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Marconi: Your Long-Term Team

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Improve Employee Retention

Whenever Rob (not his real name) and I got together, he complained about his business. Rob would go on and on about his location and say that no amount of advertising has ever made a difference. Rob would tell me, “If I only had a better location, I know I can do better.” After years of complaining, he finally moved his repair shop to a location he considered a goldmine. “Now, I can build the business I always wanted,” Rob told me.  Five years later, his business was struggling. In fact, with the increased overhead, he was actually making less money, to a point where he was failing.  

Shortly after Rob moved into his new location, he ramped up his advertising budget, exploring, and testing, every form of advertising imaginable. Rob also invested heavily into discount coupons to draw new people to his shop.  Nothing seemed to work. After extensive and exhaustive efforts, he wasn’t growing his business. This was the same issue he had with his original location.  

I met up with Rob at a training event about a year and a half ago, and we spent time at lunch discussing his problem. After a series of questions and digging into a few key numbers, it became evident that Rob had it all backwards. His advertising was working. New people were coming in. But his retention rate was horrible. Essentially, Rob had two problems. One, he was bringing in too many of the wrong customers, and two, he didn’t pay enough attention to the customers he already had. 

Here’s something to think about. Retaining customers is five to 25 times less expensive than acquiring new customers. According to a study done by Bain & Company, increasing customer retention by just 5 percent will increase profits by at least 25 percent. It all goes back to this strategy; understand your true profile customer and make sure that you create an amazing customer experience each time that will give your key profile customers a compelling reason to return. 

Customer retention, created by strong relationships and combined with an amazing experience, builds strong companies. And it doesn’t matter if your shop is located off the beaten path either. The first step is to identify your key profile customers. Step two is to build your marketing plan around finding and acquiring more of these customers. Step three is to create an amazing customer experience, especially with your key profile customers. 

Once you have identified your key profile customer, cater to them, listen to them, and build an acquisition and retention strategy around them. For example, if you know that your profile customers are involved in youth sports, the local Church, after school programs, or belong to a particular community association, then you need to be involved with these organizations with regard to your marketing and advertising. Why? To remain top of mind with your existing profile customers and to attract the same like-minded people to your shop. 

Focusing on your key profile customer makes economic sense. It shouldn’t be a surprise to anyone that your loyal, key profile customers spend more money with you over time, don’t complain as much, are less demanding, and are a pleasure to work with. 

Consider this point, too, the typical automotive shop is not a mass marketer, like Walmart or Amazon.  We don’t lead with price; we lead with value. We are a target marketer. Which means we must define our market and know that trying to be everything to everyone is an unsustainable strategy.  

Back to Rob. To his credit, Rob finally got it. He stopped a lot of his external marketing, stopped discount advertising, and put a large emphasis on his internal marketing. Which is what he and his employees do each and every day by creating an amazing experience for their customers.  Rob still works hard bringing in new customers but puts a strong emphasis on keeping the good ones he has already. Rob learned that it’s crucial to get new customers to return again, because the odds of creating life-long customers greatly increases with every return visit.

Location can make a difference. And for some companies, it’s an essential component for their success. However, we all know repair shops that are not on Main Street, USA, and have built an amazing and profitable business. And I would wager a bet that their success is largely due by providing an amazing customer experience and a solid customer retention strategy. That is not to say that acquiring new customers isn’t important. It’s essential, since all businesses lose customers for a variety of reasons. But, if I had to choose between location or retention for my success, my money’s on retention. 

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