Although dealerships and OEMs typically think of loyalty as promoting frequent buyer programs, service contracts and maintenance plans, the topic of loyalty is actually much wider and more complex than you might initially think. In order to understand how loyalty can be nurtured and utilised, we must first understand the different types of loyalty a customer can display. Customer loyalty can be divided into two main categories: behavioural loyalty and attitudinal loyalty.
The behaviourally loyal customer buys from the same place regularly; whereas the attitudinally loyal customer spreads the word about how great a product or service is or simply feels positive about a brand. This is simple in theory, but in reality, consumers usually exhibit a mix of both behavioural and attitudinal loyalty attributes.
Interestingly, the greatest benefit to the dealer is considered to come from the customer exhibiting attitudinal loyalty i.e. those providing positive references of the dealership to friends and family, resulting in increased sales. In general, between 80-90% of positive referrals come from your highest-value, most loyal customers (ICDP: Value of Customer Loyalty), and these positive referrals are not to be underestimated. Whether they come about through word-of-mouth, appear on your website or are shared via social media, referrals have the power to significantly affect your dealership. For example, over 50% of car shoppers stated that positive comments on social media would make them more likely to buy a specific brand. (Cap Gemini: Cars Online 2014)
However, it is important to be aware that effective reputation management is an essential consideration in order to reap the benefits of referrals. Research has shown that customer service on social media, such as replying to customer inquiries and handling complaints, is the interaction most valued by customers. Quick responses and quality answers are expected and if a dealer does not meet these criteria, satisfaction is likely to wane and customers are likely to look elsewhere.
Behavioural loyalty can be seen as critically important for a dealership – customers that are behaviourally loyal are buying which is ultimately the bottom line for increasing revenue.
In general, most other economic value benefits to a dealership come from behavioural loyalty. These include:
It’s worth noting that if a behaviourally loyal customer is not also displaying attitudinal loyalty, they might well be easily enticed to shop elsewhere by competitors or affect a business through negative referrals.
Nurturing a customer once they have purchased a car from you is vital. The level of service they experience from you will be a deciding factor in their decision to return to you for aftersales. The challenge is in maintaining loyalty from those customers who are already loyal, whilst also enticing the non-loyal customers to become an integral part of your customer base.
Within the spectrum of services you can offer your customer base, think critically towards the real benefit led approaches. ‘Premium’ services can be a great way to look after your loyal customers. The idea of receiving above and beyond treatment with services such as fast lanes and loyalty point schemes keeps a customer loyal to you and coming back to you for the services they require.
You also need to establish the best routes of communication and the method in which you deliver that communication to your customers. You could offer customer-centric communication, personalised products and service throughout the customer lifecycle in order to drive them back to your dealership. The type of communication, product or service offered should be tailored to where the consumer sits within the buying cycle and appeal to both attitudinal and behavioural loyalty personality types.
When it comes to the less ‘sticky’ customers, service plans can be particularly useful. Sales of service plans need to be incentivised and high quality training is required to enable salespeople to properly explain the benefits and potential cost savings to the customer. Service plans can also come as bundles with other products such as insurance and warranty.
Loyalty poses challenges for both OEMs and dealerships in today’s landscape. With vehicles requiring less repair and maintenance operations and the vehicle parc ageing, it is becoming increasingly difficult to retain customers. Furthermore, consumers are performing ever more research online for both vehicle purchase and parts/service, resulting in fewer visits to the dealership.
It’s imperative that customers remain the centre focus for all your operations. The moment customer satisfaction drops, so too do your levels of loyalty…and the figures reflected on your bottom line.