life cycle marketing for the automotive services industry

Your Guide to More Effective Life Cycle Marketing

Your Guide to More Effective Life Cycle MarketingFor the Automotive Services Industry

WHITE PAPER

BY MEGHAN HOOSE, PROJECT MANAGER


Forrester Research Inc., defines the customer life cycle as the phases a customer passes through in the course of an ongoing relationship with a company.

Whether your goal is to increase ticket size, cross-sell additional products and services, drive repeat visits, or all of the above, you will need a customer-focused retention strategy that delivers the right message, to the right customer, in the right channel, at the right time … through every phase of the buying journey, from consideration through purchase through repurchase. You will also need the customer relationship management (CRM) platform or software that facilitates your strategy.

In this paper, we’ll explore some innovative CRM programs that have been proven to work in the automotive services category. We’ll tell you why they work, what type of data and CRM platforms you need to implement them, and show you how to go about setting them up for your own automotive services business.

Whether you’re new to life cycle marketing or an experienced CMO, we hope you will find several new ideas to test and implement.

WHO THIS PAPER IS FOR

Mid- and senior-level marketing executives, merchandising managers, and customer experience specialists in franchised or corporate-owned automotive services retail businesses.

Executive Summary

Step 1: Decide What You Should Focus On

Should you focus on acquisition or retention? ACQUISITION

It can cost three to five times as much to attract a new customer than keep an existing one. The probability of selling to an existing customer is 60%-70%, while the probability of selling to a new prospect is just 5%-20%.

The strategy you implement for acquisition will differ significantly from the strategy you implement for retention. For example, your acquisition program will likely focus on differentiating you from your competitors and highlight the benefits of your automotive products, services and location to prospects. You will also want to use segmentation and modeling to identify and target your best customers up front: the ones who will provide you with the most business over the years.

Ohad Hecht of ClickZ says: “If your start-up days are behind you and your business is established, chances are that growing your business will be cheaper and faster if you retain and sell to your existing client base. This is not to suggest that you need to abandon acquisition efforts completely, but you need to shift the focus to your existing clients.” (Retention vs. acquisition–and the winner is…)

Forrester Research Inc., says: “Marketers obsess over acquisition. Even as the lines between marketing and customer experience blur, our survey respondents prioritize customer acquisition efforts over nurturing and deepening relationships with their most valuable and loyal customers.”


Step 2: Get Ready

For truly effective life cycle marketing, these three steps are mission-critical. Take them before you develop your program. MAKE SURE YOU ARE OMNICHANNEL-READY

Do you have a truly holistic view of your customers and understand all the various ways they interact with you and your brand? Have you done a marketing communications audit? You will need to be prepared to support integrated, relevant communications across all media:

• Advertising • Direct mail • Email • Website • Mobile

Customers’ expectations and preferences have changed. They expect businesses to know them personally and provide relevant offers and promotions when they need them, in the channels they want. GET THE DATA. INTEGRATE THE DATA. ANALYZE THE DATA

Technology investment is critical to enable the omnichannel customer experience and support a higher level of service. Your goal is to have your customers see you as a single, consistent voice, no matter where and how they interact with your brand. To do this—which for most automotive service providers is no small

• Search • Display/retargeting • Social • In-store

getelastic.com, “customer aquisition vs. retention infographic

In our experience, after years of testing acquisition programs across various channels for several national and international automotive services clients, we have found that search engine marketing (SEM) outperforms every other channel for new customer acquisition. Our advice: Don’t go crazy with direct mail coupons, inserts, flyers, radio, or any other offline channel. Your customers today are online, and you’ll get more bang for your buck if you focus on SEM to acquire new customers. Your mileage, of course, may vary.

RETENTION

The goal of a retention program is to strengthen your existing customers’ relationship with you. Understanding the needs of your engaged customers and providing them with relevant, customized programs will create loyalty and help you meet your business goals. If you nurture and reward your current customers, they will remain customers longer and evangelize your business to others.


undertaking—you will need to license or purchase a CRM platform that can integrate customer data across your entire organization:

• POS • Ecommerce • Loyalty • Third-party independent data, such as demographics/psychographics • OEM vehicle services recommendations • Social media data/feedback • Call center data/feedback • Independent dealer/distributor data, if applicable • Etc.

The ability to capture all customer data and customer interactions should ideally form the foundation for your life cycle marketing strategy. The need for a central, integrated connected data environment is fundamental to effective life cycle marketing. Without this, it’s virtually impossible to do holistic, data-based, localized, personalized marketing. And that is the future of automotive services marketing (and every other kind of marketing, for that matter).

There are several CRM platforms out there designed specifically for the automotive services industry. We have one. DMEautomotive has one. Salesforce has one. Oracle, Eloqua, Experian, and all the other big data providers have one. They all do different things for different kinds of automotive services providers at different prices. Our best advice: Do your research and buy only the capability you need and your stores will actually use.

DEVELOP A CUSTOMER JOURNEY MAP

A customer journey map helps you understand what your customers are doing, thinking and feeling at every stage of the customer life cycle. It includes qualitative, ethnographic research that will identify the gaps in your communications cycle and help you anticipate your customers’ wants and needs; it is based on their past behavior and their direct feedback throughout the learn, buy, enjoy, and advocate phases of the life cycle. Learn more about the power of customer journey mapping here.

TIPS: For more information on customer journey maps, visit our Knowledge Center and read “Journey to a Customer Experience Map” by Jill Hewitt. Jill is a customer experience designer here at Catalyst.

http://catalystinc.com/web-mobile/journey-customer-experience-map-general/?t=white-paper




You should model your programs based on your customer data and your business goals. Below is a sample communications program that we frequently use for the automotive services industry:

MOST RECENT/ENGAGED CUSTOMERS

Start your life cycle communication strategy with the customers who have most recently visited/purchased from you. Many direct marketing studies have shown that these customers are most likely to repurchase and repurchase immediately. Then concentrate on reactivating lapsed and lost customers—these tend to be the lowest-hanging fruit.

WELCOME PROGR AMS

Welcome programs give you the chance to educate your customers about your products and services, manage their expectations and set the stage for future cross-sell promotions. They are the first step in developing a healthy, lasting relationship with your customers. Welcome communications should be sent immediately after the customer has signed up/opted in to receive future offers and promotions from you.

THANK-YOU COMMUNIC ATIONS

A “thanks for your business” communications keeps you top of mind for future nurturing and retention. Acknowledge the products/services they purchased during their recent visit to support the notion that you know your customers. Your thank-you program may or may not include an offer, but if you include one, be sure it maps back to at least one of your business goals. For example, include a customer satisfaction survey or a link to a customer preference page to gather customer insights and preferred method of communication.

Step 3: Develop Life Cycle Communications Programs

TIPS: Your communications should always include relevant, timely content and show your customers that you know what they want, when they want it, and how they want it, based on the data you have available.

CUSTOMER VISIT

6 MONTHS

0 MONTHS


When should you send these communications? Get the thank-you out as soon as possible via email and/or mobile (if customer has opted in for mobile communications). Get the welcome communication out in a different channel, no later than 48 hours after the first visit. And 24 hours is even better.

CROSS-SELL THE RIGHT PRODUCTS TO THE RIGHT CUSTOMERS

Your next communication should focus on cross-selling other products and services … to the right customer, at the right time.

The most important thing that makes a cross-selling program effective is having the appropriate data and business rules in place, so you know who purchased, what they purchased, where they purchased, when they purchased, and what they are most likely to purchase next. Someone who has recently purchased transmission service or had their windshield replaced isn’t likely to need that service in the near future, no matter how great your coupon. But someone who purchased an oil change, or windshield wipers, or brake fluid, will. Sending irrelevant customer communications will drive your response rates down.

Worse, it can damage your customer relationships because it shouts, “you don’t know me and understand me.” Not only does data-driven marketing let the customer know that you “know” him … it tells him what to expect when he visits again. One of the most common complaints in the automotive services industry is that customers feel “sold” when they’re in-store … that retailers are pushing products they don’t want or need. However, if what you’re offering is relevant and personalized to the customer’s needs … he’s not likely to feel intimidated when your service technician makes a suggestion.

Of course, it’s critical that your technicians and CSRs have access to the data! See, everything harkens back to that all-important data.

MORE ABOUT CROSS-SELLING

Cross-selling the right services and products is key to boost ticket size, so once you figure out what the customer needs, use all channels for the best results. Here are a few more suggestions:

Preview What’s Coming

Repeat purchases in much of the automotive services industry are common. For example, tire rotation is recommended at certain mileage intervals, windshield wipers need replacing every six months, etc. Many automotive services industry customers may be routinely due for services. Why wait until the moment they are due to repurchase? Implement a preview program sent in advance to get them mentally and monetarily prepared. This communication could be email/mobile only, to save printing/postage costs.

TIPS: Think of your thank-you and welcome communications as your “customer onboarding” strategy.


Remind Them

If your core offering is a product or service your customer should purchase repeatedly—for example, tire rotation—then the core of your life cycle program should be focused on getting the customer back to repurchase that product or service. Implement a reminder or service renewal program that is personalized and includes an incentive to buy again.

The reminder program should not be a one-time or one-touch communication. Use direct mail, email AND mobile marketing to send notifications to your customers when they may be due.

Don’t stop with one notification. Send another 14–28 days after the first one (be sure to suppress customers who responded to the first notification).

Reward Them for Their Loyalty

Pay special attention to your best customers—those who visit most often, most recently and those with the highest average tickets. Tapping this audience will also help your acquisition efforts. Use your loyal, existing customers to advocate and acquire new customers for you. Implement loyalty programs that are good for the customers and good for your business by rewarding them for posting positive reviews about your products and services and referring friends and family.

LESS-ENGAGED/L APSED CUSTOMERS

It is less expensive to win back a former customer than it is to acquire a new one. The majority of the customer life cycle campaign focuses on customers who are already engaged with your brand. However, it is important to keep an eye on the population of customers who have not visited/purchased from you in a while and make attempts to rekindle the relationship.

Win-Back

Your focus should be on re-engaging them with your brand and preventing them from switching allegiance to a competitor. Entice them with a deeper discount on products and services. For example, if you offer a set of windshield wipers for $19.99 to current customers, lower the price to $14.99 for your lapsed customers. Determine when customers attrite and pre-empt the loss with offers that include more relevant, personal incentives.

“The reminder program should not be a one-time or one-touch communication.”


SEGMENTATION

Not all engaged/current customers should be treated equally. Campaigns that treat every customer the same, regardless of interest level and life cycle stage, are not as effective as customized, personalized programs that include relevant offers and specific content when customers need it.

During your data assessment, you may notice that you have groups of customers who “look” similar. You may want to think about using segmentation to more granularly focus on individual customers. Customer segments to consider:

• Customers who spend over $50 each time they purchase a product or service from you

• Customers who consistently purchase a certain grade of product—think high-end wipers or premium oil

• “Loyal” customers—defined by characteristics such as average ticket, recency of visit and customer satisfaction, number of times visited, etc.

CHANNELS

Customers expect businesses to interact with them across all channels. It is important that all programs are integrated, consistent, and show the customer that you know him or her.

Email

Emails should be simple and to the point. Include short subject lines with a relevant call to action or offer. For example: “30% off tires for your Honda Fit.”

All email should include easy-to-find links to your privacy policy and an opportunity to opt out. We recommend including a link to a customer preference portal to make it easy for customers to update their communication preferences.

Direct Mail

It is important that you keep the target audience in mind—your most recent customers. They are already familiar with you and your brand, so you may not need to go “big and bold” with regard to format. Over the last 10 years we have tested all shapes and sizes of formats in the automotive services sector. The clear-cut winner for both response rate and return on investment has consistently been a 4.25” x 6” postcard. Bigger may cut through the clutter, but it will cost you. Save the bigger, flashier formats for acquisition campaigns.

“You may want to think about using segmentation to more granularly focus on individual customer needs and business goals.”


Mobile

Mobile marketing is great for easy on-the-go access to your offers and services. However, there are risks if you are not aware of the strict requirements that come with the territory. Be sure to follow CTIA guidelines and partner with an expert who knows the ins and outs of mobile marketing—you don’t want to find yourself being fined for not executing these programs correctly.

CUSTOMER PREFERENCE

Give customers the option to set preferences for content, channels, or cadence. Greater data yields more personalized, relevant, and useful content. That, in turn, gives customers better value and a stronger connection to your brand.

Similarly, when consumers choose communications preferences and brands adhere to them, research shows that engagement, purchases, and customer satisfaction soar. Ideally, customers should be steered to a preference center early in the relationship, when their interest and intention are high. They should be asked for basic contact data and the requisite opt-ins; find out what kind of information or incentives they want, how frequently they want them, and which communication channel is best for reaching them.

TEST. LEARN. RINSE AND REPEAT

Continually test the effectiveness of your programs to improve results.As you roll out your customer life cycle programs, you will need to monitor and review them on a regular basis to ensure they are still providing positive ROI and steady customer retention rates. Implement a test-and-learn strategy to confirm that your programs are meeting your goals.

Test-and-learn strategies compare customers who receive your communications against those who don’t. Start small by testing one program at a time. For example, implement a mail vs. no mail strategy (also known as a “holdback cell”):

• Create a mail list of customers you want to send a communication to

• Send mail to the majority and suppress it for the remaining 10%-20%

• Watch redemption and responses over a predetermined response window. Then compare customers who visited/purchased after getting a communication against those who didn’t

• If you see that more customers who got a communication visited/ purchased, you are on your way to rolling out an effective program

• If your communications don’t result in more visits/purchases … start over (or call us)

Do you have a steady influx of new customers? Are you retaining the customers you already have? How are your programs working?


ACCURATE CUSTOMER DATA

Valid customer data leads to better customer retention.Developing a robust life cycle campaign is hard work. Make sure all that hard work pays off by capturing customer contact information accurately. It’s critical that your technicians and CSRs input mail and email addresses correctly into your POS.

Validate at Time of Visit/Purchase

Ask customers to confirm their contact info at time of purchase. Even go as far as showing it to them on screen. Even the smallest mistake can keep your data from being valid. Within 24–48 hours after the customer visit, run the customer’s contact information through address verification software. If it’s invalid, make attempts to correct it by looking them up on USPS.com or even Google.

Don’t Be Shy

Ever heard the saying: Ask and you shall receive? Well, ok, that may not always work when it comes to getting a customer’s contact information, but the worse that can happen is that they say no. So, always ask. If you offer an email and mobile program, ASK for their email address and mobile phone number. Even if you have signage at your store encouraging customers to sign up for email or text messages, it is a best practice to remind them of the benefits of your programs and verbally ask them during their visit.

Reward Your Employees for Valid Customer Data Capture

We all need a little motivation at our jobs. Why not incent your employees to capture valid customer contact information? A little competition is healthy in the workplace, so make it fun for your employees. For example, the worker who captures the most customer data over a certain period of time could receive a gift card to his or her favorite restaurant. Or, if you are feeling really generous, maybe even an extra day off.

Don’t Forget the Offer Codes

If you use coupon codes, make sure they are “enabled” in your POS BEFORE you offer them to customers. You’d be surprised to learn how often marketers forget to do this. You will be able to more easily track your discount programs if you set up the data ahead of time.

“Ask customers to confirm their contact info at time of purchase.”


CAMPAIGN MANAGEMENT TOOLS

Save time with the right CRM tool.It takes time to develop the right life cycle programs. It should not take as much time to manage them.

Enter campaign management tools. Campaign management tools free you up to work on the business, rather than in the business. They allow you to “set it and forget it.™” You set up your criteria once … the tools take it from there. No need to constantly keep your finger on the “go” button.

Which campaign management tools are most valuable?

Marketing automation tools

These enable you to send relevant communications across a multitude of channels based on customers’ actions. They eliminate the guesswork—no more trying to figure out what to send and when.

Reporting tools

These provide campaign tracking, business performance reports and business intelligence to help you understand how your marketing programs affect your business results.

Address improvement tools

These help you increase the size of your mailing universe by weeding out incomplete or invalid postal and email addresses.

What criteria should you use to evaluate the tools you are considering? Ask yourself:

Do they save time?

You can save significant time by using one integrated CRM platform to manage all your marketing campaigns vs. separate tools to send email, mobile offers, etc.

Are they easy to use?

You should be able to easily set up and manage campaigns with minimal effort and training. If your individual stores won’t actually use the tools, they aren’t worth paying for.

Will they produce integrated communications across all my channels?

Any tool you choose should allow you to integrate multiple channels—mail, mobile, email, social media, etc. Customers feel very strongly about how they want to be communicated with. It’s important to offer all the options they want and use to increase their engagement.

“Campaign management tools free you up to work on the business, rather than in the business.”


Do they kill a mouse with a cannon?

If you have 100 stores, you may not need a Salesforce or an Oracle. Several studies have shown that some of the larger, more expensive CRM platforms are not used across the organization. Some retail organizations do better with a cloud-based tool. Others do better with a licensed platform. Don’t buy more capability than you need.

CONCLUSION

Life cycle marketing programs are critical. Today, your only competitive differentiator may be the experience your customer has with you. Without the right data, the right communications and the right life cycle marketing strategy, you’re not going to be able to keep up with your competitors. Clean up and consolidate your database. Invest in the right tools. Train your people to use them. Talk to your customers one on one, and use these proven CRM programs. You’re likely to see a difference in your acquisition, retention and engagement metrics almost immediately.

ABOUT THE AUTHOR

Meghan Hoose specializes in project management, strategic planning, campaign analysis and management, and franchise marketing for the automotive services industry. She has built franchise relationships for more than ten years at Catalyst, and prior to that she led print, broadcast, direct and digital

marketing accounts at Saatchi & Saatchi. In her spare time, she adores crime novels, horror movies, and spending time fishing with her husband and son. She holds a BS in marketing and communications from Nazareth College. Learn more about Meghan on LinkedIn or email her at [email protected].

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