Keeping Customers Pays Dividends
The ROI of customer retention starts from the moment the initial sale is complete. “It is always easier and less expensive to maintain a customer than it is to gain a new one,” says Jason Hoult.
Keeping Customers Pays Dividends
Congratulations! You fought hard to make that sale and you got the win.
Now what?
If you manage things well, the initial sale should only represent the beginning of a relationship. Although finding new customers is imperative for business growth, holding onto them is even more critical to a profitable operation.
The Impact of Customer Retention
- It costs 5 times more to attract a new customer than to keep an old one. — Forbes
- The probability of selling to an existing customer is 60% – 70%, while the probability of selling to a new one is 5% – 20%. — Invesp
- A 5% increase in customer retention = a 25% – 95% increase in profit. —Forbes
- Only 40% of companies balance their efforts equally between Acquisition and Retention. — Invesp
Too often, the mistake management teams make is failing to realize the dealership’s customer list is 
its greatest asset. They fall for the trap of chasing “hot leads” rather than cultivating profitable long-term relationships.
“Most customer retention issues are directly related to lack of attention, lack of interest, or a lack of knowledge,” says Anvil App Works President and Founder, Jason Hoult. “When customers feel like a commodity, they’ll start treating your product as a commodity. They’ll begin to shop around and look for other opportunities to fill their needs, that in turn reduces your value.”
Unlocking the Profit in Your Customer List
When your sales team converts a lead, you gain an advantageous position. You have demonstrated value, not only from using your product, but also from buying it at your dealership. According to Hoult, you have momentarily earned the first position to make the next sale when a new need arises.
“But that means positioning yourself to get more than just the initial sale,” he explains. “Your customers don’t care how many other customers you have. They want fulfilling their needs to be easy, and they want to feel understood.”
Hoult uses the example of Domino’s Pizza to show how easy this can be for dealerships.
“When you call in an order on Domino’s 800-line, a rep you have never met, who may have only been on the job two days, answers the phone. He thanks you for calling and asks:
‘I see your usual Wednesday order is a medium half-cheese/half-sausage pizza. Is that what you’d like today?’
“You say, ‘Yes.’
“He then asks: Would you like this delivered to your home address at ____?’
“Again, you say, ‘Yes.’
“It feels like you have a connection to that Domino’s location. You really don’t, but the system makes you feel like you do,” he explains. “That’s how they make you feel like their best customer, and it’s as easy as looking at a screen.”
The Right CRM Shows You How to Increase Sales
By consolidating information from your dealership systems into a robust CRM platform, everything you know is now in one place. You can see each customer from a 360-degree perspective and anyone in the organization can access that complete view of the customer with only a couple of clicks.
“That works for your best customer all the way through the last customer on your list,” he says. “With this sort of a system, the consolidated account record becomes a Single Source of Truth, and people know to go there for definitive information about each customer.
Related Content: The Single Source of Truth
“So, when I walk into your dealership, my sales rep, the parts manager, the service manager, and the finance team members all know instantly: I am a dairy farmer, I attended the summer customer-appreciation event, I participate in the bulk-oil program, I take part in winter inspections, I have a 450E baler, etc.,” he continues.
83% of customers say they’re more loyal to companies that provide consistency across departments.
“With that kind of information at your fingertips, you can now make specific recommendations and sales pitches to me based on my individual operation’s needs.” The success rate of these pitches is higher because customers feel like you are looking out for them, not wasting their time pushing random products.
Furthermore, the right CRM solution leads your staff through the full relationship-development arc. Are messages and inquiries acknowledged promptly? How does the customer want to be contacted? Are follow-ups on quotes happening at the right time? Is the right information in front of your staff to answer the customer’s questions? Can your staff anticipate customers’ needs from the information they have available?
46% of sales leaders say deeper customer relationships are a key objective for sustaining success.
Building that kind of relationship with customers positions your dealership for the first opportunity to solve their needs. “We strive to be in a position where the customer looks to us for advice,” says Hoult. “You only get there after having good transactional relationships and practicing care and attention in putting the customer’s needs first.”
The ROI of Customer Retention
The ROI of customer retention starts from the moment the initial sale is complete. “It is always easier and less expensive to maintain a customer than it is to gain a new one,” says Hoult. With acquisition costs for a new customer reaching as high as five times more than making the same sale to an existing customer, the difference in margin between the two transactions adds up quickly.
Marketing metrics consider the customer lifetime value (CLV) when determining the revenue potential for a business. With an eye on the lifetime spend of each customer, you can easily see how failure to maintain a customer relationship can cost a business.
Investing in the proper CRM system equips your dealership with the tools it needs to build and measure customer retention and its related success. “You’ll see salesmen who get better at following up on leads and quotes begin to do better than they did in the past,” says Hoult. “That shows up as increased sales numbers, and you’ll see their corresponding activity tracked in the system.”
But stronger customer relationships go beyond increasing sales volume. You’ll notice higher margin, driven by increased “wallet share,” according to Hoult. “Not only will these customers choose your dealership, but your margin on these transactions also becomes larger because they want to buy from you. And the cost to keep them coming back remains low — if you remain committed to customer retention.”
79% of service professionals say it’s impossible to provide great service without a complete view of customer interactions.
A good CRM solution makes it easy to track KPIs for these relationships. For example, identify customers who:
- Completed transactions in three or more departments
- Have attended customer-appreciation events
- Own equipment requiring a supply of disposable product
This kind of information helps you craft customized programs that anticipate a customer’s needs and drive add-on sales. Also, keep tabs on customers who have interacted with your dealership through multiple channels: text, email, a customer service call, or reaching out to a sales rep.
“These are some of the leading indicators for strong customer relationships,” says Hoult. “If they are not participating in specials, only talking to one department, or worse: only talking to one particular person, those indicators show you haven’t done a good job with customer retention.”
“Ultimately, you should see profit per customer go up as they become more loyal, more engaged,” says Hoult. “Those add-on products and services are profitable — more so than the original whole-good sale.”
And Anvil develops turn-key CRM software solutions equipment dealers can use to make it happen.
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