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Indicators of Dealership Loyalty

Many dealers ask me for help in retention measurement, and statistics surrounding Customer Loyalty Indicators.

Two important indicators of Automotive Dealership customer loyalty are the purchase of additional service after the sale by Members and multiple vehicle purchases.

In the automotive dealer sector, these are also sources for the greatest margin, so they’re critical not just as indicators of customer satisfaction but as profit drivers in their own right. Little profit is made on the sale of the first vehicle. Dealerships must rely on repeat service and additional vehicle sales to make the customer life cycle profitable.

However, most auto dealers haven’t the vaguest idea which car buyers are loyal service customers at their dealerships, or multiple car buyers (especially if they're a multi rooftop autogroup). On average, dealers retain only 30 to 40 percent of post-warranty service dollars on vehicles they sell. What’s more, remarkably few dealers track service purchases systematically. As a result, as little as 3% of vehicle buyers will purchase again from the same dealership.

While it may be necessary to keep sales separate from an organizational point of view, it is very important that their tracking systems be linked. One simple way to do this is through a digital loyalty solution like re:member group’s BEDROCK® and ASPIRE® platforms. While re:member group makes no claim in having a CRM solution (see DealerSocket for the best one in my opinion), our loyalty solutions do identify repeat buyers in all departments and can assist in determining a lifetime customer value to Members.

The information Service Advisors acquire should easily be cycled back to encourage salespeople to target buyers who have remained loyal service customers. In addition, incentive systems should identify the lift that dealerships receive as a result of implementing a loyalty program in both service and sales. The keystone measurement in this case should be repurchase loyalty, as this is the best possible indicator of customer loyalty.

The Walser Automotive Group in Minneapolis, Minnesota makes customer loyalty a significant part of their overall marketing strategy. Thirty-one Percent of Walser’s Customers purchased more than one vehicle between 2005 and 2009, representing fifty-six percent of Walser’s Total Vehicle Sales. In that time, Walser has increased their repurchase loyalty by four percent.

Furthermore, Sixty-nine percent of Walser’s customers continue to service their vehicle after the sale.

Recall what loyalty expert Fred Reichheld claims: a five percent increase in customer loyalty can yield an increase in profitability between twenty-five and eighty-five percent.

What are you doing to increase your customer loyalty? Or, what is your customer loyalty percentage?

 

Paul Long

President

re:member group

cell: 612.221.0463

email: paul@remembergroup.com

www.paulnlong.com

www.remembergroup.com

 

 

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