Every business needs customers. Unfortunately, it is becoming increasingly difficult to attract and keep them. Why is this so? What can you do about it? It was not long ago that most automotive service shops had few competitors in their local areas. Customers were mostly loyal and a good relationship between a shop and its customer was not unusual. Today, things are different. A multitude of automotive service alternatives for consumers has resulted in a tough, competitive environment.

When it comes to being competitive, one of the most powerful tools available to automotive service shops is a customer database. A database can help focus your time and money on current and good potential customers. Since the 1980s, many large corporations have worked on getting to know their customers with a marketing strategy called database marketing. Today, with the falling costs of computer hardware and software, this strategy is within reach of even the smallest automotive service shop.

For automotive service, database marketing can be defined as "the collection and use of customer information and service history to identify and target groups of customers with similar needs and facilitate an ongoing (sales) relationship with them." It is more than a trend in marketing; it is the foundation for modern marketing practice.

Database marketing identifies those people who are most likely to be interested in doing business with you. It offers you the flexibility to present distinct, targeted messages to your key prospects. And it also makes your marketing more efficient and effective while offering measurability and accountability for your efforts.

The process requires business owners to track their customers, their promotions and the shop traffic that result from the promotions. By measuring the success of each promotion, you can better refine future marketing efforts. While it takes time to collect customer-related marketing information and track promotion performance, database marketing does provide solid returns over time.

Several things are needed to start database marketing and be successful at it. Heading the list are a sufficiently powerful computer and an appropriate, easy-to-use database software. In addition to a database, word processing, spreadsheet and graphics applications will help with marketing activities and a number of purchases. Next on the list of requirements is good data. It is important that you gather and keep detailed, relevant information on customers, and their purchases and promotions. Customer contact information generally includes name, address, city, state, ZIP code, telephone and perhaps fax numbers and e-mail addresses. Each customer's preferred way to be contacted should also be noted. Additionally, information pertaining to occupation, age, gender, income, number of children, personal characteristics, lifestyle interests and length of time at a residence can be helpful, but you have to be sensitive to your customer's concerns regarding why you want such information and how you intend to use it.

A service history provides you with insights as to the type and extent of relationship you have with your customers. This information can include information such as customer account number; purchase/service dates, amounts and service/items; and payment type.

Reaping the full benefits of database marketing also requires an investment of time. Most automotive service shops should plan to commit at least two to four hours per week to gather, record and analyze data as well as to plan marketing strategies.

Finally, the drive and desire to be more successful is necessary.

Information can be gathered in a number of ways. Some will be obtained as daily sales transactions with existing customers occur, and missing information can be asked for directly. When information is requested, customers should be told that it will be used to send them more personalized offers; however, if they choose to not respond, their wishes for privacy should be respected.

When customers first call or walk in, a perfect opportunity to gather information is created. So that it is as "painless" as possible, a simple questionnaire should be developed. Perhaps a small gift could be given to all new customers who fill out the questionnaire, or a weekly or monthly drawing for a more substantial gift could be the incentive. In many cases, your point-of-sale system will facilitate the data gathering process.

While courting new customers, automotive service shops should remember that current customers are much more likely to provide the next sale than new customers. You must not forget that current customers are responsible for whatever level of success you enjoy and can contribute even more to future success.

When it comes to current customers, not all should be valued equally. It is often helpful to categorize customers according to criteria such as what services/repairs have been utilized, how much and how often they come in for service, as well as how recently they've purchased services. Then, marketing messages and their distribution method can be customized and made more appropriate for each group.

There is a simple, yet meaningful way for you to group customers: best customers, spenders, frequent customers and uncertain customers. "Best customers" are of highest value to you. Although they are relatively few, they return for service or repair more often and have higher average sales than other customers. These customers need to be rewarded and kept on target.

"Spenders" tend to be more numerous than "best customers." When compared to all other customers except the "best," they have higher average sales but do not return for service as frequently. This group needs to be encouraged to return for service more often.

"Frequent customers" spend more often than all customers except the "best," but their average purchases are less. They can be encouraged to spend more on each visit or purchase.

"Uncertain customers" have the lowest return rate and the lowest average sale. For most automotive service shops, this is the largest customer group, and it includes many new customers. Among the uncertain customers, there are those who can be encouraged to have their vehicles serviced more often, to spend more on each purchase, or both. There are also those who cannot be changed and may not merit the spending of marketing dollars.

"Best customers" are the core of most automotive service businesses, and they have earned special treatment. Relationships with them must remain strong. Replacing them can be costly - more than the cost of any database marketing promotion.

Appreciation should be shown to best customers often, and communications to them should be high quality. Ways of keeping them happy include thank you notes on the anniversary of your shop's opening, perhaps with a "dollars off next service" coupon; coupons for customer anniversaries such as when one has been loyal for six months or a year; notification and thanks when one achieves the best customer status; invitation to a special "best customers only" event, such as a holiday open house; or an across-the-board discount applicable to all purchases.

If the perks offered to "best" customers are changed frequently, perhaps quarterly, or if they are offered for only limited times, this group will constantly be made aware of your appreciation.

"Spenders" have shown that they can spend a lot of money, but they need stimulation to do so more frequently. With some encouragement, many will become "best customers." Communications with "spenders" must protect the established relationship while increasing the frequency of their purchases.

Monetary incentives, special offers and thank you notes with discount coupons often drive repeat sales. A punch card program or "frequent buyer's club" that provides discounted or free merchandise after a specified number of purchases can be effective. Natural cycles, like holidays and seasons, can be used in marketing messages to encourage repeat sales.

"Frequent customers" are notable for the number of their purchases, not for the average value of those purchases. They represent a loyal, solid base of customers who keep cash flowing, and they have shown that they trust a particular business by their purchase frequency.

Marketing messages to "frequent customers" should focus on increasing their average purchase while maintaining their regular visits. Since they spend often, even a small increase in purchase amount could add up to significant sales increases.

Specially targeted discounts can be used to encourage larger purchases. For example, a automotive service shop might send a coupon for 10 percent off any purchase over $30 to customers whose average purchase is $20.

Automotive service shops can also "up sell" - encourage "frequent customers" to make larger purchases of the items they're already buying, promote higher quality or more expensive items, or introduce them to new products or services.

Cross-selling - offering complementary and companion items and services to those already purchased - can also achieve the same goal. If it is felt that frequent customers have reached their purchasing limits, you can use them to attract new customers in the form of referrals.

Some "uncertain customers" have the potential to become better customers - others do not. Try to choose those who resemble your "best customers" whether in demographics (age, income, gender, etc.) or in terms of purchasing.

Automotive service shops may feel that these customers do not have significant potential, or that the shop's marketing budget is too limited. On the other hand, shops may decide that their "uncertain customers" have strong potential and represent too many people and purchases to ignore. If the decision is made to market to the "uncertain customers," shops will have to decide which ones will receive communications. Two promising types of "uncertain customers" are new customers and long-term customers who were once more valuable.

The marketing messages to new customers might be as simple as thank you notes with special promotions and an invitation to return to the shop. New customers' importance should be emphasized.

"Uncertain customers" who have been important customers in the past have the potential to become good customers again. However, the length of time they have been in the "uncertain customer" category affects their potential. One who has been in the "uncertain" category for two months has a higher potential than someone who has been in the category for a year or more.

Successful database marketing is the result of regular attention, care and consistency. It is an ongoing process through which success is achieved over time by a cycle of repeated learning, action and measurement. Database marketing transforms marketing from art into more of a science, and therefore, provides the greatest opportunity for you to market better.

Jim Miller is a communications representative for TargetSmart Inc., in Denver, Colo., that provides products and services for local marketing efforts for small businesses.

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