Friday, December 7, 2012

How Much Would You Spend on Marketing to Acquire a Customer for Life?

Michael Sachs

My daughter, a junior in college, purchased her first car this summer. Actually, I purchased it and she is now more indebted than ever. Anyway, as she was packing her car to return to school I noticed one of her tires was very low on air.

Timeout: Hannah grew up in the iPod generation, where things just work until they don’t and then you simply throw them away and buy new ones. As such, she had no idea that she actually needed to look the car over every once in a while to see if everything was ok. How many others like her are out there? What’s the long-term business potential from earning their trust?

I filled up her tire and insisted that she take the car in for service as soon as possible. When she got to school, Hannah asked a friend for a recommendation and got one for a local tire store (part of the regional Kost Tire & Auto Care chain). She went to the shop, was greeted immediately and her car was in the service bay almost before she sat down in the waiting room. About a half-hour later the man who greeted her came out and showed her the nail that came out of her tire. He said the tire was all patched and she was good to go. When she asked how much she owed for the repair, the man said with a smile,”Don’t worry about it. I got you covered on this one.” Wow! My college-poor daughter was so happy – she got her car fixed and it didn’t cost her a cent (and almost no time either).

I look at this and think, “That’s one smart shop keeper.” What was he going to make on that repair - $20? Instead, he just acquired a customer for life. Actually, he probably acquired more than one customer, since she has already recommended this place to many others (just like her friend did for her).

The Bottom Line: How much do you and/or your dealers spend to acquire one new customer? It’s probably more than $20, and it’s probably not a life-long acquisition. I’d say this tire shop keeper made a brilliant marketing decision – he acquired a customer for life and it only cost him $20.

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