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Keep your best customers
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From Volume 25, Issue 6 - June 2001
Feature
A step-by-step guide for increasing customer retention.
by: Robert Roman
 
 Related Information
  Measuring and monitoring your progress

No matter what type of automotive appearance business you operate, one thing is for certain - no company can keep 100 percent of its customers.

Customers can defect for a variety of reasons. For example, customers may move or relocate outside your market area; they may have been shopping price when you were running a wash special; they may have become dissatisfied with your service; or they may have been lured away by a more convenient competitor.

Whatever the reason, you can expect to lose anywhere from five to 15 percent of your customers each year. Unfortunately, the cost of acquiring new customers can be five to 10 times greater than the cost of retaining your current customers. Since long-term customers are often more willing to pay higher prices, are easier to satisfy and are your best source of referrals, a slight increase in your retention rate can lead to significant gains in long-term business.

Warning signs

There are several early warning signs that can help you identify if a trend in customer dissatisfaction exists:

· If you and/or your staff hear repeated comments about the merits of your competitors, you may be having problems with the perceived value that your customers are receiving from the services you are providing.

· If you and/or your staff notice an increase in the number of customer complaints, you probably have operational defects that need to be corrected.

· If you have been experiencing a decline in volume and/or total sales that can’t be attributed to external factors such as a new competitor, bad weather or the local economy, you probably have customers who have become dissatisfied with your services.

If you have been experiencing any of these conditions, it may be time to tune up or re-tool your customer-service model to improve both your customer awareness and your customer-retention rate. This will help you protect your customers from the competition and minimize the costs associated with a high rate of defection.

How market-oriented is your company?

Is your business market-oriented or product-oriented? Ask yourself the following questions:

· Do you have an organized and systematic way to determine your customers’ needs and wants?

· Do you have a way to determine if your customers have a problem with your services and/or products?

· Do you have a system to measure customer expectations and satisfaction?

· Do you have a system to ensure that things are done right the first time?

· Are you willing to change things in order to give customers what they want?

If you have deficiencies in any of these areas, you may want to consider placing emphasis on becoming more market-oriented and less product-oriented.

Define your level-of-service standard

One way to define your level-of-service standard is to determine what is important to your customers and then develop and implement an action plan based on your findings.

Customer-service tracking programs (computerized or manual) have proven to be an invaluable tool for determining not only who your customers are but what they like and when they tend to buy. Also consider:

· A suggestion box and/or customer-service questionnaire that can be used for frequently surveying your customers to discover their likes and dislikes.

· Dedicating a certain percentage of time each day to solicit customer feedback on the quality of your services.

· A service audit or “mystery shopper” initiative that can provide you with a picture of how your customers view your business and services.

Evaluate your service and product offerings

Comparing and evaluating how your services and products stack up against the competition is an excellent way to help you determine how to meet and exceed your customers’ expectations.

· The main features of your tangible services should be at least equal to that of your competitors.

· Your extended services should be provided in a manner that at least equals your customers’ expectations.

· Your extra services should be designed and provided in a manner that provides you with a competitive edge.

Evaluate your customer-service response program

A good customer-service response program has the following features:

· If the business is an absentee-owner situation, management must be empowered to respond and serve customers in a timely manner and provide them with what they want.

· Strategies for customer-service advisors should focus on developing positive and lasting relationships, rather than a one-time sale.

· Key staff should be held accountable for developing a rapport with customers, conducting themselves in a professional manner, communicating effectively, treating people well, and understanding your services and products.

· Employees should be encouraged by management to take responsibility for customer problems, and owners must be willing to listen to and institute the appropriate changes if operational problems exist.

Create realistic expectations for your customers.

Marketing and advertising efforts should promote your business without creating unrealistic expectations. For example:

· Avoid advertising that only sells the sizzle and does not provide an accurate representation of your services and products.

· Focus on advertising that emphasizes your reputation for providing quality service.

· Consider advertising “messages” that adequately differentiate your services from the competition.

· Never promise something that you don’t have the ability or willingness to provide in a consistent manner.

· Don’t “nickel and dime” your customers by refusing to accept a request for a refund.

Develop a system for resolving customer problems.

Disgruntled customers can react in a variety of ways. For example, they can become disappointed when your service fails to meet their expectations, irritated if you have inconvenienced them, and down right insulted or angry if you have cost them both time and money. Regardless of how the customer reacts, management must assume the responsibility to resolve the problem as quickly as possible in an amicable manner.

· Determine the customer’s level of dissatisfaction by listening to what they have to say, ask questions to find out why they are unhappy and put yourself in their shoes.

· Defuse the situation. Let customers vent their frustration. If an employee is involved with the problem, separate the employee from the customers and let both parties cool down far apart from each other.

· Offer your sincere personal apology.

· Work with the customer to determine an appropriate solution.

· If a monetary loss was involved, offer compensation that will have a highly perceived value to the customer and low cost for the business.

· Follow up to demonstrate that you are genuinely concerned about the customer and value their patronage.

Refine your customer referral program

Consider developing alternative methods so your current customers can become a source of new business.

· Offer long-term customers a bounty for bringing in new business.

· Offer valued discounts for your long-term customers.

· If you have additional profit centers, cross-sale your customers with another service.

· Don't be afraid to up-sell your customers as their needs become greater.

· Give away promotion items periodically.

· Establish a new-car-buyer program for local automobile dealerships.

· Develop a reward system for employees who bring in new business.

· Contribute to charitable events and participate in community activities.

Robert Roman provides carwash and management consulting services through RJR and Associates, Clearwater, FL (www.carwashplan.bigstep.com). The author acknowledges and thanks Corporate Learning Solutions, Inc., for its contributions to this article.
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