Published 07 Sep 2020
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Would you spend 50 cents on a customer that has purchased from you before to increase your chances of selling to them this month or next month?
On average, people change their vehicles every three years. This creates a very real opportunity for dealers if they take advantage of it and position themselves to maximise their existing customers in an effort to generate repeat business.
A quick way to determine this possible pool of repeat customers is purely by looking at how many vehicles were sold 3 years ago. Whatever the monthly average was back then is a great starting point.
For example, say in 2017 Acme Cars sold 360 cars which gives them an average of 30 cars per month. What this then means is that it is likely that all of these customers will be back in the market for another car at some point in time.
No matter how long your dealership has sold cars for, you always have an ongoing pool of customers that will be cycling back through the market needing to purchase a newer vehicle, and in many cases sell their old one.
The crazy part of doing this exercise is when you realise how many of these customers do actually come back and buy from your dealership again. So you should know how many vehicles you sell right now, each month to repeat buyers.
In this example Acme Cars has a potential 360 customers a year that will be back in the market at various times, which still means there will be an average of 30 past customers purchasing cars from somewhere. Acme Cars only sell to 3 repeat customers a month. That means 27 went and purchased somewhere else. At 50 cents a customer, the potential ROI from spending $15 per month on 30 customers in this example is huge!
First thing’s first, do this exercise for your dealership and see how big the opportunity of repeat customers is, how many you are managing to sell to now, and then put a plan in place to increase the probability of getting them back in to purchase from you again in the future.
Regardless of what the percentage is that’s being achieved now, there’s an opportunity to increase sales from this highly valuable customer – the repeat one.
The next question to consider is: what are you doing to maintain a relationship with customers post-sale? (provided that their original purchase was a good experience).
This should aid and foster retention, and consideration of your dealership, when it’s time to trade in and purchase their next vehicle?
Not talking to them from the time you sold the car certainly isn’t going to maximise the opportunity. The repeat customers you get by default now means you had created an experience, good enough for them to come back.
How many more could you get if you were proactive in this area? You know the number from above and it’s big!
They haven’t heard from you since purchasing, so unless they drive past your dealership every day it’s unlikely you’ve been – or will be – top of their minds when it comes to their next car.
The key is constant, but not overwhelming, contact during the ownership cycle. The minimum I would recommend are the following touchpoints from our AMPD CRM (customer relationship management) solution:
There are plenty of other soft touchpoints during the customer’s ownership cycle you can also consider, but this is the minimum to stay in contact and be present enough to be considered when it’s time to buy a new vehicle and these are only a small investment of $3.25 per customer over a 3 year period. Yes that’s right, basically $1 per year per customer to keep in touch and increase your chances significantly with repeat and referral business.
How much did it cost the dealership to get the customer in the door the first time? Dealerships spend millions a year attracting new customers, yet very little in comparison trying to keep them.
When so many dealerships start a new month on zero wondering what the month ahead holds, proactive dealerships can start ahead of the game knowing what number of existing customers they are likely to sell to due to past experience, and actions taken to increase the probability of a repeat customer making contact.
The harsh reality is, if you’ve been doing nothing with your buyers post-sale, this is what you’ve missed out on over the past few years in sales.