How customer loyalty is shaping our industry
How customer loyalty is shaping our industry

How customer loyalty is shaping our industryIn the automotive industry, just like any other, customer retention is the key to success. And for good reason – just take a look at the stats:

  • It is 5% easier to sell to existing customers rather than new customers (Marketing Metrics)
  • Attracting a new customer can cost 6-7 times more than keeping an existing one (Kiss metrics)*
  • Every car sold with a service package has nearly a 50% increase in retained margin over the customer lifetime (ICDP)

All of which makes for interesting reading, especially when you learn that many in the industry are continuing to direct their efforts on attracting new customers. But don’t forget, it’s equally important to retain the customers you already have.

Challenges for the industry

Many car dealers still rely on out-dated metrics which fail to tell the whole story of customer habits or the customer experience. You must understand your customers through data because no two customers are the same – and neither is their revenue potential.

Another challenge faced by the industry is the amount of information available to potential customers. They know a lot about your dealership long before you know anything about them. In short, your Customers know more, demand more and expect more. Dealers need to make it easy to purchase parts, book a service or arrange a test drive online.

In order to face up to challenges you can start by asking yourself these questions. How user-friendly is your website? Do you have a social media presence to build your dealership brand? And could you better use your CRM data to improve your customer service levels?

Anatomy of a loyal customer

So what transforms someone from a straight-forward customer into a loyal customer?

According to research conducted by ICDP, the answer lies in the formation of solid relationships. Although a customer may well begin their shopping experience with a loyalty to particular brand, this doesn’t necessarily mean they’ll buy the car from your dealership. Dealers still have to work hard to create great sales experience in order to win the sale.

And even after the sale, a golden opportunity exists to make sure they come back for both their aftersales care and any future new car purchases. Offer a great service every time they interact with your workshop team members and they will have very little reason to look elsewhere when it comes to their next vehicle purchase. Then these customers are no longer just brand loyal; they’re dealer loyal.

The maintaining-customer-loyalty-lesson we learn from this, of course, is that it’s vital to continue a good relationship long after the initial sale.

Car dealers – take note…

Taking control of customer loyalty

Here are four ways you can enhance the customer experience in your dealership to drive loyalty:

1 Reward Schemes:

One way we can nurture customer retention is through rewards programmes. We’re not talking about expensive flashy promotions, instead think about low-cost loyalty incentives that customers value highly. What about offering a VIP scheme with a discounted rate off their annual service and parts? Minimal cost to you, maximum perceived value for the customer.

Or, consider transforming your loyalty scheme into a mobile app to ensure you’re providing your customers with the easiest way to stay connected to your business. An app also means customers can manage their own loyalty points without the need to carry a card. And if you still need convincing, consider this: according to a survey conducted by Performance Loyalty Group, customers in auto dealer loyalty schemes visit the service department twice as often – spending twice as much money – as non-member customers.

2 Staying in touch:

As well as great customer service, customer loyalty also relies on an effective customer communication strategy throughout their journey with your dealership.

For example; your ‘aftersales care’ should focus on ‘care’ just as much as ‘sales’. Don’t forget to get in touch when their MOT or Service is due and send helpful reminders to make sure they don’t miss their appointments.

To offer the best customer experience, you need to make the most of your CRM data. This is because the better informed you are about a customer’s car history and servicing needs, the better the aftersales care you can deliver.

3 Understand your customer:

An increasing number of dealerships are actively engaging with individual customers through targeted marketing campaigns. Informed by data, these dealers can send communications based on their needs, wants or even specific events. Consider sending offers on your customers’ birthday, or offer free winter checks to check vehicle safety. Check in with an email campaign after a service to check that they’re happy and act quickly to resolve any issues if they’re not. The more you understand each and every customer, the better their loyalty will become; giving you that all important boost to your bottom line.

4 Service plans:

With a 60% retention rate, service plans are a great way to create loyal customers and they’re a win-win situation for both dealers and customers.

Your customers are busy people, so what better way to appeal to them than giving them peace of mind that their servicing needs are covered at no extra cost? Encouraging them to sign up means you receive a guaranteed regular income for the next few years and have plenty of time to deliver quality customer service that guarantees they’ll want to renew. In short, customers who purchase service plans can stay with you for years to come.

The overall lesson here is to communicate with customers, understand their needs and expectations, and use insightful data to inform your customer loyalty strategy decisions. Get this right and you’ll have nailed the main objective of any customer retention programme: keeping loyal customers for life.

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It is 5% easier to sell to existing customers rather than new customers

Improve loyalty by:

  • Introducing reward schemes
  • Staying in touch
  • Understand your customer with data
  • Implementing service plans