The Most Profitable Business Strategy Is Your Current Customer Base!


Almost Every Dealer, CEO, President VP of Sales and Manager that I speak to these days in the automotive dealership business constantly emphasizes building processes, technologies and expertise for acquiring new customers to get more business. And yet, common marketing wisdom tells us that customer retention is where longevity and profitability truly lies.

Because of the emphasis on customer acquisition, it makes sense that many dealership companies spend less time and effort on truly maintaining their valuable customer relationships. For many, that has been and will continue to be a serious challenge in the automotive dealership business.

The rule of thumb is that it costs five times as much to acquire a new customer than to keep an existing one. Many dealers and their management teams have focused the majority of their efforts on lead generation activities. Big mistake man! Although new business is always an important driver to any business, more dealers than not seem to neglect the MOST PROFITABLE marketing strategy, which is keeping and growing your current customer base.customer

Whether or not we accept the doom and gloom predictions of the severity of the impending recession, one thing is certain: for most businesses, things are going to get a lot tougher. Customers – across many industries and across segments – are going to have fewer discretionary funds and that means the competition for every dollar is going to heat up.

Related: Your Top Digital Strategy for 2020 is in the Dealership

As a result, now is the time to focus on building a real customer retention infrastructure. To do this effectively requires elevating the value of retention in each dealership’s profit center and the day-to-day practices. Many Dealers, CEOs, Presidents Senior VPs and Managers can accomplish that by taking the following four steps:

1) Recognize publicly the important contributions that retention makes. For instance, retaining customers demonstrates:

  • The ability to overcome the day-to-day challenges – workload project and interpersonal requirements associated with working with existing clients;
  • The ability to adapt to customers or clients’ unique buying habits, cultures, requirements and evolving demands.
  • The ability to build and maintain long term trusted and valued relationships.

2) Attribute the same high status to customer, client retention usually accorded to securing new customers. For example, customer acquisition typically: how much does it have to cost?

  • Is held out as a significant accomplishment – and rewarded;
  • Serves as an exciting or unifying rallying point for any service sales team.

3) Establish and track specific retention targets for customer retention (CSI). Just as with customer acquisition, building customer retention into all sales forecasts and compensation plans is a great idea.

  • Regularly monitor retention targets and provide appropriate skills training on a regular basis. No, you cannot fake this one!

4) Identify valued customers who are consistently demonstrating signs of disengagement.

For example, customers who:

  • Are spending less on your product/service than they have in the past
  • Have stopped referring business to you
  • Are hesitant on pay their bill
  • Have gone elsewhere for business that they would normally bring to you

There are lessons to be learned about your customers when you know this type of information. It’s really priceless if you use it to fix your business. So don’t discount the information!

customerReach out to these very important customers to determine why they have attributed less value to your products or services. Invite these orphans back! They are very valuable!

While few dealership companies will escape the impact of a deep recession, taking these steps now can help any dealership and their service sales team better weather the impending economic uncertainties.

As one dealership recently stated; if you’re not moving forward in your business, you’re going backwards. Thank you, Carmine! That’s a fact!

With a big focus on recession-proofing the dealership in every profit center, I welcome hearing any suggestions that you have for ways to help continue to grow every one of those areas.

We put a heavy focus on helping our network of automotive dealerships prosper! Our business is all about helping your business succeed.

Please send your insights or questions to to share any more business generating ideas with us.

Related: How Dealers Can Meet The Delivery Demands Of Their Digital Retailing Strategy


Did you enjoy this article from Michael Roppo? Read other articles from him here.

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