we could expect. That is connecting with customers.

Relationship building and retention of a "book of business" seems to have gone out of fashion in today’s sales environment.

So, what type of marketing strategies should business leaders look at?

Targeted Messaging

Targeted campaigns using current customer data. By using this specific audience, a customized message can be delivered on multiple platforms or touchpoints. The key is specific messaging to the right customer at the right time. Social media is a great avenue and websites are beginning to execute personalization when a customer returns but the strategy has to be driven by the business.

Remember any contact, be it a phone call, an email or in person is a form of marketing. Being able to know who you are engaging with, if they are a current customer, and if they are a high value customer is key to executing an exceptional customer experience. Nothing derails the experience like a targeted message, delivered at the right time only to have an employee not recognize a returning customer.

Loyalty Programs

Another effective marketing strategy for retaining customers is creating a loyalty program. Loyalty programs offer rewards, discounts, and exclusive offers to customers who frequently purchase from a business. Many of us utilize these programs for travel, (airlines, hotels, rental cars) and appreciate an upgrade or recognition for our continued business. ?For automotive dealerships, a service drive loyalty program may be more effective since a vehicle purchase has a longer sales cycle.

Loyalty programs not only incentivizes repeat purchases, but also creates a sense of belonging and appreciation for the customer. It is crucial to make sure the loyalty program is tailored to the customer's needs and interests to ensure they feel valued. Think of personalized messaging, greetings or just showing appreciation when they arrive.

Customers want to feel valued and appreciated by the companies they do business with. Focus marketing campaigns on the product or service the customer needs at that time. Sending generalized messages on a variety of products the customer feels they don’t need will do more to push them away than retain them.

Email Strategies

Email marketing is a powerful tool to retain current customers yet often taken for granted. It is important to send regular emails to customers, but not to bombard them with too many or be too generalized. An effective email strategy involves sending relevant and timely emails, such as welcome emails, personalized offers and updates on their products. It is also essential to include a clear call-to-action in every email to encourage the customer to act.

A successful email strategy involves analyzing email metrics such as open rates, click-through rates, and conversions. This allows you to understand which emails are resonating with your customers and make improvements accordingly. Make sure to tag all links with the proper UTM strategy so you can see traffic to your website and know which customer clicked on a specific link for follow-up. Beware of the heavily formatted email templates with multiple photos or images. These can be caught in spam filters which affect the success of campaigns.

Customer Experience in Physical Locations

The customer experience in your physical location has a significant impact on customer retention. A well delivered customer experience creates a positive feeling for the customer which in turn can begin to create a sense of loyalty and repeat business. A negative experience or one that is delivered in an inconsistent manner can drive customers away. Therefore, dealerships must prioritize creating a positive customer experience in their physical stores.

Firstly, it is essential to define what you want your customers to feel post interaction. Then define the actions your employees must execute to create this experience, then build these actions into processes, hire the individuals with these traits and train employees to execute the actions necessary to deliver the desired experience.

Employees should be knowledgeable about the products or services, but it is imperative to train them to speak well, listen and focus on serving the customer.

Secondly, businesses must ensure their physical stores are well-maintained, clean, and organized. This makes it easy for customers to feel welcomed as they find what they need and creates a positive impression of the business. Make sure any marketing messages or branding that is being done by the dealership or business is visible in the showroom. This subconsciously allows the customer to know they are in the right place.

Finally, businesses can improve the customer experience by creating a sense of being part of the community. ?Dealerships do a good job of this through local charitable offering or sponsorships, hosting educational events around their business or just being visible in the community. ?More businesses can take a page from their playbook on this.

Seeing the leaders and employees as part of the community breaks down barriers of “sales” and creates a common bond between everyone, leading to increased loyalty to community businesses.

To summarize, businesses must implement successful strategies to retain current customers. Marketing strategies such as targeted relevant messaging, loyalty programs and personalizing communication are effective in retaining customers. Email strategies such as sending relevant and timely emails and analyzing email metrics are also crucial.

Finally, businesses must prioritize creating a positive customer experience in their physical stores. This involves training employees to provide excellent customer service, maintaining a clean and organized store, and creating a sense of community. By implementing these strategies, businesses can create a loyal customer base and achieve long-term growth and success.

If you found value in this article, please share, and make sure to subscribe to the newsletter. I appreciate it

Join me in Austin this May for the Digital Marketing Strategies Conference where we will be discussing this topic along with many other themes affecting the automotive industry. Tickets can be purchase here along with the full agenda.