Have you ever heard about The $517,000 customer? It comes from Carl Sewell’s iconic book Customers for Life. In it, he teaches a simple credo, “Find out what customers want…and give it to ‘em.” He says that each person who walks through your door (virtually or in real life) represents $517,000 in potential business revenue over his or her lifetime. That book was published in 1990.
Is there a payoff in treating customers with respect? You bet. In the long run, you’ll do more business because when you take care of your customers they don’t forget you.
The $517,000 customer explained.
How much could a person spend with you in the course of a lifetime? Mr. Sewell’s calculation goes like this: If cars are $35K apiece, 12 would cost $420,000. when you add service for those vehicles, that’s $517,000.
Today’s average new car price is right around $49,000, so 12 would cost $588,000. Add service on top of that and each customer you meet is a $700,000 customer! Is it worth it to take care of your customers and their problems? You bet.
No matter what business you’re in or what you sell, do your own calculation. It’s quite a powerful tool to use when thinking about how you treat each customer.
How does your business attract and retain the $517,000 customer?
Poor management, failed leadership, workforce apathy, and lack of consistent training are just some of the reasons why companies lose customers.
Every single person at every dealership is having to adapt to the new reality. Remaining inactive in the face of significant change is a sure path to distress and unprofitability. As margins decline, inventories shrink and markets soften, it’s even more crucial to scrutinize dealership performance more closely.
An integral analysis component is to examine outdated behaviors and processes that impede performance – and replace them with an updated, holistic approach to “digital” operations.
As someone who spent most of her career managing large, successful car dealerships, I recognize there are facts that were in place long before the pandemic:
Fact #1: Consumers lack trust in car dealers.
Fact #2: The predator/prey mentality is still alive and well.
Fact #3: Until dealers reconcile Fact #1 and Fact #2, consumers will continue to disengage.
The pressures on the dealership business model today are abundant. Retailers must evolve and adapt to changing consumer expectations. This was true before the pandemic and is even truer today as we move beyond it.
Treating customers with dignity and respect is just good business. Even if you don’t care about being nice to people, studies have proven over and over again that when customers leave happy, they tell their friends. When they feel respected, they’ll be back to buy again. Isn’t the point of business to be more profitable?
The opposite of those scenarios is happening more often today, not less. Where this behavior will lead the industry given the cataclysmic disruption we’re witnessing is anyone’s guess but it doesn’t take a genius to see it probably isn’t good.
I challenge you to look inward and determine what you need to do in order to attract and retain the $517,000 customer.
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