5 Ways to Improve Dealership Customer Loyalty & Retention
Car loyalty was always a dependable source of success for manufacturers and dealers in the automotive industry, but customer retention has become more challenging in recent years due to limited inventory, rising prices for vehicles, evolving customer behavior, and heightened competition in the automotive arena. Even so, in spite of all the continuing adversities, automotive brand loyalty seems to be picking up momentum again. Per S&P Global Mobility, industry-wide brand loyalty, as of June 2024, was at 52.5%, reflecting an increase of 1.9 percentage points from the previous year. This improvement marks the first year-on-year upturn since 2020.
The Importance of Loyalty Now Unmistakably
As inventories are falling back in step with normalcy, now is the time to focus seriously on retaining the customers in your dealership. With presently over 450 nameplates out there, consumers have many more choices today than they ever did, and that will prima facie increase to anywhere from 600 to 650 by the end of this decade, courtesy of electricals. Going by the estimation, owning a vehicle has now become around 30% more expensive compared to 2019. And so the dealers need to build such conscious promotion to help cultivate ongoing and effective communication with their customers, so that they do not stray towards its competitors.
To keep customers coming back and build their loyalty, a dealership should have five core processes:
- Actively Involve Your Loyal Customers
In terms of customer retention, the first thing to do would be to identify customers who are on the verge of loyalty. Consider the tremendous impact of inventory shortages-this seems like the right time to start wooing these customers before anyone can think of shopping elsewhere. Engaging proactively can keep such customers from defecting.
Engagement is the name of the game when switching becomes imminent. The sales, marketing, and service teams all should work together to make sure that the experience the customer receives is seamless and consistent in every respect. Customers remember your dealership during a purchasing cycle when you somehow stay in front of them with emails, text reminders, or personalized phone calls.
Toward this end, there are also modern marketing tools available. Using third-party data and customer insights-from financial slip data to demographic information-car dealerships can achieve a much closer glimpse of their loyal customer base. This allows a dealer to pinpoint separation in their communication outreach, ensuring that customers who might be considering a change are touched on before they begin shopping elsewhere. - Create Personalized Messages That Address Their Needs
Retaining loyal customers is not merely a question of identifying those in jeopardy; it is rather connecting to them in a way that feels personal and meaningful. One message fits all will never be good enough in today’s cutthroat environment. To be noticed, customize your messages to meet the unique demands and preferences of the customer.
Personalized message means more than just that you address the person by name. It says you recognize their needs and explain how your dealership will bring them value. Here are some opportunities for personalizing your messaging:
Promote finance and insurance (F&I) products tailored to them.
Offer personalized financing specials that meet their budget.
Provide timely follow-up after the sale to ensure satisfaction and offer any assistance.
You will build trust in the course of time through these personal interactions, thereby demonstrating to customers why your dealership is the right one for their auto needs. - Customer Experience is Important to Keeping the Conversation Open
In such competitive markets, contact with customers must remain consistent. With inflation and baited costs from competition, the customer might be tempted to look at other options. To reduce the chance of that happening, a dealership must remain in contact with the buyer throughout the ownership process.
The essence of continuous engagement is found in personalized touchpoints: sending reminders for service, specific offers, and birthday wishes to customers. The more meaningful engagement is for a customer, the less likely they will appoint a competitor with an ear-turn.
Such engagement can be aided with technological tools such as behavior prediction tools. These gun services allow dealerships to analyze customer data to predict when a customer will need service or be in the market for the next vehicle. Convenient service alerts and excellent customer service can go a long way toward nurturing a relationship long after the sale is made.
Short-term sales and inventory management, although of lesser importance than long-term customer loyalty, are vital still. The long prices of vehicles put great pressure on dealerships to move existing inventory quickly. Identifying customers early in the buying process enables dealers to match the right vehicle to the right person, most likely before the person starts to shop around.
Advanced technology, with behavior prediction and data-analytic tools, helps to identify which customers are ready to make a purchase. By evaluating CRM, DMS, and inventory data in real-time, dealers can develop a complete toolkit for decision-making on which vehicles to promote, as well as to whom. Such a forward-thinking stance helps maximize inventory turnover while strengthening customer relationships with tailored solutions for their specific needs.
Loyalty Pays for Future Sales
Loyal customers are not only a cash cow now; they will be critical to future sales. The customers reciprocate for the repeated purchases that lead to substantial revenue through service, fixed operations, and referrals. Research indicates that quite contrary to it, loyal customers:
Less willing to negotiate price.
More likely to create service and repair business.
Reliable generators of referrals by word of mouth.
Having an ongoing relationship with loyal customers is a foundation for future business. Instead of merely selling to these customers, dealerships should view their loyalty as a long-term investment. Personalized and consistent communication keeps your customers coming back when they’re ready to buy again and referring others to your dealership.
Final Thoughts
There are things dealerships can proceed to make customer loyalty and retention even better, and they are concrete steps. Being proactive with loyal customers, creating personalized messages, working on the customer experience, supporting short-term achievements, and utilizing the strength of loyalty for future sales are the ways in which dealerships can maintain long-term relationships and some degree of success in a changing market.
So, are you ready to go beyond the parameter for customer loyalty in your dealership? Why don’t you contact us now for a free demo and see how we can best support you in retention, even through some tough times?