Customer Retention: Do Your Employees Understand its Effect on Their Paychecks?
Just about every business owner or corporation executive who is awake understands that it is far more costly to obtain a new customer than retain an existing one. This concept is even more near and dear to core tenets of running a business—in an uncertain economy.
Here’s the dilemma that consumers witness over and over like a recurring bad dream: Many employees who interact with customers do not understand the importance of customer loyalty to the bottom line of a company. Repeat customers help pay your salary. Fewer repeat customers, more expense required to find new ones… something might need to be cut from the budget… like your salary!
Granted some customers can be difficult; however, when a loyal customer has an issue, the customer service representative needs to be motivated to deal with it effectively AND know how to create a win-win resolution.
Consider this example: A customer takes his out-of-warranty vehicle for a routine oil change, and is told at the end of that service that the vehicle has a slow leak that needs to be addressed in the near future. Cost for this “recommended repair”—as written on invoice—is $1100. The customer is in shock. Not being a trust-fund baby, he says he needs to sleep on it.
The customer does some research and finds out that part of the problem is that the entire transmission has to be taken out to fix this small leak at a cost of $92/hour plus parts. It appears that since very few of these types of repairs have been made by this service department that the customer is paying, in part, for the staff’s learning curve. Further, upon following up with the service department, the customer is informed that the original quote was incorrect, it is really $1800 to repair the leak and, by the way, “You need a 30,000-mile service which costs an additional $600.” Now the customer has gone from shock to hopping mad. He is ready to leave his vehicle parked outside his house and buy a clunker for the $2400—and put a bumper sticker on the clunker that says “My other car is an X but I cannot afford to drive it.”
How should the dealership’s service department deal with this situation? Here are some options:
- Make certain that each employee is carefully trained so that when he/she quotes a price for a repair, especially when it is in writing, that it is correct.
- Stand by any inaccurate price quotes, giving the customer the benefit of the doubt.
- Charge the customer $1800 for the 30,000-mile service AND the repair of the leak to compensate for the inaccurate quote and encourage repeat business.
- Tell the customer that they are sorry
- Ignore the situation entirely
The answers that are more likely to help the dealership keep the customer? Hopefully, you know that they are a combination of 1, 2, and 3 above.
Final thoughts:
- A customer really doesn’t want to hear that someone is sorry for someone misquoting a price. “Sorry,” does not put more money in his/her bank account.
- Make certain that your staff knows what they are doing when they interact with customers. Each person needs to understand the importance of retaining loyal customers to their individual financial livelihood.
- Each employee needs to be given license to ask a manager when they find themselves in deep water rather than risk alienating a loyal customer.
If you and your employees are in tune on the importance of customer retention, you will keep more customers and run a much more profitable business.
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