Why Give Discounts to a Customer That Is Already Paying Full Price
By Alexia Henson, National Director for Direct Mail with AutoLoop
Have you ever wondered about businesses that give discounts to regular, loyal customers—those who already expect to (and do) pay full price? After all, there’s a reason these customers are loyal: they obviously understand the value of superior service—so they should be paying full price, right?
From a dealer perspective, sending a discount to a loyal customer doesn’t make sense: most dealers would say they already give too much money away trying to recapture lost customers and attract new ones.
I hear this from Fixed Operation Directors and Service Managers all the time: “I am not giving discounts to the customers who are already willing to pay full-price!”
Like I said, it sounds reasonable…until YOU are the long-term, always-full-price-paying customer.
Let’s say you frequent a certain restaurant four to five times each month and spend quite a bit of money at every visit. Then one day you call the maître d’ and ask for that special table by the waterfall for your anniversary. He replies, “I’m sorry; I realize you’re an excellent customer, but we save that table for new or infrequent customers … we want to make them feel special.”
Ouch, right? But think about it: that’s exactly what you are telling your good clients when you give discounts to sporadic customers or to those that have never spent a dime in your dealership.
Our industry is one of the few that does not reward its good customers. Plus, in addition to not rewarding them, we continually remind them that they should be spending MORE money on their vehicle to maintain its safety or longevity.
I was discussing this subject with a longtime client a couple of years ago while planning his mail strategy and budget. He wanted to target lost customers but had no interest in offering discounts to current ones. The conversation then moved on to several direct mail promotions he wanted to do over the next few months. Once we agreed on quantities, he said, “Since I’m one of your regular clients and I do quite a bit of business with you, I should get a pretty good deal on my mail campaigns, correct?”
“But…you’re already a loyal and well-paying customer,” I replied. “Why on earth would I give you a discount?” The room went silent…but he got my point. And of course, I did give him a good price—after all, he was a loyal customer. He started paying attention to his steady, profitable, “good” customers, and hasn’t looked back; neither have I.
Automotive service is not an impulse buy: most people don’t even think about it until they need it. By sending out multiple offers to your loyal clients, you increase your chances of getting them the right coupon at the right time. Basically, you’re preparing them for when they have an unexpected problem: you want them to automatically turn to your dealership for the solution rather than a Tire Kingdom, Jiffy Lube, etc.—because these are the places that promote and encourage defection from your dealership to begin with!
These companies have the same Op codes that your dealership has. Once they capture your customers, they immediately start marketing to those customers with discounts…the discounts you were saving for YOUR defected customers.
The best—maybe the only—way you can stop or slow that defection is to keep your regular clients out of other stores, because your competitors are soliciting those customers whether you are or not. They’re more than willing to entice your customers with a discount coupon … but at that point, the upsell opportunity is theirs, not yours.
It’s an all-too-familiar scenario: John Smith pulls in just to get his battery checked. While he’s there, he sees a promotion about an oil change for $34.99. He thinks—as he is intended to— “My oil’s about due for a change anyway, so might as well get it done while I’m here.” And that’s the first step away from your service drive.
I‘m not ignoring the importance of upselling, but you can’t upsell the customer who isn’t there. And when it comes to bringing in customers, laying the groundwork with monthly offers not only works but it works well!
This is where direct mail comes in. It’s ideal for getting different offers to customers on a regular basis. Send a mailer that offers a free brake inspection … or a free battery inspection with $10 off if a replacement is needed … a free tire rotation with an oil change or an alignment check—you get the idea. These are the little incentives that add up to long-term value for your clients—and your dealership.
So why spend money marketing to your good customers? Because if you don’t, your competitor certainly will.