Every year, when the CRM issue rolls around, we look closely at the value of an individual customer. Your dealership sells cars every week and you probably have some type of customer relationship program in place to try to maintain a relationship with that buyer. The question is: what is that relationship worth?
The standard customer value quote says, "It’s 10 times more expensive to get a new customer than retain an existing one." Translated into dealership-speak: “Spend money keeping a buyer happy and sell his friends and family some cars, because it is more expensive to go out and drag in a brand new buyer.”
Want a mathematical formula to convince you? Try this exercise:
If we assume your average car sale is $20,000 and the average buyer could buy a car every four years from 16 years old to 75 years old (15 cars) that equals $300,000 for the Lifetime Value of a Customer. If that customer refers just two buyers in their lifetime to buy from you, that adds another $600,000. Try this with your own figures and, when you’re done, add in the amount you think they will spend on service over a lifetime.
So, that one buyer can add up to a million dollars in sales for your dealership. Think about that next time one of your salespeople offends, ignores, or fails to call back a potential customer.
How do you keep these customers happy? One way is to signup with one of the fine Customer Relationship Management companies you will find in this month’s issue.
If one customer ends up bringing you nearly a million dollars over the lifetime of your dealership, it might be worth spending a couple bucks on a customer to keep them happy, happy, happy. You don’t need to do it for the goodness of it…do it for the cash.
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