Budgeting for Customer Experience at Your Dealership

As you finalize your budget for this year, are you confident that the amount you’ve allocated for your Customer Experience program will give you the results you want? An effective Customer Experience program works to prevent customer issues before they occur, close the loop with the customer when said issues do occur, and improves customer retention by turning unhappy customers into satisfied and loyal customers – ones who are willing to recommend your business to others. To help you better understand (and improve) your current customer experience program, it’s important to first identify what your customers are worth and how much you should be spending on them using a Customer Lifetime Value Calculator.

You want returning customers who are willing to recommend your business, not detractors (AKA customers not willing to recommend).

During our 20 years of helping dealers improve the customer experience, SATISFYD has observed that about 10% of an average dealer’s customers are detractors.  That is, when the customer is asked whether they’d recommend the dealer, their answer would be “unlikely” or “no”.  When a customer is not likely to recommend there is a good chance they’ll eventually take their business to another dealer. It’s not uncommon for unhappy customers to drive past their closest dealer and go to one 30-60 miles away in order to get a superior service experience. (To learn more about detractors and Net Promoter Scoring, click here).

The Cost of One Detractor

For an agriculture dealer, we’ve calculated that a customer is worth approximately $75,000/year. Considering a customer with a lifetime of 20 years, the potential loss in revenue over that 20-year span equates to $1.5 million (20 x $75,000) if they were to defect early in their relationship with the dealer.

As an example, if a dealer has 1,000 surveys returned and 10% are from customers not willing to recommend, that dealer has 100 detractors (which, according to our calculations, equates to a total potential loss of $150 million. If only five of those 100 customers defect in the upcoming year, the loss would be $375,000 for that year (5 x $75,000), and a lifetime loss to the dealer of approximately $7.5 million (5 x $1.5m).

Investing in Customer Experience Helps Dealers Thrive

The good news here is that dealers can repair these relationships and retain their customers by listening and implementing an effective Customer Experience program.

Customer Feedback Solutions, such as SATISFYD, help dealers identify customers who are at risk of defecting. These solutions communicate and proactively escalate issues to dealership staff, enabling them to address the issue, close the loop with customers and work to prevent future recurrences. They also highlight things that are working well to help dealers reinforce areas of excellence within their operation.

  • How many customers do you have?
  • What’s the average value of your customers over a 20-year lifespan?
  • How many customers are detractors?
  • Of those detractors, what percentage do you think are truly at risk of leaving?
  • What’s the loss to your dealership if you lose those customers?
  • What would you be willing to spend to keep those customers?

SATSIFYD is specifically geared toward helping you recapture detractors, bring them back to your business, reestablish that relationship and keep them for the next 20 years.