I’ve recently heard you speak on increasing the value of my average customer; what are some ways to do that?

Tory Hornsby | 09/15/2016



Dealers who aren’t focused on increasing the value of their customers are leaving themselves extremely vulnerable. The cost and difficulty of acquiring a new customer is tremendously higher than it is to increase the value of an existing customer.  Putting an emphasis on increasing customer value cannot only lead to big dollars in gross profits, but also much higher net profits too. That’s why we’ve often called a customer database, “the hidden gold buried in your dealership.”

Before you can improve something, however, you have to know what it is and where you stand. This principle is actually the second of the five Core Values we live by here at Powersports Marketing.

  1. Personal Accountability and Responsibility

  2. W.G.M.G.D. – What Gets Measured Gets Done

  3. ATTITUDE = 100%

  4. Commitment to Teamwork and Systems

  5. Dedication to Continual Improvement in Business and Life

If you’re not measuring, you’re not improving. How do you measure the average value of a customer? Usually it’s done annually. So, simply divide your total sales in a 12-month period by the number of active customers you had in that same 12-month period. If over the last 12-months you’re at $5,000,000 in total sales and you’ve had 2,200 active customers in that same period, your annual customer value is $2,272.

Once you know that number, your attention must focus on how to improve it. Here are 4 specific ways to maximize your customer value:


1. Don’t do as much discounting. You don’t have to offer a discount to make a sale. Hobbyists/enthusiasts almost always spend more money on their hobby than anything else in their life. Instead, focus on improving your marketing (to increase store visits), customer service (to build loyalty to your dealership), and selling skills (including handling objections) in every department. Don’t just focus your training efforts on the Sales Department; include PG&A and Service as well. Continual selling skills training goes a long way. 


Keep in mind that a lack of training will always equal low margins. The easiest way to close the sale is by discounting. The sale happens when value exceeds price. Rookie and un-trained salespeople will over-use the discount tactic and lower price instead of raising value. While I understand that you have to discount at times, it does not need to be the primary way you win a sale.


2. Increase the size of your transactions. Upsell. Look for related add-ons every single time. A customer buying one piece of apparel will often buy something else when value is built and they’re asked to buy. Helmets lead to a better visor or a jacket.  Jackets lead to gloves. Oil and filter lead to a drain plug washer and a can of brake cleaner and spray polish.


If you can get $10 more per visit from a customer who does 10 transactions per year, that’s $100. Over 5-years that’s and additional $500 from one customer. Done with 500 customers, it’s an additional $250,000. Done with 2,500 customers, an extra $1,250,000.


3. Put a fence around your herd. Customers are only as loyal to you as you are good at marketing to them. When not marketed to, they develop a sense of apathy. Like cattle wander from pasture to pasture, customers will wander from your dealership to the competition. Back to you, back to them. Your marketing must build loyalty and increase the number of times they visit you every year instead of the competition. Marketing guru, Dan Kennedy, often writes on how Direct Response Marketing is the proverbial ‘fence’ that keeps customers in your pasture.  It also immunizes your customers from competitor’s offers.


Every dealership also has thousands of in-active customers (they haven’t done business with you in more than 1 year). Good marketing will reactivate lost customers and increase their frequency of visits as well.


4. Come to our Marketing Boot Camp. We will be diving into this subject much deeper than I can in this article. According to past attendees, you’ll walk away with the equivalent of a “Master’s Degree in Marketing Your Dealership.”  Join us in Atlanta, Monday, October 24th through Wednesday, October 26th. Enroll at Better hurry though… space is limited.


Dealers who aren’t learning new marketing trends, or who aren’t focused on increasing the value of their customers are leaving big money on the table. You’re also leaving yourself highly vulnerable to the ever-changing market/economy. Reserve your spot for our Fall Marketing Boot Camp now… you’ll be glad you did, or we’ll refund your money.  Hope to see you there.

- Tory