There aren’t many dealerships around today who don’t recognize the value of their customer base. But not all treat that customer base as an asset in the same way they their “hard” assets. Think of your customer base in the same way as you think about financial assets — something to nurture and grow and something that needs constant monitoring and attention (including the occasional tune-up).
Understanding your customer base, especially in the new and dynamic environment, can be a powerful competitive tool to drive both loyalty and conquest. It’s important to ask the question: what am I doing to nurture and optimise my customer base?
See your customer base as a living, breathing asset, not just a database
One of the most important components of financial success and growth is asset mix. I would argue that the same applies to your biggest asset — your customer base.
In the context of a customer base, this requires a deep understanding of who your customers are, what their needs are and what you can do to ensure maximum ROI on investments in marketing and the customer experience.
Over the years, I haven’t come across too many dealerships or groups that truly have a deep understanding of their customer base. It’s important to do so because different kinds of customers play a different role in the business, need to be treated differently and contribute in different ways to the on-going success and profitability of a business.
Understanding your customer base is not just about demographics and psychographics, but requires a more fundamental view. Here’s a way of looking at your customer base from a different perspective.
Demographics and psychographics are still very important, but this is more of a functional segmentation, allowing you to tailor interactions with customers in a very relevant way. The technology in many comprehensive dealer management systems will allow you to do this with careful and well planned analysis.
Affinity a new watchword
So what can you do when you have a better understanding of your customer base?
One path is to have a clear goal in terms of the kind of relationship you want with your customers. A study conducted by Accenture (2018 Global Consumer Pulse Research), emphasizes the growing importance of a customer’s feeling of affinity for a brand or a company in determining customer loyalty and business success.
Understanding your customer base is not just about demographics and psychographics, but requires a more fundamental view.
The study covered 35 countries, including Canada. Among other things, Accenture found that Canadian consumers feel more positive about dealing with companies when they:
- 68% Are transparent about how they source their products and ensure safe working conditions;
- 66% Treat their employees well;
- 57% Project strong ethical values and authenticity; and
- 55% Stand for a shared purpose that reflects their own personal values and beliefs.
Source: Accenture 2018 Global Consumer Pulse: Canadian results
Accenture calls those companies that engender high levels of customer affinity, “purpose-led” brands or companies. Two interesting observations arising from the study:
- Price, product quality and customer experience are important attributes, but companies looking to build their competitive agility need to find new ways to stand out;
- Purpose-led brands have the potential to create stronger and more resilient customer relationships. That translates into more sales and greater customer lifetime value. Purpose also bolsters confidence in a brand. That provides an extra layer of protection from the almost inevitable “trust incident”—and ultimately protects the bottom line.
It’s not just about being good corporate citizens. Dealerships have always been active in their communities but Accenture’s study indicates that today’s consumers want more than that — they want to feel that the companies and brands they deal with share their purpose and values.
The goal is a customer who feels a strong affinity for your dealership, regardless of whether they are new to you or whether you see them as active or loyal.
Affinity with a customer is the outcome of a number of components that are essential building blocks.
We’ve come a long way from seeing customer satisfaction as the holy grail.
I heard one of the best examples of a customer who feels an affinity for a dealership in a radio commercial for a Toronto area dealership.
This customer spoke about how he and his family were treated at the dealership over time and the fact that they had purchased and serviced multiple vehicles there. is final statement was: “why would I go anywhere else?”
Consumers won’t necessarily articulate in so many words the fact that you share their values and that they feel an affinity to your business, but his comment indicates that that is exactly how this customer felt.
Importance of on-line reputation
Changing consumer values is not the only challenge facing businesses today. Traditional media are no longer the only source of information that mold consumer opinion.
Affinity with a customer is the outcome of a number of components that are essential building blocks.
Even community support and activities, which have long been a hallmark of dealerships, cannot always compete with the immediacy, power and constant presence of social media.
In the hierarchy of the building blocks towards affinity, I put reputation there as a core component right after the most basic filter of product and services provided (no one will really pay attention to you if you do not provide products and services they want or need).
An interesting blog by Ryan Erskine a contributor to BrandYourself.com (a U.S. based online reputation management firm), cites a list of fascinating statistics about on-line reputation and their impact on businesses today.
The list covers four areas of importance to businesses in the current environment and lists a total of 20 statistics from various sources (from 2014 and more recent). I’ve distilled this to the key ones in the graphic bottom left.
The bottom line is that your customer database is more than just a database. It’s really the asset that, properly managed and used, can truly give you an advantage in what’s likely to be a turbulent time ahead.
Most businesses entrust their customer database to the marketing function, but many probably don’t see it as more than just a functional tool enabling marketing actions and decisions.
I would advocate for the customer database to be seen as a strategic asset, as important as any other financial or material asset in the business. It requires more than just a resource who has many other functions and duties to perform.
