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Part 5 – How to increase customer growth and retention

By September 22, 2014February 6th, 2017Think Tank

One of the concerns that we often hear about from both automakers and dealerships are how difficult it is to retain service customers after their warranty period is over.

In this week’s whitepaper excerpt, we will explore how delivering an exceptional Aftersales service can help dealerships and automakers overcome this problem.

“Why is a customer of an eight or ten-year-old car not coming to your dealership anymore? Because it’s perceived to be expensive.”

Starting from Now

customer-growth-cartIt was noted by the leaders interviewed that about two-thirds of vehicle service is lost to IMTs after the third year of warranty. Automaker research indicates that some customer attrition can be attributed to the perception that service is more expensive at an authorised dealership. Automakers believe this customer perception is not entirely accurate when like-for-like quality is compared. However, with the exception of high-end prestige brands, dealerships haven’t found the formula to get that view accepted by their marketplaces. Both automakers and dealerships want to reverse this high attrition rate to independent repairers.

The leaders noted the global industry trend for automakers to offer longer warranty periods and the adoption of capped price servicing programs. These tactics are seen as helping to be competitive, but aren’t significantly changing the post-warranty customer retention results. Such programs allay the cost of ownership concerns of price conscious customers, but are not bringing in the fresh income that would be a product of longer retention.

Vision of the Future

In 2020, traditional Aftersales selling models and dealership structures will evolve to appeal broadly to new and used vehicle buyers, vehicle users, and branded product loyalists. Dealerships will sell products as an experience and a service. They will utilise data profiles to efficiently match their resources to customer decision points – (e.g., budgetary, product, social status, social responsibility, experiential … ).

“You have to move to deliver more than an oil change because the other guys can deliver an oil change. So, you have to deliver an oil change and a customer experience.”

Dealership culture and identity will evolve from being centred on vehicle showrooms, to being whole-of-dealership / one-stop-shops for everything about the brand – vehicle sales, Aftersales services, value-add, and brand social camaraderie. They will provide a complete ownership experience that draws owners and users toward them to validate and enrich their brand experience, needs, and desires.

Customer retention rates will respond positively as dealerships present a caring persona and information that is accurate, transparent, and relevant. All persons interested in the brand will purchase from a dealership who says, ‘You are welcome here’.

Bridge to the Future

New accords between automakers and their sales channels will ensure a consistent Aftersales brand promise is delivered for all vehicle brand owners/users – new and used. All this will contribute to a growth in customers’ empathy, trust, and valuation of their relationship with branded dealerships. This will reverse Aftersales attrition rates seen in previous decades.

Big Data will make a new style of customer engagement possible. IT developers like Infomedia will create programs to use Big Data as a catalyst for:

  1. polished and professional customer engagement processes – time after time;
  2. competitive price modelling – that can negotiate based on metrics known about the customer;
  3. accuracy and transparency of pricing – that delineates cost and benefit of an item;
  4. effective customer servicing – that allocates dealership resources customer by customer;
  5. lower operational costs – through service and parts pre-planning, deeper local market intelligence, and more effective promotional expenditure;
  6. friendly helpful customer relationships – that sustain invaluable word-of-mouth promotion.