By René Lamothe
Dealer Marketing Magazine, January 2008

In marketing, all customers are not created equal. You want to spend your marketing dollars where you will get the most bang for your buck. In the dealership, the ‘C’ customer (who only comes in for an oil change) gets nixed from the marketing budget with database segmentation. Targeting only your top customers sounds like a smart idea, but is it?

According to the Pareto Principal (more popularly known as the 80-20 rule), 20% of your customers account for 80% of your revenue. Knowing this, you segment your database by Platinum, Gold and Silver (or ‘A’, ‘B’, and ‘C’) and send varying marketing messages to those targeted segments. The goal is two pronged:

1. Treat the top 20% (the ‘As’ and ‘Bs’) differently than the bottom 80 % (the ‘Cs’).
2. Move customers up the segmentation ladder — convert ‘Cs’ to ‘Bs’ and so on.

But does it work?

Service Departments complain that their ‘C’ oil change customers are consistently a single line Repair Order. They’ve sent them direct mail pieces, coupons, loyalty cards, and major maintenance reminder letters but they just won’t budge. Why have your best intentions gone sour? Because a piece of mail is not going to convert a ‘D’ customer to an ‘A’ customer, your Service Advisors and Technicians are. To effectively sell to that 80% ‘C’ majority, you need to have a process in place to ensure that Technicians and Service Advisors are partnering to up-sell. Instead of Service Advisors saying, “Oh no, another oil change customer,” they need to be thinking, “Oh boy, here’s another oil change customer I get to an opportunity to work with and up-sell.”

Service Advisors and Technicians need to live by the 27-point inspection. They need to be coached on sales techniques, and they need to receive an incentive to put their declined recommendations—those recommendations that the ‘C’ customer just turned down because they “didn’t want to decide today”—into the DMS.

Once the Service Advisor has done his/or her part, the dealership also needs to have a process in place to follow-up on those recommendations by sending a Recommended Service letter. Statistics show an astounding 96:1 return on investment from Recommended Service letters. Service Advisors and Technicians who spend a little extra time on the inspection / sales process, are your best chance to move ‘C’ customers to ‘A’ customers.

Service Advisors and Reminder Letters are vital touch points that help to build a lifelong relationship with the customer. If your service customers are familiar with your dealership, they are more likely to think of you it comes time to buy their next vehicle. Segmentation can seem like a smart way to market to your customers; but at the end of the day, it’s your processes that make all the difference.

René Lamothe is a CRM Consultant for DiversiForm, Inc. (DFI), an innovative customer retention and direct mail marketing provider. René can be reached at 800.444.3445 or rene@diversiform.com.