The Roi of Great Customer Experiences

Introduction

In a competitive market and a tough economy, every automotive aftermarket brand loses sleep about how to increase revenue. Whether operating service centers, collision repair shops, or retail locations that sell car care parts, automotive aftermarket brands are un-der increasing pressure to drive new business by whatever means necessary.
To accomplish this, they have increasingly come to rely on aggressive marketing strategies that mix offline advertising with online advertising. Local radio spots, glitzy billboards, lo-cal newspaper ads, paid search ads, and online directory listings—these are just some of the popular tactics being deployed by marketers to increase new customer acquisition and engender more repeat business from current and past customers.
Yet recent research by Leger Metrics into customer behavior in the automotive after-market industry suggests that much of the money devoted to these aggressive marketing activities might be in the process of being wasted. Indeed, a recent analysis of over 8,000 customer visits to over 120 North American service centers and parts stores reveals that advertising activities play a comparatively small role in shaping and influencing customers’ purchasing decisions. Instead, Leger Metrics’ research has added weight to the idea that positive customer experiences are the number one driver of both new and repeat business, influencing as many as 80% of all customer purchasing decision.

Driving Business Through Great Customer Experiences

The old adage is that marketing brings customers in, but great experiences are what keep them coming back. Applied to the automotive aftermarket, however, this adage is revealed to be only partially true. Customer survey data from leading automotive aftermarket brands has revealed some stunning conclusions about what motivates customers to do business with them. What’s clear is that great customer experiences play an extremely strong role in driving revenue. When survey respondents were asked what factors motivated them to purchase car parts or service from the aftermarket brand in question, 60% of respondents indicated that they were motivated to purchase as a result of a past positive experience.

The next leading factor was a positive recommendation from a credible source. 20% of respondents indicated that their purchasing decisions were primarily motivated by positive word-of-mouth from a friend, colleague, or family member.

Positive customer experiences, therefore, were responsible for driving 80% of all customer purchases. They did so directly, when a customer had had a great experience or series of experiences and thus decided to return and keep his business with that brand. But they also did so indirectly, when a great experience caused someone to praise the brand and the viral impact of that endorsement drove his friends, colleagues, or family members to shop or service their cars there, also. Not only did great experiences keep repeat customers coming back, their viral impact also drove in new customers with equal efficiency.

On the other hand, factors that have traditionally been associated with new business generation appear to have had only a slight impact in driving revenue for automotive aftermarket brands. Coupons were the primary purchasing influencer for only 7% of customers, while billboards, print ads, radio spots, online advertising, and directory advertising combined to influence a mere 6% of all purchasing decisions.

Source: Leger Metrics data 2010-2011. Multiple answers allowed for this question.

Taking the analysis further, it becomes apparent that customers who were driven to purchase as a result of traditional advertising activities were less likely to be satisfied, less likely to recommend the brand, and less likely to revisit than customers who were motivated to purchase products or services as a result of a past positive experience or as a result of a positive recommendation from a friend, colleague, or family member.

Taken together, all these data points combine to paint a compelling picture of the customer dynamics in the automotive aftermarket. In this sector, great customer experiences drive the lion’s share of business and aggressive advertising tactics influence comparative-ly few purchasing decisions. Even in cases where advertising activities do motivate customers to purchase, satisfaction and loyalty tend to be significantly lower.

“Loyalty is the most valuable commodity when it comes to purchasing car parts or ser-vice,” said Fay Hinkson, Leger Metrics’ Director of Research. “Customers that have great experiences are proven to be more loyal and that can mean years and sometimes even decades of reliable repeat business. But getting that customer experience right in the first place is the starting point for any meaningful long-term relationship between the cus-tomer and the brand.”

Tips For Improving The Customer Experience

Delivering remarkable customer experiences pays off significantly in the long run. Brands that direct their money towards improving the customer experience and thrilling their customers will win out over brands that spend copious amounts of money on advertising yet shortchange the customer experience.

There is strong evidence that prominent aftermarket brands are taking funds once earmarked for expensive advertising campaigns and instead investing in activities aimed at thrilling customers. One Leger Metrics client, who operates an international chain of car care centers, made the brave decision to cancel all spending on local radio spots. The money saved was instead channeled towards improving the quality of the waiting room experience. In particular, the brand focused on making the waiting room area more friendly and enjoyable for females. Survey data had shown that women thought that the waiting room environment was crowded, dirty, and lacking in ambiance. The money saved by cancelling the local ads was therefore spent on a comprehensive overhaul of the waiting area experience, with the goal being to make it more clean, spacious, and presentable to female customers.

Still another leading aftermarket brand chose to pull its expensive Yellow Pages listings and instead focused on developing educational videos that played on high definition screens in its network of service centers. These videos were designed to educate and inform customers about the work that was being performed on their vehicles. Prior to the deployment of these videos, customers had indicated that they felt mystified and even intimidated by the technical jargon that service personnel were using to describe basic jobs like brake servicing, oil changes, and wheel alignments. These new videos were designed to explain these mechanical processes in layman’s terms, thereby educating customers about their vehicles and also giving them a deeper sense of assurance about the work being performed on their cars.

Finally, a major chain of car parts stores suspended its billboard advertising campaign and instead focused on generating brand excitement by tapping into the viral power of great customer experiences. In collaboration with Leger Metrics, the brand invited customers who were thrilled about their purchasing experiences to share their brand endorsements with friends on Facebook in the form of branded status updates, which also contained targeted discount offers, available exclusively to the friends of customers who had purchased car parts or accessories at the brand’s stores. The brand found that unlocking the viral power of positive customer experiences was a far more effective way to increase brand buzz and drive new customers to its stores than merely plastering the freeways with expensive billboard ads to which glaze-eyed rush hour commuters had become increasingly blind.

Conclusion

The voices of 8,000 automotive aftermarket customers have conclusively shown that great customer experiences are the single biggest revenue driver for car care centers and parts shops. Brands that ignore the customer experience do so at their own peril, while brands that invest in delivering remarkable customer experiences invariably succeed.

Advertising activities simply cannot match the ROI potential of great customer experiences. While automotive aftermarket brands should always make judicious use of advertising tactics to boost brand awareness, investing in the customer experience will go a lot further towards creating loyal, long-term customers, who will then drive substantial numbers of new customers into stores and service centers simply by spreading positive news about the great experiences that they will have had.

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