Monday, September 16, 2013

How Pohanka Chevrolet of Chantilly VA Lost 4-5 Car Sales - A Customer Retention #Fail

This brief story is a perfect "penny wise, pound foolish" example of how NOT to treat customers in the new economy.

A large family, with a long history of Chevy purchases including a Cavalier, Blazer, Tahoe and 2 Suburbans faces an engine failure on the most recent, a 2008 LTZ. The diagnosis from Pohanka Chevrolet is a quick (i.e. un-motivated) $4K for engine repair, or $7K for new engine - therefore it makes sense to the family to seek a trade-in and get a new, pre-owned Suburban. Blue-book valuation on the 2008 Suburban is anywhere from $18K to $24K - with a good engine. The trade-in offer is an absurd $8K. No deal, no negotiating, no interest in true customer service - despite the fact that the family is also ready to immediately buy a Suburban in inventory, that's already aged a month in the parking lot.

In the moment, it seems penny wise for the dealer to stand firm on the trade-in, as the wholesale market is pretty stingy, particularly for a car needing full engine repair. However, what was truly lost as the family exited the dealership (never to return), was:

-Sale of a 2013 pre-owned Suburban, about $35K
-Sale to auction of an engine-less 2008 LTZ Suburban (maybe just a few K value)
-Sale of ANOTHER, 2nd Suburban (likely another $40K), given the family's other 2002 Suburban (190K miles) was rapidly declining
-Sale of ANOTHER used Tahoe (likely another $30K), intended for the recently-licensed new driver in the family

In fact, this was the 2nd time the family walked away from this Chantilly Chevy dealer, when a 2010 sale could not also be negotiated (and wound up getting a great deal from Sport Chevrolet of Silver Spring).

Therefore 5 sales were actually lost, plus now all future sales and service (thousands of dollars already, to date), plus significant negative review and feedback to other potential consumers, neighbors, etc.

Not a very wise strategy, in this economy, as it turns out. It's not a rip-off story - it's a simple lack of interest in long-term customer retention, and lack of understanding of the new client-centric retail economy.

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