If you are looking to take your dealership to the next level, then you will want to expand your profit per customer and lower your marketing costs. The good news is that you can accomplish both by simply retaining the customers that you already have. In this article, we’ll give top dealership customer retention strategies.
Customer loyalty and customer retention is the foundation for all dealership operations. Why sell five vehicles to five different people when you can sell five vehicles to one customer? Here, we will take a look at some of the proven dealership customer retention strategies being implemented by the most successful dealerships.
Interesting facts about auto dealership customers
Before we get started on customer retention strategies, here are some eye-opening facts that will help give you insight into how to identify and manage customers.
1. Consumers are more loyal to their vehicle brand as they age
As customers get older, they get “set in their ways” on what brands they trust. Therefore, if you have an older customer on your roster, then they are more likely to buy their next vehicle from you. Treat that customer like gold.
Here is a look at the customer retention rate by age range:
|Age range||Loyalty rate|
2. 62% of customers stop doing business with a company because of poor customer service
You probably remember the times that you have had a bad customer experience. Well, according to the data, 62% of customers who have had a bad experience, will stop doing business with a company. That is why damage control is so important.
3. It cost 7 times more to sell to a new customer versus a returning customer
You probably already know that it costs much more to get a new customer than sell to a current customer. You may be surprised that the cost difference is about 700%. That’s why it is so important to focus on existing customers and improve your dealership customer retention strategies.
4. A 5% increase in customer retention can result in 25% increased profits
Just to show how important it is to look at customer retention, a simple 5% increase in your customer retention can increase your profits by 25%. Therefore, it is worth the time investment to focus on the customer satisfaction of your current customer base.
5. Customers who service their vehicle regularly – at your dealership – are 86 times more likely to purchase their next vehicle from you
The service department is an excellent source of revenue for your dealership. However, your service center is also a great way to keep your customers coming back for more vehicle purchases and leases.
In fact, customers who have their vehicle serviced regularly at a dealership are 86 times more likely to buy from that same dealership. That’s something to keep in mind when creating incentives to get customers coming in for regular service.
Dealership customer retention strategies
Now that we have established how important it is to keep existing customers coming back, let’s take a look at the top 10 proven strategies that can increase customer retention, expand profits and lead to a more lucrative dealership business.
1. Encourage regular maintenance appointments
As we discussed before, having your customers visit the service center – on a regular basis – greatly increases their chance of making a purchase or lease in the future. Therefore, you will want to make every effort to convince customers to get regular service at your dealership. Here are some ways you can make that happen:
Make use of automated service reminders – You can utilize text messaging and e-mail campaigns to remind customers to have regular service performed on their vehicles. By automating the process, you can ensure that every one of your customers is notified. This will help boost the number of regular visits to your service center.
Allow for after-hours appointment scheduling – Data shows that 22% of people will schedule service center appointments after-hours. Within that data, there is a bias towards younger drivers who will schedule their service center appointments when your dealership is closed. Make sure your website and phone system allows for after-hours appointment scheduling.
Offer service specials – As stated before, regular service center visits leads to an 86 times more likely hood of a repeat purchase. Therefore, it may be smart to offer discounts on service center visits.
Educate your customers on the importance of regular scheduling – Many vehicle owners tend to put off regular maintenance thinking that it is not important. Be sure to create social media posts, blog articles, and direct mail campaigns that stress the importance of regular maintenance and the costs of not properly maintaining a vehicle.
2. Send non-business messages to your client list
Business is all about relationships. You have to mix up your dealership customer retention strategies. Therefore, you want to do more than simply communicate with your customers through marketing messages. In fact, you’ll want to stay in touch with your customers in the same way that you do with friends and family. The great news is that offering these regular communications can be automated and done at very little cost. Here are some great non-business communications that you can text, e-mail, or physically mail to your clients:
Birthdays – Who doesn’t like to get well wishes on their birthday? Chances are that you have your customers’ birthday on file. You can send your customers an email and text wishing them a happy birthday. For your high-value clients, it would be worth the investment to mail them a birthday card.
Anniversaries – Do you have a client that is celebrating an anniversary? This is another great way to reach out to them.
Holidays – During the holiday season, you can also send out cards and well wishes.
Community events – Does your city have a specific festival or event? Perhaps the local college or professional team is competing for a championship. Communicating about any local event can help endear you to your customers.
3. Over-respond to poor customer service experiences
As stated before, 62% of customers will break off a relationship with a business after poor customer service. Therefore, when you get a complaint from a customer, then this should be an “all hands on deck situation.” You will want to go out of your way to make sure that the customer feels that the matter has been resolved. Here are some steps that you can take to deal with a poor customer service situation:
Have someone senior at the dealership directly correspond with the customer – Customers want to know that their complaint or issue is being dealt with by someone who can take decisive action.
Make sure that the complaint is solved as soon as possible – People tend to be emotional when they are upset. You can quickly get that person’s emotions in check with a quick response.
After the complaint has been resolved, follow-up – After the complaint has been resolved, the customer may still have some negative perceptions about your dealership. Be sure to follow up to see if there is anything that you can do to make them happy.
4. Curate your dealership’s reputation
With online reviews and social media, it is very easy for a potential customer to gauge the reputation of your company. Therefore, it is important that these online reviews and social media messages are constantly curated to ensure that the dealership’s reputation is seen in the best possible light.
Here are some steps that can help curate the dealership’s reputation:
Respond to every negative social media posting – Make sure your dealership’s social media manager monitors every mention of your dealership and responds to every negative comment in a professional manner.
Challenge hostile reviews or “review bombing” – There are cases where certain individuals may try to inundated review sites with multiple negative reviews of your dealership. Be sure to contact the review site and have these reviews removed as soon as possible.
Hire an online reputation manager – There are companies that offer online reputation management. This service may be valuable to your dealership if you have a large social media presence.
5. Sell a car with a service package
The key to expanding dealership profits is getting the most revenue from a customer. Therefore, it’s a good idea to sell a service package to existing customers. Data show that service packages can lead to a 50% higher retained margin over a customer lifetime. Cross-selling improves margins and profitability.
Now customers are usually resistant to upsells, therefore you have to sell the value of a service package. Here are some ways that you can get customers to pull the trigger on a service package:
Discuss how regular service can maintain the value of the vehicle – You can imply that regular service will allow the vehicle to be more desirable when it comes to selling or trade-in the vehicle.
Stress the importance of regular maintenance – Remind the customer that regular service can maintain the performance of their vehicle.
Show that buying a service package is an affordable choice – Your service package can offer an overall discount versus booking a number of separate service visits.
6. Reward your most profitable customers by creating a VIP program
Your most profitable customers should be treated like gold. The good news is that these customers already like your dealership. Therefore, you will want to protect that relationship. You can do this by creating a VIP Program. Here are some features that you can include in a VIP program.
Ability to reserve in-demand vehicles – If your dealership is getting a hot vehicle with lots of demand, then you should offer that vehicle first to your VIP members.
VIP services – Chances are your VIP customers may be busy people. Therefore, you can offer bespoke services such as complimentary pick-up and delivery of vehicles for service visits, test drives at their residence or office, and a dedicated VIP customer service line.
VIP parties – Have a new vehicle coming to your dealership? Turn that event into a release party and invite your VIP guests to get an up-close look at the vehicle.
7. Create a customer referral program
Turn your customers into your sales team. Chances are that your customers like your vehicles and trust your dealership. Also, your customers may know people who are in the market for a vehicle. By offering incentives, you can add extra sales with less spending on marketing.
So what should you offer in your customer loyalty program There are a number of approaches that you can take. Here are a few.
Service center coupons – As stated before, you will want to get your customers into the service center a much as possible. You can offer 50% coupons on major maintenance work for every referral that leads to a lease or a sale.
Gift cards – You can also offer gift cards to your aftermarket accessory store or partner with another local business such as a restaurant. You can also simply offer a Visa or Mastercard Gift Card.
Cash Rewards – Who doesn’t like cash? You can simply offer a cash reward for every referral that leads to a lease or a sale.
8. Utilize customer relationship management
Managing your customer relationships can be overwhelming. However, there are a number of CRM solutions that will allow you to better handle the flow of leads and stay on top of potential sales. Here are some of the top features that you will find in a top tier CRM system:
Customizable dashboard – This allows you to better manage the flow of leads and potential sales.
Internet lead management – You can organize leads and assign them to members of your sales team.
Marketing tools – You will have lots of marketing tools in your overall strategy. That includes everything from email to direct marketing, text messages, internet advertising, and more. A CRM tool will allow you to better handle your dealership marketing.
Customer data management – Be able to access anything that you need to know about your existing customers including their sales and service history, credit information, and more. This data can help you generate reports on sales trends, demographics, and more.
Training and support – CRM systems are robust. Therefore, you want to make sure that your CRM provider is able to provide complete training as well as ongoing support to make the most of the system.
9. Send your existing customers updates on new vehicle releases
Statistically, your existing customers are going to be the most receptive to your brand’s newest vehicles. Therefore, you will want to keep your existing customers updated on new vehicles that will be coming out in the next 12 months.
Here is some information that you can include in these messages:
What is unique about this vehicle – Does the new vehicle have high horsepower, innovative tech, or breakthrough style?
When is the test drive available? – Encourage your existing customers to be the first, in the area, to test drive the vehicle.
How does the new vehicle compare favorably against the competition? – Show how this new vehicle will have an edge on any competitor.
Selling a new or better model of the same car is the key driver in dealership customer retention strategies.
10. Make use of personalization to make customers feel special
Customers will want to know that they are valued. This will make the customer more likely to visit your service center and purchase more vehicles in the future. One way to accomplish this is through personalization of communications.
Here are some ways you can make use of personalization:
Personalized direct mail – Sending direct mail with the person’s first name can go a long way to making sure that the mail is read.
Personalized email – Most email software allows you to place the person’s first name in the salutation. This can go a long way in ensuring that the message is read.
Personalized text message – a personalized text message – with an offer – should convert better than a non-personalized message.
Getting more from each customer
Make sure that you don’t miss any opportunity to maximize the value of each customer. Be sure to treat your existing customers as valued assets, market efficiently, and take advantage of any opportunities to get an edge in your dealership business.
It is easier and cheaper to sell 5% more to an existing customer than to get 5% more customers.
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