Who was Vilfredo Pareto, and Why Should Dealers Care?
There’s an old saying in business that about 80 percent of your sales comes from 20 percent of your customer base. In truth, this ratio holds strangely true in a number of areas: 20 percent of your time produces 80 percent of your results, 20 percent of your workforce creates 80 percent of your total productivity, and so on.
It’s called the “Pareto Principle,” after Italian economist Vilfredo Pareto who first put the concept to paper in 1906. It still carries an important, but often-overlooked, message for your marketing efforts today.
It’s understandable that everyone wants new customers. But the truth is there are some people who will never be your customer, and some who will be less valuable customers than others. Dealers have to be careful that in their quest to conquest, marketing geared towards instilling loyalty or lasting customer satisfaction doesn’t fall to the wayside.
Analyzing your dealership customer data will tell you which of your current customers hold the most potential for profit. Retaining those customers is absolutely essential to feeding the healthy revenue stream that funds more expensive conquest marketing.
More expensive? Yes. According to Forrester Research, it costs five times more to gain a customer than to keep one.
And while there is great satisfaction in drawing shoppers away from another dealership, the probability of selling to a new shopper is only 5-20%, while the likelihood of closing the deal with a repeat customer is 60-70% on average.
So how do you keep them?
Identify them. Know who is at which stage of the buying cycle, and be one step ahead. Know their car, sale/lease terms, service habits, and all the information that will help you build the strongest approach with the most irresistible offer.
Connect with them. They don’t stop being your customer after they sign on the line. Staying in touch between their visits to the dealership (when you are probably asking them for money) by offering useful, helpful, or entertaining material makes you an asset, not a debt.
Observe them. If you pay attention to what they find interesting – which communications they open, which links they click, which pages they visit – you can tailor your marketing messages to be even more effective.
Listen to them. Social media is social, by definition. Customers expect interaction, often using it as their first line to customer service. They’ll see what other people say to you and judge how you respond, so use it to your advantage.
We absolutely want you to go out and convince new people to love you. Just not at the expense of the ones who already do. For help spreading all the love, call 855.NKD.LIME or email firstname.lastname@example.org.