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3 Tips For Proactively Promoting Dealership Customer Retention


Customer retention can make or break a dealership’s bottom line. That’s why customer relationship management has become such a hot topic – and why in recent years automotive dealership customer retention statistics have moved from the footnotes to the executive dashboards of dealers and OEMs alike.

In this blog post, we share 3 ways auto dealers can improve their dealership customer loyalty and retention, including:

  • Defining what dealer loyalty is worth to your bottom line
  • Helping your employees understand the value of loyal customers
  • Making sure you’re focused on where the customer relationship lives

Know What Dealer Loyalty is Worth

Dealer loyalty is profitable. Loyal customers are cheaper to sell to, less likely to bargain aggressively on pricing, more likely to generate service and other fixed-ops revenues and are a source of high-ROI referral business.

But how profitable is it to invest in a long-term customer relationship, if that requires short-term investments or foregone revenues? A landmark Harvard Business Review paper found that improving customer retention by just 5% increased profits by 25% to 85%, depending on the industry. 

That can translate into big numbers in the auto industry. In 2012 General Motors reported that a single percentage point of improved customer retention loyalty was worth 25,000 vehicle sales, or $700 million in annual revenues to the automaker. 

At the dealership level, data from IHS Markit finds every 1% decrease in loyalty rate equals an average of 90 sales units lost. Further research from MaritzCX found for the average dealer, improving dealership customer satisfaction by one level on a standard five-point scale would result in $2.5 million in loyalty-related revenue, while a one-level drop in customer satisfaction would cost the dealer $4.2 million in lost loyalty revenues.

All this to say, improving customer loyalty for auto dealers means knowing its worth. Use what you know about your existing automotive dealership customer retention statistics, gross and net revenues and other key performance indicators to project what even small improvements or declines in loyalty would mean to your top-line and bottom-line figures, and then project that out over time. 

By utilizing behavior prediction technology, you can take those predictions and KPIs a step further by determining when high-value customers will be in-market and immediately engage them before they’ve had the chance to defect. From there, measure your responses and ROI to further optimize your approach. 

Have Your Employees Think Long Term

From a day-to-day perspective, dealerships revolve around hitting the weekly and monthly sales numbers, and that’s not going to change. This can create conflict with the way auto dealers improve customer loyalty, as it means making decisions that incur short-term costs as investments in long-term loyalty, such as absorbing repair costs in an OEM warranty dispute or offering a free loaner.

However, what’s good for customer happiness is good for loyalty and good for sales, even when happiness comes at a cost. The reality is automotive dealership customer retention statistics, customer satisfaction statistics and sales figures all march in lockstep together. 

The important question is whether your dealership is being managed accordingly. Are your loyalty and satisfaction numbers posted as prominently and discussed as regularly as your sales figures? Are loyalty and satisfaction improvements celebrated and declines taken as seriously as the month’s sales figures? Does your dealership culture truly rank the customer’s experience over that month’s numbers?

Critically thinking, what’s making a dollars-and-cents difference for your people? When GM saw that a one percent improvement in loyalty retention was worth $700 million, the automaker made customer retention statistics part of the annual bonus calculation for its leaders. How are you rewarding your employees for dedicating themselves to excellent customer relationships and building long-term dealer loyalty to drive dealership customer retention? 

Ensure you’re utilizing your reporting tools and dashboards to help you understand why salespeople are or are not hitting their sales targets and where there are opportunities for improvement and growth. By actively setting, monitoring and measuring these metrics, you’ll ultimately improve on your dealership’s sales strategy.

Focus on Where the Relationship Lives

Many dealers view the customer experience through the lens of the sales floor, but in reality, once the sale is over the service drive becomes the focal point of your customer relationship. By the time the next sales opportunity rolls around, the quality of the service customer experience will far outweigh the quality of the sales experience years prior in your customer’s mind and heart.

This is especially important in challenging sales environments where the service drive becomes the de facto front door to your dealership. As the customer lifecycle circles around, the service drive is where your dealership has its best opportunity to collect the payoff on your CX investments by being the launching point for trade-in discussions with sales advisors during service visits. It’s also your best venue to profit from your competition’s failure to build dealer loyalty when you leverage your service-not-sold customer relationships to turn a service customer into a conquest sale. 

This is again where a dedication to the customer relationship results in real-world profits: When deployed as part of a comprehensive customer experience culture, Market EyeQ helps our partner dealers activate up to 55% of their service drive customers into in-market leads, a 4x activation rate over industry standards that helps drive up to 15 incremental conquest sales per month.


Interested in learning more about what you can do to drive customer loyalty and retention in your dealership, even in the most challenging environments? Contact us for a free demo.

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