How A $35 Oil Change Jeopardized A $1,000,000 Customer.

A tidy definition of brand loyalty is, “Supporting a business when there are less expensive and more convenient alternatives.” As a manufacturer or supplier you want to believe that you’re doing the right things to foster loyalty. In essence, loyalty expressed is repeat business. There are scores of ways to inspire loyalty and carelessness with it knows no bounds. Being reckless with loyalty is expensive.

My loyalty got tested this week. I sat on this for a few days thinking my frustration was misdirected and might subside. Nope. Continuing to analyze the situation has simply widened the view of how so many businesses so willingly cast off customers. This particular case is about a $35 oil change that may jeopardize potentially over $1,000,000 in sales. Here’s how.

I like Chevrolet Suburbans. Their versatility is hard to match. They pull boats easily and haul dogs, people, bikes and gear with aplomb, like a ballerina with a wheel barrow. Between personal, family and work I’ve had a hand in buying about 20 of them. At a conservative price of about $60,000 each that’s a sales total of $1,200,000.

The one I drive now came from a large Minneapolis dealer about 25 minutes from where I live. When I call for service work this dealer has been attentive and reasonable with costs. This particular vehicle has over 90,000 miles on it and the dealer has done all of the service work since day one. I feel vested in that dealership and have taken the time to give them high marks on emailed and call surveys. When I have car questions or consider new cars, they’re my first call. You could say the level of my loyalty is on par with the aspirations I have for the loyalty I’d like my customers to have with my products. But that got derailed last week when they quoted me $75 for an oil change, double the normal amount I’d been paying for the same level of service.

Probing more, the service rep confirmed he had my service records in front him including about 16 oil changes they performed at prices close to $35. His indifferent attitude left me with the options of scheduling the appointment at the new price or move on. Armed with the knowledge that there are two closer Chevrolet dealers and a swarm of oil change operators within minutes of where I live offering lower prices, I chose to move on.

To some degree, that decision was liberating. My evaporated loyalty freed me up for guiltless shopping. This examination is not about oil changes or their price. And you’d be correct in pointing out that this Chevrolet dealer doesn’t owe me anything or have any obligation to offer me any special price considerations.

However, I do see them spending huge advertising sums in multiple channels to sell vehicles. Apparently they’re looking to match customers with vehicles for sale! Finding such buyers is magnitudes easier from the pool of existing customers than converting new customers as repeatedly confirmed by the thick repository of research on the subject. Check out these statistics on the value of a loyal customer:

• Loyal customers are worth up to 10 times more than their first purchase.
• 80% of future profits most likely come from 20% of existing customers.
• A 5% increase in customer retention can increase profits by more than 25%.
• The average conversion rate from promotions sent to new customers is less than 1%.
• It is 7 times more expensive to acquire a new customer than to keep a current one.

That’s quite compelling evidence as to why anyone selling anything should reconsider how their existing customer base is shown the love, or not. In my particular case, I can’t wait until the new Suburbans come out in a few months. I’m going to buy one. And in the next 20 years it’s possible that I have a hand in buying 10–20 more Suburbans. At today’s prices, that’s easily over $1,000,000 in sales and where I spend it is now up for grabs.

My oil change situation could have had a vastly different outcome. One where the loyalty is preserved and didn’t risk losing a potential $1,000,000 customer. The service writer could have just as easily said, “Hey Mark, nice to see you again. I hear you and understand you’re cringing at a $75 oil change when you’ve been paying half that. I also see your Suburban is nearing 100,000 miles, can I get a salesman to show you the new models and talk trades? In the meantime since you’ve been a loyal customer how about I give you one of our internal discounts again for $15 off?”

Loyalty is less about a number than it is gratitude. When the attitude is, “Take it or leave it” or “We’re so busy we don’t care,” then the absence of a loyal pool of customers shouldn’t be a surprise.

Here’s a summation. Loyalty can be fleeting; Loyalty is measured constantly; Loyalty is the expression of feeling vested, the reciprocal is appreciation.

Thankfully, loyalty is easy to foster. Remember, it’s not about numbers. Loyalty is pure emotion, it’s about how your customers feel. Here’s the formula for building deep loyalty:

• Understand that your customers have choices. If you want repeat business, perceive that every customer touch point is weighed, and that exchange for loyalty is gratitude.
• Express appreciation by providing incentives to return for more business, the measure of loyalty.
• Create value for becoming a repeat customer through status, recognition or preferred treatment.

I am a believer in the Zenness of, “What happens to you, happens for you.” Maybe I’m being shown that it’s time for me to explore new opportunities. Simultaneously, sharing that process gives me a chance to vent and review with you the importance of loyalty, the significance of preserving it and how to win it.