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Case Study: How an Automotive Dealership Used Voice Marketing to Supplement Sales, Boost Customer Retention

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Company: Mike Miller Hyundai
Contact: Russell Herman, Service Manager
Location: Peoria, IL
Industry: Automotive, B2C
Annual revenue: Confidential
Number of employees: 50

Quick Read

While automotive dealerships across the country struggle to remain in business, to get through the current economic downturn Mike Miller Hyundai has focused on customers who have already bought cars from the dealership.

Using Vontoo technology, the dealership routinely sends out voice messages that remind customers of overdue services such as oil changes and maintenance checks, at a fraction of the cost of direct mail.

As a result, its service bays have been filled 20% above capacity on average, and customer retention is up to around 52%, 13 percentage points higher than the national average for Hyundai dealerships.


Challenge

Located in Peoria, IL, Mike Miller Hyundai is a small automotive dealership that, especially in this economy, relies as much on customers in need of tune-ups, oil changes, and other automotive services as it does on new car sales.

In 2007, the dealership's service manager, Russell Herman, noticed that although he was spending some $2,000 per month on direct mail campaigns, his service bays were seeing fewer and fewer customers, making direct mail an expensive endeavor.

"I wanted to find a way to reach customers in a more cost-effective manner," he recalled.

Campaign

Herman decided to pursue voice marketing, signing on with Indianapolis-based Vontoo, Inc. in November 2007 because its program appeared to be both quick and easy to use and was available on a "pay as you go" basis, whereas its competitors required lengthy contracts up front. That was a key consideration for Herman, who wanted to test and measure customer response before making any commitments.

Herman began by testing the program on customers due for oil changes and maintenance checks. He also used it for appointment reminders the day before a customer was due to come in. He recorded polite reminders, which he then saved and reused as needed, sparing him additional time.

Next, Herman incorporated follow-up messaging directed at non-respondents. If the dealership did not hear from a customer within 30 days of the first reminder, for example, another message was sent, and again 30 days after that, if the customer still did not respond. On the fourth reminder, Herman added a $5 discount to the message; 30 days later, the discount was increased to $10.

"We wanted to remind them, but we also wanted to hook people who were temped to go somewhere else," said Herman. "So we gradually upped the offer until it was so compelling that they'd come in."

Results

Herman reports that inbound calls to the service shop increase 30-40% almost instantly every time a bulk voice message is sent out.

"The phones ring off of wall, literally within an hour, and ring consistently," he said. "Reception notices, and our service staff notice. There's an immediate response every single time."

In fact, since initiating the voice-marketing program, Mike Miller Hyundai has been receiving more business than it can handle, with service-bay capacity filled 120%. The company now services approximately 1,500 cars a month—high for a dealership of its size.

Meanwhile, another dealer down the road from Mike Miller is quoted as saying this is the slowest his business has been in 26 years. "Most shops struggled through summer," said Herman. "We've been consistently booked a week and a half out since April."

The program has also proven effective for customer retention, which now averages 52% for Mike Miller, compared to a nationwide average of 39% for Hyundai dealerships. "While most dealerships struggle to maintain one-third of their customers, I'm seeing more than half return. That's good business," said Herman.

Furthermore, of the thousands of calls Herman has sent out, only 10 customers have opted out.

In Herman's experience with Mike Miller Hyundai, no other marketing campaign has performed as successfully, and he is finding new ways to use the program to the dealership's advantage.

For example, he has begun using it for manufacturer recalls, for follow-up calls to ensure services are being performed to satisfaction, and to wish customers a happy birthday or merry Christmas.

"We want to show our customers we appreciate them and value their business," said Herman, "and by ensuring loyalty among these existing customers, we can maintain sales despite selling fewer cars due to the economic downturn."

Herman says he also plans to use the program for alternate services that are in decline, as soon as the shop is in a position to handle more volume.

Lessons Learned

  • Retention is about communicating with people. "It doesn't have to be fancy—just a 'hey, we're here, we're thinking about you, and we think your car might be due,'" Herman explained.
  • Voice marketing is a highly cost-efficient alternative to direct mail. "It's so expensive to communicate via direct mail. Email is free, but most dealership email databases are only 20% complete. Phone numbers we have, and this works incredibly well," said Herman. "For the same cost as direct mail, I can contact the same customer 6 or 7 times with different messages, if I want; other forms [of marketing] we've used are too cost-prohibitive to do that."
  • Repetition is key. "Putting our name out there every two to three months keeps them aware that we're here.... It isn't rocket science, or any new marketing or sales revelation. It's consistency and repetition, getting the message out at the right time and being able to afford to do it," said Herman. "I'm going to be the guy reminding them at the right place and at the right time."

(If you've recently given your marketing strategy a "tune-up" and would like to share the results, we'd love to hear them. Email CaseStudies@MarketingProfs.com.)

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Kimberly Smith is a staff writer for MarketingProfs. Reach her via kims@marketingprofs.com.

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