Why Dealers Should Focus on Customer Communication

With new and used vehicle transaction prices plateaued at historic highs and OEM incentives limited, some auto dealers are considering pumping the brakes on their marketing efforts in 2022.

At the same time, diminished customer loyalty and extended path to purchase due to production delays and inventory shortages are emphasizing why it’s so important for dealers to stay in consistent communication with customers. Looking past the next 30 days, it quickly becomes clear why dealers need to continue consistently engaging their audience to maintain their competitive edge.

In this blog post, we’ll explore three key reasons why dealers need to continue communicating with their customers in 2022 including:

1. To promote customer loyalty even as consumer sentiment diminishes
2. To support your service and fixed ops departments amid inflation
3. To achieve sustainable success throughout 2022 – and beyond

1. Consumer Sentiment is low

As new and used vehicle prices remain high and dealerships’ inventories remain low, consumer sentiment has taken a steady decline.

From March until April 2022, the Consumer Sentiment from the University of Michigan declined 9.4%. And by May, consumers’ views of buying conditions for vehicles declined to the lowest reading this year, according to Manheim reports. Customer loyalty has also taken a dip in recent months, with brand loyalty among U.S. auto buyers dropping to a six-year low in 2021. 

According to IHS Markit, a part of S&P Global Mobility, inventory shortages are having a profound impact on customer loyalty, finding a strong correlation between days’ supply and make loyalty, demonstrating consumers eagerness to switch dealerships and even brands to find the vehicle they want.

How to Promote Customer Loyalty as Consumer Sentiment Diminishes

To proactively prevent customer defection and protect your customer base from competitor’s conquest attempts, engaging customers well before they return to market is key. As inventory shortages extend the path to purchase, dealers need to engage customers earlier than they would in the past, up to 12 months before a customer returns-to-market.

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Path to Proactively Preventing Lease Buybacks

By engaging prospects early with personalized messages that build buyer trust, dealers are empowered to set realistic expectations with customers early on, setting the stage for an excellent customer experience when buyers do return-to-market.

2. Fixed ops pricing is on the rise

While retail prices of new and used vehicles have made headlines in recent months, prices of automotive parts including tires and services such as those covered under F&I products like vehicle service contracts, are also increasing. In some cases, the costs for these services are growing faster than the national average.

Knowing the end result of inflation will be passing some of these cost increases onto customers, getting ahead of customer communication is key. This is especially important as some customers may already believe they’re being price gouged in the service lane.

How to Approach Buyers as Service Costs Increase 

Building trust with buyers is critical here, too. If prices are increasing due to increases in parts or service costs, communicate that to your customers. Instead of being afraid to compete on cost, messaging should focus on your service department’s advanced knowledge and abilities as compared to the more generalized service shop down the road.

Just like with your sales messaging, look for opportunities to engage customers in the method they prefer with clear and personalized messaging. Each customer communication should build on the last customer touchpoint, with consistent messaging carried across every platform. 

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3. To achieve sustainable success through 2022 – regardless of what lies ahead

While many dealers started out the year on a high-note, what remains for the rest of 2022 is yet to be seen. According to S&P Global Mobility, production in the second half of 2022 is expected to result in SAAR rates that average 14.69 million units amid continued semiconductor challenges and ongoing supply chain, logistics and worker related issues.

While the underlying demand is currently stronger than US sales results to date, pent-up demand remains under threat from inflation and other macroeconomic pressures, according to S&P Global Mobility. 

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Dealership Inventory Challenges Guide

In Q1, U.S. auto sales began to cool considerably. According to NADA, March 2022’s SAAR totaled 13.3 million units, down from 14 million units in February and 24.4% from last March’s SAAR of 17.6 million. While sales increased slightly in April, NADA noted, “the industry is still unable to produce enough vehicles to meet current demand, let alone restock dealer lots” amid ongoing production challenges.

As a result of unstable global markets, S&P Global Mobility further downgraded its 2022 and 2023 global light vehicle production forecast in May by 2.6 million units, down to 81.6 million for 2022 and 88.5 million units for 2023.

How Dealers Can Achieve Sustainable Success in 2022  

With retail prices likely to remain high for some time, now is the time for dealers to recognize the value of an excellent customer experience. Customers rank trust as important as purchasing price when deciding which dealership to purchase from.

To help offset any sticker shock, look for opportunities to provide customers a whiteglove customer experience that meets and exceeds their expectations. To achieve sustainable success regardless of what lies ahead, build value into your dealership’s processes at every step. This starts with with proactive, personalized outreach that supports a personalized sales or service experience and long-term customer loyalty.

While historic profits have some dealers considering if they should pump the brakes on their marketing efforts, declining consumer sentiment, diminished customer loyalty and ongoing inventory shortages are emphasizing why dealers can’t afford to lose communication with their audience. To achieve sustainable success in 2022 and continue breaking records in the years ahead, dealers need to maintain consistent, personalized engagement with their customers.

Interested in learning how Mastermind can help your dealership maximize its marketing efforts and profitability in 2022? Contact us for a free demo.