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How Valuable is Your Reputation?

—January 05, 2014
How Valuable is Your Reputation?

By Bryan Doyle, Product Manager, Customer Experience, Mitchell Auto Physical Damage

Unless you are running the only shop in town, you likely face some form of competition for customers. But just how valuable are loyal customers and how does a business in a competitive market inspire loyalty? These are questions facing every manager in just about every industry. While the importance of customer loyalty is obvious in industries such as soft drinks, coffee or even cellphones, the benefits of customer loyalty in the auto-repair industry may be less apparent, but it is just as important.

So how do you inspire loyalty in your customer base? And how do you even measure and monitor what customers are saying about their experience with your shop? There are three little words that go a long way in gauging customer loyalty: Net Promoter Score (NPS). The Net Promoter Score was developed by Fred Reichheld of Bain & Company. It’s based on a single question: "How likely is it that you would recommend this company to a friend or family member?"

Using a 0–10 scale on customer surveys, customers are identified as Promoters (9 and 10), Passives (7 and 8) or Detractors (0 to 6). The score is calculated by subtracting the negative responses (detractors) from the positive ones (promoters). The higher your shop’s NPS score, the more "promoters" you have.

Can you increase customer loyalty?

A few years back our group did an analysis of AutocheX1 phone survey respondents. We identified four drivers of customer loyalty in the collision repair sector:

  1. Being kept informed
  2. On-time delivery
  3. Shop service
  4. Shop quality

Our analysis revealed that "being kept informed" had the largest correlation to whether or not a customer was willing to refer the shop to a friend or family member. This very simple, incredibly valuable concept can often be overlooked in the repair process. Customers in one of our largest programs who felt they were kept informed throughout the repair, when asked if they would refer the shop had scores 75 percent higher than those who indicated they were not kept informed. So if you’re looking for a simple solution to flip this problem into a benefit for your shop, keeping customers informed is your key to building loyal customers and turning them into your shop’s brand promoters.

This research, coupled with feedback from our shop customers, led us to develop our new product: Reputation Manager. Reputation Manager is a suite of products that provides users the tools to manage their online brands, gain business insight from customer survey data and keep customers informed during a repair via email or text messages.

Surveying customers is the first step in monitoring and understanding customer loyalty. Keeping customers informed is the secret sauce for building loyal customers. Reputation Manager automates the surveying and updating process and the delivery of a streamlined experience to your employees and customers. The next step in tracking customer loyalty is monitoring what people are saying about you online. As the Internet continues to evolve, so has the way information and opinions are shared. Social media has gone from a buzzword to a widespread form of influential communication. As consumers pay more and more attention to what others are saying online, opportunities are created for businesses to market their brands, but new risks also appear. Social media and online communities are new channels which businesses need to monitor closely and frequently to protect their brands.

So why would auto body shops even care about online reviews? Research performed by Michael Luca, a professor at the Harvard Business School, has revealed that an increase of just a single star on a review site can lead to a 5 to 9 percent increase in revenue.2 This is a huge economic incentive for independent businesses to actively manage their online reputations, or at the very least, monitor any negative reviews or comments.

At Mitchell we are continuously evolving our products to provide our clients with new ways to keep track of what people are saying about their businesses. This is where the second part of Reputation Manager comes in. It provides users with social media monitoring and text analytic tools to manage their online brands and gain business insight from customer reviews and social media comments. Through the use of these tools, Reputation Manager provides the data necessary to understand the potential of your business and attain the customer loyalty essential to growing your bottom line.

1 AutocheX is Mitchell’s Customer Satisfaction Indexing service.
2 Harvard Business School Harvard Magazine

Published in the Industry Trends Report, Auto Physical Damage Edition, Q1 2014

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