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What have you done for me lately?

Updated: Oct 26, 2023

Over the years I have bought four new motorcycles, and three new cars. That’s not a lot of new vehicles, but then I am fortunate to have been in the motor industry for a long time, and in roles where a company car has been given. However, I will now sum up in a list what gifts, incentives and freebies and thank-yours I have been given for being a customer of six brands.

  1. Branded emails

  2. Service reminders

What do you think of the list? I think you would agree, it is not impressive.

Dealers and distributors nod when we discuss the value of existing customers over acquiring new customers. We all agree that customer retention is key. There is broad agreement that acquiring a new customer costs four or five times as much as retaining a customer costs.

Wharton Marketing Professor Peter Fader said, "Here’s my take on that old belief: who cares? Decisions about customer acquisition, retention and development shouldn’t be driven by cost considerations—they should be based on future value.”

Yet at a customer level, with my albeit shortish list of new vehicle purchases my future value has been consistently ignored.

Future Value or Customer Lifetime Value is a sobering calculation. Let’s consider that you want to retain as many customers as possible in your dealership. You don’t mind if they switch across brands you offer. Let’s set a CLV target that you want each customer for (say) 15 years and you wanted to achieve 75% loyalty. Perhaps you might even loose them for a purchase cycle because you or your brands don’t have the product they want, but that you treat them as an existing customer at that moment, with the aim of winning them back. What is the value of that customer?

Is that retention target target too high for you? Then do the exercise with lower values. It doesn’t need to be limited to new cars only. Remember many customers are multi-car families. Different family members have different requirements. This calculation or exercise is not limited to new car dealers.

What would you need to do for your customers to gain their loyalty, and to meet your retention target? How much is each customer worth to you now you have done the calculation?

This thinking is far more than just marketing, it is about the whole business. It makes you and your staff think about the true value of each customer, and their expectation of your business. Firstly, you have to build trust and then you can earn and gain their loyalty.

To build trust and loyalty, as a business leader you need to think about every aspect of your business, from the customer’s point of view. Some would argue that looking at your business from the customer’s point of view is in fact the true definition of marketing.

This thinking will help you focus on driving a better quality service, clearer communications, better follow up, better lead handling, more retention activities. It will make your customers feel special. They will become advocates for your business. A truly customer focussed approach will improve your business processes as well as your bottom line.

Consider this scenario. I once went to collect my motorcycle from a dealers where it was being serviced, only to see they were setting up for an event, “It’s a launch event for our new bike” said the salesman. I hadn’t had an invitation, and I felt snubbed. But here’s the thing, I hadn’t bought my bike from the dealer that was servicing my bike. So, should I have been invited? Some of you will undoubtedly say no, and some would ask, why didn’t you get your bike from your local dealer? Quite simply, I had moved. My servicing dealer was now my local dealer (and remember my local dealer knew that, because they had my name and address and what I rode and how old it was).

In this example with taking a CLV view, the service department would have been much more joined up with the sales department. The data flow would have signposted that I was a customer that was low hanging fruit for acquisition. A customer gained by the service department is just as important as a customer gained by the sales department. Are you ready to start on a Customer Lifetime Value focussed journey?

At a high level, to start on the journey you need to know five key pieces of information.

  1. What percentage of your marketing spend is ringfenced for customer retention.

  2. What is your customer retention rate?

  3. What is your CLV?

  4. What is your cost per sale for a new customer?

  5. What is the cost per lead for a new customer?

It is unlikely you will be able to answer these questions immediately. Perhaps you should ask to see your marketing plan separated by which activities are geared towards existing customers and which activities (and what percentage of your marketing spend) is allocated to new customers. Perhaps you could start measuring Net Promotor Score for sales and service?

There is one distributor out there whose marketing department is split into future customers and existing customers. What does that tell you about how they do things?

Perhaps now is the time to ask, “What have you done for your customers lately?’

Boost Auto has just launched the Boost Auto Accelerator programme, a sales and marketing programme for sales executives and sales managers, with the objectives of generating more leads, selling more cars and spending less money. One of the topics we cover is Customer Lifetime Value. Find out more here.

With apologies to Janet Jackson.

Boost Auto is an automotive consultancy working in seven main areas.

  • Market Insights & Trends

  • Sales and Marketing effectiveness for brands and dealers

  • Green fleet facilitation for large corporates

  • Go To Market strategies for emerging brands

  • Market Insights & Trends

  • Business Planning and facilitation

  • Operational Effectiveness

You can contact us at

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