A recent study conducted by Automotive News and Dominion Dealer Solutions reveals the challenges automotive dealers face when trying to improve retention and revenue. The study also demonstrates how dealers can be proactive in maintaining customers in order to maximize profitability and ensure future success.
While automotive service is a $485 billion dollar industry, IBISWorld’s “Auto Mechanics in the US” market research report says that “dealers lose “88% of customers over 4 years of ownership.” Therefore, it is essential to find answers to the question, “How can dealers maintain customer loyalty?”
“The study reveals that only 14% of dealers have a formal retention plan.”
Developing a true customer lifecycle management plan involves a lot of detailed planning and an investment that some dealers may not be willing to make. The study reveals that only 14% of dealers have a formal retention plan. From this poll data, one can surmise that the majority of dealers are unsure if their dealership has a formal retention plan or choose not to answer. If this is the case on a national scale, then $418 billion dollars is left in the service industry for franchised dealers to win from independent service companies.
The study goes on to ask dealers, “Who in your dealership is leading your retention efforts?” Answers showed that marketing claimed the most responsibility, but not by much. Only 32% of dealers are running retention efforts through their marketing department and 29% were unsure who in their store was responsible. The fact that marketing departments are spearheading retention efforts is not surprising. Generally, marketing directors are the most in touch with dealership data, especially at a group level.
“…a retention strategy is extremely important to the future success of a business.”
The study continued by asking dealers, “How important is a retention strategy to the future success of your dealership?” A majority 69% of dealers responded to the question stating retention strategy is “extremely important” to the future success of a dealership and 21% believed retention strategy was neither important nor unimportant. From these results, we can conclude that while dealers are unsure if their dealership even has a formal retention plan, they believe that a retention strategy is extremely important to the future success of a business. Therefore, dealers need to make an effort to resolve this disconnect and utilize the value of first-party consumer data by implementing retention plans that will help to maximize profitability.
It’s hard for any brand to keep up with the level of personalization that consumers are demanding today. Automating the process by regularly communicating with customers when they’re ready to transact will increase the transition frequency and keep them coming back.
Need help with increasing retention and profits with top data practices? Contact us today! Call 877.421.1040 or visit drivedominion.com
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