Customer Relationship Management: How Lexus Nails Customer Relationships
This is Part 3 in our Reverse Engineer Your Business Series (view Part 1 & Part 2).
Editor’s note: This piece was originally published in 2013. It’s been so popular that we updated it in 2020.
Visiting the Lexus dealership for routine maintenance is like taking a vacation. Friendly baristas serve up gourmet cookies and lattes as customers surf the web in a plush lounge surrounded by the latest Lexus models. When a car service will take longer than the time it takes to enjoy a muffin and mocha, they send customers off in loaner cars that happen to be the latest upgrade to what they currently drive. Lexus owners actually enjoy taking their cars into the dealership because of the service they experience outside of the garage.
So how does this help them win the sales race? And what can it teach you about fostering and managing your own customer relationships?
Lexus & Customer Service Relationship Management
The experience and interaction with the sales and service teams turns into one that customers not only tolerate, but look forward to. Rather than “having to,” we “get” to visit the dealership and drive a loaner car.
The freshly baked cookies at Lexus are sticky in a figurative way: They keep current customers coming back for more. In fact, 48% of Lexus owners return to the dealership to buy another Lexus. This is a key part of Lexus’s customer relationship management strategy:
The art of farming (keeping customers) is every bit as critical and strategic as the act of hunting for new ones.
Building Long-Term Customer Relationships
Nailing customer relationship management is key for two reasons:
- To keep current customers buying
- To turn these customers into brand evangelists who bring others into the fold
To further illustrate this point, consider the following statistics.
- The probability of selling to an existing customer is 60-70%, while the probability of selling to a new prospect is 5-20%
- Acquiring a new customer can cost 6 to 7 times more than retaining an existing customer (Source: Commonly attributed to Fred Reichheld at Bain & Co)
- Poor service quality is the number one force “pushing” customers into the arms of waiting competitors (Source: Accenture 2009 Global Consumer Satisfaction Report)
- Nearly 80% of customers rely upon word of mouth for information about service providers (Source: Accenture 2012 Customer Global Consumer Pulse Research Key Findings)
There’s a reason that sales models depict customer relationships and marketing/sales channels feeding equally into your customer segments – both are equally important. So the question is, how much do you invest in things like product development at the expense of serving the people already devoted to you? Are you hunting more than you’re farming? And is that working in your favor?
Let’s return to the dealership example to see how this plays out. Chris Sutton, senior director at J.D. Power and Associates, recently noted, “Manufacturers have made large investments in their retail programs, and dealers have made significant investments in key customer touch-points—people, improved processes and customer waiting areas—which are having a profoundly positive impact on their customers.” In other words, they are investing strategically in customer service and relationship management. According to J.D. Power and Associates, Lexus has ranked highest in customer satisfaction with dealer service among luxury brands for 5 consecutive years.
Customer Relationship Management Strategy: 4 Lessons From Lexus
So my question to you is: What are you serving up to keep your customers excited for more? Maybe you already have a lot of these principles in place, or maybe you’re looking for ways to improve. Whatever the case, here are some actionable tips gleaned from the Lexus model on how to step up your customer relationship management game.
Go Above and Beyond
Just like Lexus offers lattes and cookies, you can do something special for your customers to make the experience both memorable and enjoyable. Offering something a little extra, or unexpected, might just be the key to keeping them coming back for more.
We talk a lot about differentiation In marketing and product, but it’s applicable in customer service and relationship management, too. Do you have a differentiator for your customer care? What can you do to set yourself apart? The experience at Lexus is different than at other dealerships, and while it’s not the only reason I am a repeat customer, it’s certainly a factor.
Pay Close Attention to Current Customers
Don’t focus the majority of your attention on leads and bringing in new business. While this is important, your current customers are equally important. “Sales” doesn’t end the moment the prospect has made the purchase, and keeping your existing client base – and keeping them happy – is also an essential element to growing your business.
Cultivate an Experience
Support exceptional customer interactions and service with a positive physical atmosphere. Think about the Lexus dealership environment example from a customer relationship management perspective; not only are their staff helpful and friendly, the service waiting area is pleasant and enjoyable – desirable even. Whether you have a physical space like a dealership or storefront or a virtual space like a website, ensure the customer experience is as pleasant as the interactions that take place with your team.
As a Lexus owner who has enjoyed a muffin or two myself I can add my voice to what you have written. I also look forward to visiting the Austin Lexus dealership.
Pro tip: It’s a lot more fun when you car’s still under warranty. Trust me on this one.
Tim Hamilton says
Ha! Great point JLM, I must say I agree! Though even without a warranty, that free car wash helps to quell the sting of a hefty service fee 😉
Tim, great article. The interesting thing is First Texas Honda has bought a lot of this to a more affordable segment. I visited with their GM to learn about what they did to totally change the experience of buying a car and things like an in house cafe, interacting with the Austin music community, low stress buying process (sales people aren’t paid on total amount of sale but just the sale) came up. By the way they dug a 400′ well so they could do car washes even when there was a drought.