Rodgers Chevrolet
Keep Your Customers
Recall from the video spotlight for this chapter that an average business keeps only 70 to 90 percent of its customers each year and that it costs nearly five times as much to acquire a new customer as to keep an existing one. Statistics on the auto industry further indicate that if an auto dealer can hold on to an additional 5 percent of its customers each year- increasing its retention rate from 90 to 95 percent, for example-then total lifetime profits from a typical customer will rise, on average, by 81 percent. The president of Rodgers Chevrolet, one of the nation's first woman-owned car dealerships, knows about customer retention. Pamela Rodgers considers service to be her company's backbone.
She says, "This is where our customer stability is going to be . . . providing good service to our customers. That will keep customers coming back, and the referral business coming back." Rodgers also attributes her business success to employee satisfaction. In a recent interview, she said, "[The] client is the reason we come to work every day, [and in order] for your clients to be happy, you have to have satisfied employees." That is, she considers the employees of Rodgers Chevrolet to be her "customers" as well. She must be doing something right. In 1996, when Rodgers moved in, the dealership was selling 40 cars per month.
Today, that figure has grown to more than 200, with annual sales averaging around $75 million. How can you build customer and employee satisfaction into your business plan? One way to do so is by learning to listen. That is, to meet or exceed customer needs, the business owner must really listen to what the customer is saying. Your customer should feel listened to, valued, and important to you and your company. One study indicates that 68 percent of customers leave a business relationship because of a "perceived attitude of indifference" from the business. At Rodgers Chevrolet, Rodgers makes certain the company's service advisors speak to each and every customer.
To be successful, she says, "It's important that they know their stuff . . . that they're trained properly, that they have good communication skills and good customer relation skills." Before working the activities, re-read Chapter 13 and watch the video on Rodgers Chevrolet. You may also want to review the simplified model of consumer behavior in Chapter 13. The three interrelated aspects of the model include the consumer's decision-making process, psychological influences, and sociological influences.
Activity
Imagine that you are the customer service manager at Rodgers Chevrolet. You have begun sorting customer comments into groups based on the type of vehicle owned. After reviewing a couple of years of feedback, you discover that Corvette owners do not feel they are being served as well as their friends who own foreign sports cars. Many comments mention the service level of the Lexus brand and indicate that customers may be considering changing to a Lexus SC just to get the whiteglove service. You would like to develop a way to serve your high-end clients better (the base price of a Corvette is $45,000, compared to $10,000 for a Chevy Aveo).
• Identify the elements of consumer behavior affecting your situation.
• Outline the criteria that car owners use to evaluate service to their vehicles. Do those criteria change as the vehicle sticker price rises? How?
• What new service offering could you provide to Corvette owners to entice them to continue to drive a Corvette and use Rodgers Chevrolet for service?
• Create an ad campaign or marketing program (a multimedia piece, poster, or brochure) that promotes your new service features and takes into account the elements influencing the behavior of your target market.