Car dealerships: ways to promote customer loyalty

31 October 2013

The days when dealerships simply sold cars are long gone. With less money in their pockets and continuing long-term economic uncertainty, not to mention more reliable cars, people simply aren’t buying new vehicles as often as they used to. This means dealerships have to diversify, relying more on revenue from other car-related areas, such as servicing and repairs, to ensure customers keep coming back.

These seismic changes have precipitated a culture shift from sell, sell, sell to one of nurturing and relationship building in a bid create loyal customers. Loyalty pays. It costs six or seven times as much to attain a new customer than keep an old one.

There’s much that technology can do to help with building and measuring customer loyalty in dealerships and manufacturers, but the most important aspects of loyalty require no fancy software to help. It’s the human touch that’s the key.

According to a 2013 Barclays’ survey of 2,000 consumers, the main thing that makes people feel loyal towards a small business is being greeted with a smile and a simple and sincere hello. They also value staff who go out of their way to build rapport, treat them well and remember them if they are repeat customers.

Get the basics right

So, it is essential that dealerships and manufacturers get the relationship basics right. Be curious about customers and listen to what they have to say, and be consistent and reliable. Honesty is key:  better to admit when you can’t do something and, if necessary, recommend another company, rather than try and muddle through. In that way, you will build loyalty and they will trust your opinion rather than see you as a salesperson trying to reach their monthly targets at any cost.  And when you do have loyal customers - let people know. It can help you retain your existing customers and entice new customers to buy, by creating a positive image about your brand.

The Barclays survey also found a ‘loyalty gap’ between what consumers valued and what the 1,000 SME businesses they talked to believed. While those businesses understood that personal touches did make a difference, they weren’t taking that further and developing specific loyalty strategies.

Part of that strategy could include a loyalty scheme. The mega brands: Boots, Tesco, airlines, have been reaping the benefits of loyalty schemes for many years. Now even small local shops have got in on the act. Everyone loves a bargain. Dealerships too should not miss this opportunity.

Loyalty schemes

So what should a loyalty scheme do for customers? In short, it should save them money and time. Discounts on services, parts, MOTs or a free oil change or valeting a few times a year can help build loyalty, as can a free courtesy vehicle. Customers can also be given the opportunity to earn points or credits to save money on future services or products.

But, not all customers are the same. Working people are looking to save time, while older customers may value a pick-up and drop-off service, so incentives need careful thought.  The mix of benefits will vary, but it has to be enough to entice a customer to choose your dealership above others for as many of your services as possible. These offers should never stand still. Incentives should be updated as the market and customer requirements change.

The easiest way to manage all this is through a CRM system that holds all your leads and customers together.  Make your customer information work for you to target customers at the right time and use analytic software to pinpoint people who are nearing completion of their financing or leasing completion or who don’t use your services often.  These are the customers who may be considering making another purchase or who have stopped using your service department for some reason.

A 2013 report by global automotive market intelligence firm Polk, “Leveraging Measurable Behaviors to Enhance Dealer Loyalty,” suggests there is still a lot dealerships should do. It found that although brand loyalty remained fairly consistent at almost 50% from January 2010 to October 2012, dealership loyalty remained steady at 34%. 

Polk extrapolates that could mean customers were happy with the brand but less so with the dealership, because of poor sales or service, as well as practical reasons such as moving house. It cautions both manufacturers and dealers to work out why customers are leaving and whether they can do anything about it.

Loyalty is only going to get harder and dealerships and manufacturers are going to have to work with greater precision and tenacity to keep customers loyal. Those that can combine and master the human touch with the technology know-how will be best placed to win the battle for the hearts, minds and wallets of customers.


About the author

Tom Cregg has been in the automotive industry since 1983, having started with Mercedes-Benz at its UK headquarters.  Since then, Tom has occupied a number of senior regional operational and management roles including with Daimler-Chrysler and SAGE Auto Group in the United States. 

Passionate about connecting automotive manufactures with their customers, Tom has been involved in developing some of the industry’s most intelligent business tools and e-commence systems designed to provide sales, marketing and services teams with a single view of customers.

Tom is a sought after industry expert, helping clients develop business strategies and technological capabilities to better identify and convert new prospects into loyal customers.   He believes the industry has much to learn from retailers including how to engage consumers across multiple touch points and channels including the internet, showroom and service centres. 

Tom is currently spearheading the development of an industry-wide business intelligence tool to connect multiple systems including customer relationship management (CRM) to change the way dealers create and manage sales and service customer experiences so brand loyalty drives sales.  

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