Maximizing the usage of the telephone

There is a restyling shop we enjoy visiting on a regular basis to see what is new in the industry. With a recent visit, we observed one employee who was on the phone the entire time we were in their shop. While all of the customers were being taken care of by other employees, we thought it odd, and asked the shop owner about this. "He's hard at work bringing back some old customers", was the answer the owner gave.

"Where had they gone?", was our question, and "How do you know they are gone?" The owner of the shop explained they had made a point of tracking every customer they had ever had the opportunity of servicing. Whether they had installed an audio system, done a custom trim job, or any of their other services, each customer was tracked by their name, as well as the make and model of the car.

Their system was so complete that when a customer came into the shop and the car was not the same as what was on file, the sales and installation people were trained to ask the customer what happened to the old car. If the customer had sold their car to another individual, the shop made an effort to contact the new owner so as to be able to provide information about the products they had installed, as well as information about the services the shop provided.

Again, with each customer, a file was created. Every customer had been tracked by the product, date, and price paid. "But where does the phone come into play?", we asked. "Every month, we have the computer print a list of files which have been inactive for at least six months. The report gives us all of the information we have tracked and from there we go looking for the missing customers."

We now knew how the shop created this list, but the curiosity remained as we wondered why they would want to know this. The shop owner told us he had studied ways to reduce costs. In an article he had read, there was a quote from John Wanamaker, a famous department store owner. Wanamaker said he knew half of his advertising did not work; he just didn't know which half it was. What caught this shop owner's attention was in studying industry reports giving the averages for businesses, he found advertising was an expense that as a percentage of sales was often equal to the net profits of the business. A second report that caught his attention said the cost of obtaining a new customer was approximately $20. Yet to retain a current customer, the cost was only $4.

Looking back at Wanamaker's statement and the industry average financial statement, the idea of retaining customers seemed to be a lot more affordable and profitable than looking for new customers. He then took the time to look at the files of customers who frequented his shop, and noted most were having something done to their car at least once every six months. The logical question in his mind was to ask where had these customers who had not been in his shop gone? To answer the question, he created a stack of names and phone numbers and began to call the customers. The list of questions asked went through several changes before he got to a sequence that seemed to work best. The surprise in the process was when he found out he was not the best person to be asking these questions.

He found this out as he had an infrequent call in which the customer seemed to be hesitant to answer his questions. He would then ask his installers if they could shed any light on what had transpired in the customer's last visit to the shop. These hesitant to answer customers were most frequently the customers who had been unhappy with the product or service in the shop. This is where the shop owner got the idea of having someone else ask the questions. And from this experience, he developed the technique of bringing back old customers.

The newest person in the shop was given a list of 100 names. In the period of 10 days, all 100 customers were to be contacted. The phone script went something like, "Hello, Don Blair? This is Danny Lyons, calling from Cox's Custom Cars. I am the new sales person here at Cox's and as I was looking at our files to see who our customers were, I noticed we had had the opportunity of doing (describe the last job performed) on your car last February. Do you still have that car, and how did that work out for you?" And Danny then listens to hear what the customer has to say. Danny then says, "I also note you have not been back in the shop since then. We have gotten some really sharp new accessories in since then, and I would welcome the opportunity to show them to you."

If there was any problem with the previous transaction, it is at this point the customer will usually express their unhappiness. Again, Danny listens, takes notes, and then says, "Well, I would really like to have the opportunity to earn your business back. Do you think we could do that?" Of the 100 customers Danny called within two weeks, a complaint was heard only twice. Not every time the unhappy customer was identified were Danny and the shop owner able to make the customer happy again. But Cox's Custom Cars had done what the majority of shops fail to do: attempt to gain the customer back.

Why go to all this trouble to find two unhappy customers? Actually, it is not just for these two customers. What is the surprising part of this attempt to have customers return is that approximately 16 of those 100 will actually show up in the shop within the next two weeks. They will have told Danny Lyons, as do the majority of the 100 customers called, they had not needed anything of late.

But, these 16 will show up because the thought of shopping again with Cox's has been planted. The cost of this unique effort is minimal. The results are tremendous; especially if you think about the alternatives. If you were to utilize a newspaper ad, you would be thrilled with even a 3% response. And the 3% may only look, instead of buying from you. But this group of sixteen are already strong candidates to buy, as they have frequented the business in the past.

We may not have solved the problem of determining which half of the advertising works, but we have surely demonstrated a method of prospecting for customers that will work for you, too. John Wanamaker would be proud.