Executive View: When does loyalty start?

Paul Bentley, former operations director at Lookers and now a non-executive advisor at customer loyalty experts MLP, explores the topic of giving customers a reason to stay in touch. 

Can you believe Q4 is just around the corner! The September new registrations are upon us and its very likely that all energies are focused on ending the year in the strongest position and hitting all the various targets.

During my 18 years at Lookers, a key challenge was ensuring that I maximised my time to make sure I managed the tricky balance of driving the performance today whilst ensuring that medium and long-term goals of the business were in the right place.

Q4 was the time where lots of these mid and long-term goals took a greater share of my time. I’m sure that maximising the cashflow, reducing debtors, managing stock levels including irradicating overage, cost control and budgeting for 2025, are all areas that will no doubt be fighting for top spot in your time planning too.

Short-term tactics with long-term benefits

During Q4, inevitably tactics will need to be employed for sales targets to be reached and plans put in place to ensure that the surplus stock created by the September sales is profitably disposed of in a timely manner.

The two proven routes to achieve this goal are:

1) Attract and convert “quality” conquest business

2) Maximise the renewals market.  

As ever, the balance between short-term results and long-term growth needs to be struck, but these do not need to be mutually exclusive.

Done well, the short term tactical activation can also extend into long term customer loyalty.

When does loyalty start?

At MLP we firmly believe that customer loyalty begins at the very first interaction with your brand and will likely remain fragile through multiple interactions thereafter.

As the various targets loom on the horizon, an often well-trodden path taken by the dealer network is a cash reduction in vehicle price to encourage customers to purchase your brand over any others.

This solution whilst undoubtedly achieving some short-term success is a one-off moment that is gone in an instant once the transaction is complete and unfortunately, the value exchanged is rarely remembered beyond the point of sale.

This is a practice that is used on a widespread basis across the network, therefore often cancelling out the discount or cash offered, and unfortunately all too often results in a race to the bottom in a bid to gain pole position.

Therefore, the real question is, how can you stand out above the rest with those potential customers, without breaking the bank or devaluing your brand or business model? 

MLP have solutions that enable you to retain margin and improve profitability by replacing the money off with added value propositions. Your customer can benefit from a long-term tangible or experiential gift at a higher perceived value than the original saving offered whilst allowing each dealer to control costs.

These solutions often offer savings on your margin which could be as much as 50%, therefore increasing the perceived value to the customers, whilst realising a saving on the actual costs to your business.

What is the true value in keeping in contact with your customers post sale?

As we know, the typical acquisition cost for a new customer is circa £150, however what would be the added value in keeping meaningful and regular contact with your customer. Having the ability to do this results in a much higher propensity for customers to be open to discussions on additional products and services for both sales and aftersales departments.

Giving the customer a reason to stay in contact is the key. Studies prove that sending a gift, which can arrive post sale either as a one-off or as a continuous delivery of value, helps maintain and extend that customer connection with your brand.

Giving the customer an experiential gift, such as a hotel stay or a meal in a top restaurant for example, creates a greater connection and establishes goodwill. Many well know household names have adopted this approach to build long term “always on” relationships with their customers with great success. Some of these brands are listed below.

Having insight into many feedback focus groups, it is often commented by customers: “you only get in touch when you want something from me”. Service reminder, MOT, mechanical recall or time to renew your vehicle or finance agreement.

This is difficult to argue however short-term tactical targets and long-term brand loyalty incentives can work in combination and one approach can help amplify the other and give an incentive or value to the customer for a worthwhile communication.

Put most simply, if we have our customers’ needs first and foremost and ensure we provide value and show appreciation during every interaction, incentive led tactical events can be the springboard to improve long-term loyal relationships.

MLP have worked successfully with great partners within the top five of the AM100 and are now looking to roll this proven approach out with the wider dealer and affiliated networks.

We will be attending the AM Live event to share more about the science behind the results and the opportunities that this approach will deliver. If you are attending, we would love to share this detail with you, therefore if would like to find out more, please just get in touch so we can book in a discussion. MLP`s clients include: Arnold Clark, Aviva, Bosch, Confused.com, Direct Line Group, Ford, Howdens, HSBC, Inchcape, JLR, Nissan, Travis Perkins, TSB.

Author: Paul Bentley, MLP