Automotive Customer Retention: A Growth Driver

The good news is that the best ideas aren’t usually the most difficult to put into practice, which is helpful if your dealership wants to enhance its client retention strategy. Even if you’d like to, it’s nearly impossible to keep every single customer who walks through your door. And some of those individuals—llet’s face it—just make things difficult for your team.


What would it matter if you had a group of devoted clients that treated you like an old friend and routinely came back for service? Most likely, you already do, and these contented clients are among your biggest assets.


In addition to being the first to recommend you to their friends and family, loyal clients are also easier to keep returning to (for things they may not have previously thought to obtain from you). We must not disregard this.


In order to assist you concentrate on developing your business through your greatest clients, this post presents a helpful lens to look at your business decisions and uses significant industry figures from a SimpSocial study.


Making Use of the Pareto Principle to Reduce Time and Profit Losses

The Pareto Principle is an effective generalization that simplifies a lot of business decisions. The Pareto Principle, also referred to as the 80-20 rule, holds that 20% of all causes (or inputs) lead to 80% of all outcomes (or outputs).


The fundamental notion is that the majority of your results come from a relatively small portion of your efforts, and the rest of your efforts have a relatively tiny impact. Of course, it’s not an exact science.


You may see some good illustrations of the 80-20 rule at a dealership. For instance, according to the National Automobile Dealers Association, the new-vehicle department of a car dealership typically accounts for around 58% of a dealership’s total sales but less than 26% of a dealership’s overall gross profit. The service division accounts for 25% of profits while contributing less than half of those sales.


What does this entail for auto dealers, then? How would you put this concept into practice? The first step is to concentrate on the proper clients.


A Smaller But Lucrative Group: Quietly Content Clients

Not all of your most important clients purchased your services at the highest margins. The consumers who frequent your dealership year after year are your most valuable ones.


How can you improve your overall retention and make the most of the people you already have? You probably already know the answer to this.


How to Make Loyalty a Growth Driver

As part of our Dealership Service Retention Report, we investigated industry retention trends and discovered some compelling data. To begin with, 25% of clients who described themselves as “extremely loyal” to their servicing dealership indicated that “nothing” would cause them to think about going somewhere else. However, nearly half of the respondents stated they would think about leaving if they had a negative dealership experience.


What can we infer from this? It demonstrates that dealerships should focus more on satisfying those customers who return than trying to win over those who gripe about things like prices all the time.


This can be challenging because repeat customers are frequently the ones who don’t cause a scene. They aren’t the ones yelling on Yelp or calling the dealership to complain; therefore, they aren’t clamoring for your attention.


Establish a mechanism to monitor consumer visits.

We won’t dwell on this as most dealerships already have it, but before moving on to the next section, you’ll need a trustworthy technique to monitor your business. Gather each customer’s phone number and email address, and be sure to link that data to their previous purchases. A good system will enable you to rapidly identify the data on the clients who return the most often by sorting through your database.


It will be much simpler for you to identify which clients will value a memorable experience when you use this data to your advantage. Additionally, it offers a simple method for getting in touch with clients and creating a feedback loop.


Improve work quality to increase total client loyalty.

You need to run a company that is worthwhile for individuals to refer customers to if you want to increase referral revenue. Of course, this is painfully obvious: “If you want to be more profitable, become a better business.” However, you should consider this more in terms of priority.


In the aforementioned survey, we asked participants to rank six characteristics in terms of significance when choosing a repair shop for their vehicle. The best results were in the areas of job quality, price, and customer service quality. The second most significant consideration for individuals who indicated they are “extremely loyal” to the dealership where they service their vehicle was the level of customer service provided, which surpassed price.


Perhaps you’re thinking about reducing the price of some of your services to boost margins. Maybe you analyzed the advantages and disadvantages and determined that your decision wouldn’t significantly lower your level of productivity. However, over time, you’ll see a percentage of clients decide your services are “just not quite good enough” anymore, even though this may increase your income in the near term.


They eventually cease making the extra trip just to use your service. Or when prices are raised to reflect increased costs, car owners conclude the less expensive choice offers a better deal. Even if they return frequently, they might not be as eager to recommend you to their friends and relatives.


In the automobile business, the strength of your work speaks for itself when it comes to retention.


convert devoted patrons into brand evangelists

As we’ve previously mentioned, repeat customers pay $167 for every $100 they spent in year one in year three. Additionally, acquiring a new customer is five times more expensive than maintaining an existing one. Clearly, spending time on retention is time well spent.


But even though getting new clients is expensive, having a base of devoted clients helps reduce the cost. When a potential customer has been referred to you by a reliable source, it is much easier to earn their business. Loyal customers are the most likely to make this recommendation.


Based on how many new clients your best customers refer to you, you might want to provide them with special prizes. This may be something straightforward, like a discount at their subsequent service visit, or something unique, like an added benefit (more on that later).


Utilize the services that are already in demand to enhance the experience for recurring consumers.

The 80/20 rule’s ability to help you concentrate on what is already most beneficial to your business is one of its many wonderful features. One of the important conclusions from our study was that vehicle owners prefer to obtain specific services from dealerships as opposed to other locations.


In general, oil changes, electrical problems, manufacturer-recommended maintenance, and unidentified problems (such as those caused by the Check Engine light) are considerably more frequently sought out at dealerships by car owners. These are going to be the most convincing things to talk about when determining which services you want to market the most (whether through advertising or referrals).


Nevertheless, car owners are less likely to return with problems with the brakes, tires, or batteries. This implies that it’s critical for service consultants to spot those problems when the client is already at the dealership. Make sure your clients are aware that your dealership can handle their tires in particular, as 90% of drivers who buy tires elsewhere never return for service. This is a significant retention weakness.


In addition to keeping customers from seeking those services elsewhere, proactive maintenance gives dealerships the chance to protect their clients from problems even before they arise. This assists in transforming your “somewhat loyal” clients into “extremely loyal” clients.


Deliver added value

By giving your top clients a great experience, such as by offering exclusive bonuses, you may increase their satisfaction quickly. Giving customers something more memorable than just a loyalty discount will accomplish this.


SimpSocial prospers in this market. With the help of SimpSocial, new-car dealerships may offer a special package of reimbursable advantages with each qualifying service visit. This distinguishes you from the competition and aids in building lasting relationships with your clients. Additionally, these advantages set you apart from other dealerships, giving your devoted clients an incentive to continue doing business with you and refer new consumers to you.


Future automobile buyers can be easily persuaded by these advantages, providing you with the opportunity to impress them with exceptional vehicle maintenance and unanticipated repairs. It gives you the ability to gain their trust so that your dealership will be the first place they think of when the time comes for them to purchase their next vehicle.

No leads were lost. reduced overhead.
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