Less than 15 years ago, not a single dealership had a personal computer, digital camera, website or email address, let alone a person who knew how to operate any of them. Today, most successful dealerships have an entire department dedicated to internet marketing.

For years, the automotive industry has dabbled in customer service and retention; from the simple idea of business-reply postcards, to CSI surveys, to a part-time BDC. It is now time to stop dabbling and make customer retention and loyalty a full-time department. Your new Retention Manager (from today forward—“RM”), will work with each department head to develop a retention plan that satisfies your entire business while also taking care of existing customers. Having one retention leader work with all your department heads provides economies of scale while also getting everyone on the same page. Sales and service go hand-in-hand. You cannot have one without the other.

Dedicating a sole professional to the task of building customer loyalty will set your store apart from the rest. Having a RM on staff will demonstrate to your buying public and your entire staff that your dealership is serious about keeping its customers.

Allow your department heads to focus on what they do best—running their day-to-day operations. They should not pretend, nor should you expect them to be, marketing, advertising or retention specialists. Any time you can get your employees to focus and become a specialist rather than a generalist, the results and productivity will be quickly evident.

Recent NADA studies show that it takes three times more money to acquire a new customer vs. maintaining an existing one. According to NADA's 2010 data, the average dealership spent $292,010 on advertising to acquire new customers. This amount was broken down as follows:

• Newspaper $65,410 (22.4 percent)

• Radio $43,509 (14.9 percent)

• TV $58,694 (20.1 percent)

• Direct Mail $29,493 (10.1 percent)

• Internet $64,826 (22.2 percent)

• Other $30,077 (10.3 percent)

Once you have a RM maintaining existing customers, does this mean you can cut your budget by 33 percent since your existing customers keep buying more parts service and new cars from you?

The most astounding fact I heard recently is that the average dealership spends 90 percent of its annual budget acquiring new customers. This leaves only 10 percent of their budget for maintaining relationships with current customers. This means for every $100,000 you spend, $90k goes to acquiring and $10k goes to keeping them happy. I’m not a math major, but is it any wonder why the average dealership loses 80 percent of its customer-service business to Jiffy Lubes and other service centers while also spending $292,010 a year trying to get new customers back?

So, the next time you sit down for a company meeting, make sure to ask your Owner, GM, GSM, SM, PM, FM, FOD and CFO* to discuss the idea of adding a RM ASAP. Who knows, maybe the boss will give you a piece of the savings for coming up with such a cost saving and loyalty boosting idea?

*GSM=General Sales Manager, SM= Service manger, PM=Parts Manager, FM=Financing Manager, FOD=Fixed Operations Director, CFO=Chief Financial Officer.

Andrew Wolfe is a managing partner at Dealer Concepts (www.dealerconcepts.com), located in Clarkston, Mich. Dealer Concepts provides innovative and timely customer retention and loyalty programs to more than 5,000 dealerships and service centers worldwide. Wolfe has worked in automotive marketing for more than 30 years. He can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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