Jul 18th, 2017
How auto dealers can maximize profits through customer retention
North American new vehicle sales are hyper-competitive. So how can automotive dealers and OEMs continue to drive profits?
While the Canadian new vehicle market continues to be hot with sales in June finishing 5% higher year-over-year to 1,039,068 units—a new record according to DesRosiers Automotive Consultants—Canadian auto dealers and OEMs should have an action plan in place to diversify their business. And that plan starts with improving customer retention.
Customer retention drives profits
With such monthly good news reports, it’s tempting for dealers and OEMs to rely on new vehicle sales only, rather than building that nest egg for the future. One avenue is to look beyond the sales showroom and focus on keeping the customers you already have via the fixed-operations side of the business.
No one could argue that when each new car buyer receives a premium, streamlined and convenient ownership experience—from the first time they encounter your dealership online before they even buy to when they take delivery of their vehicle—that customer is more likely to return to your dealership for maintenance or repair services, accessories, or their next new or used vehicle.
In fact, the Cox Automotive 2017 Car Buyer Journey study discovered more than half of customers returned to their dealer for service after purchasing or leasing a vehicle.
How can dealers improve profitability via customer satisfaction?
The flip-side to that data is that almost half of those customers did not return to the dealership for after-sale services. With the proper investment and commitment, though, dealers and OEMs can dramatically improve those retention rates.
A case in point: Cox Automotive’s Xtime brand integrates all client touch points into a unified system for both consumers and dealer service personnel. The direct result is increased service retention, as much as a 7.5% increase, according to a recent Xtime analysis.
Knowing that dealers and OEMs can improve profitability by driving customer loyalty through a single service experience platform, here are the key fixed-operations focus points:
- Flexibility and convenience: Equipping your dealership with a single service experience platform begins by welcoming the customer online to schedule service appointments. This extra step illustrates your dealership is committed to a level of convenience and flexibility consumers are already experiencing in other digital retail experiences.
- Show customers your value: Take the time to educate your customers about the online booking process during the vehicle delivery process. A good place to start is by booking their first service appointment— a great opportunity to display your dealership’s service experience and commitment to customer convenience.
- Showcase your service department: During the vehicle delivery process, take the time to highlight your dealership’s service department’s personnel, services, and technology. The Cox Automotive 2017 Car Buying Journey found fewer than half of new-vehicle buyers and only a fourth of used-vehicle buyers are made aware of their dealership’s service capabilities.
- Continue the customer relationship digitally: Employ automated service-reminder text messages and emails. These personalised communications can increase customer awareness when vehicle maintenance, recalls, and repairs are required. According to the latest J.D. Power Service Satisfaction survey, 67% of customers say they “definitely will” return for service when they receive text-massage updates.
Committing to the connected ownership experience improves customer retention
Today’s car buyers are no different than at any other time in our industry. They want value, convenience, and trust from their dealer. A single service experience platform allows dealers to fully embrace digital technologies that keep customers coming back, stay ahead of the sales plateau and improve the bottom-line on the fixed-operations side of the business.
Regardless of how your new vehicle sales are doing, improving customer retention is a win-win situation for dealers and OEMs.
Jack Sulymka is the Director, Marketing & Corporate Communications, Cox Automotive Canada.