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5 Ways To Improve Dealership Customer Loyalty & Retention

As dealerships’ new and used vehicle inventories slowly begin to normalize, now is the time for automotive industry dealers to focus on proactively retaining their loyal customers and improving retention.

While loyal customers have long been critical to dealership success, customer loyalty is no longer guaranteed in this sort of climate, even if a customer (and their family) has been purchasing from your dealership for years.

While brand loyalty in the U.S. light vehicle market has risen slightly alongside days’ supply to 50.3% in October 2022, this was the first significant increase since January, according to S&P Global Mobility reports.

Looking from a broader perspective, brand loyalty has been declining since March 2020 when it stood at 56.3%, immediately before the start of the pandemic and the start of the supply chain challenges, according to S&P Global Mobility,

Is Car Inventory Improving?

As inventory levels begin to normalize as high prices and limited incentives remain, protecting dealership loyalty customers against competitor’s conquest attempts has become key, critical to both immediate and long-term success. It’s critical dealers take intentional, proactive action to protect their customer base against the competition’s conquest efforts.

In this blog post, we share 5 ways to increase loyalty and improve dealership customer retention by:

  • Proactively engaging loyal customers
  • Personalizing your approach
  • Focusing on your customers’ experience by staying in touch
  • Securing success in the short term
  • Supporting future dealership loyalty sales efforts

Utilize Proactive Strategies for Customer Communications

The first step in protecting your dealership’s loyalty audience is determining which of your customers pose the greatest risk of defection. For example, about 58% of Nomads, who own a brand once and leave, left their brand in the 12 months ending July 2022. According to data analysis by S&P Global Mobility, that's the highest defection rate in at least 10 years.

As the lingering impacts of the inventory shortage continue to impact brand loyalty, dealers need to engage potentially loyal customers before they start shopping around to prevent defection and improve customer retention. Customer retention requires cooperation to keep customers engaged until their next purchase, from departments including:

  • Marketing 
  • Sales teams 
  • Service departments

Advanced dealership marketing tools empower dealers to take this approach even further. Combining these insights with third-party data, like financial records and household demographic information, gives dealers an even clearer view of their loyalty audience. This enables them to prioritize their marketing strategy and efforts and automatically engage customers before they return to market. 

Personalize Messaging to Address Unique Needs

Identifying which of your loyal customers pose the greatest risk of defection is only one part of the equation.

Retaining loyalty customers means keeping them engaged over time, an increasingly difficult challenge amid aggressive conquest efforts from the competition. To stand out from the noise and retain loyal buyers, your dealership needs to craft personalized messaging that proves you know and can care for your customers best.

Personalizing your messaging means more than including your customer’s name and vehicle of interest in an email template. Your messaging needs to demonstrate why they should continue trusting your dealership with their business.

Look for opportunities to build trust with your loyal audience through every customer touchpoint, such as:

  • Marketing F&I products
  • Marketing personalized financing special offers
  • Ongoing communications after the initial sale

Focus on the Customer Experience and Keeping in Touch

Amid improving inventory situations, offers from competitors and expanded online retailing options are increasingly tempting your customers to shop around. Staying in consistent communication with your car brand loyalty audience is another key to staying ahead of defection while the ship slowly rights itself.

Look for opportunities to keep in contact with your buyers with personalized messaging that speaks to their specific and evolving needs and in their preferred medium. Ensure each touchpoint builds on the last in a useful and helpful manner, meeting your loyal customers where they are in their ownership or buyer journey to keep them engaged over the years.

For example, some proactive dealers are utilizing behavior prediction technology to maintain consistent communication with customers to build loyalty through convenient service alerts. By serving as an ongoing customer concierge through service alerts and following dealership service drive best practices, dealers are creating the type of service experience that keeps customers coming back.

Supporting Short-Term Success

Slowly normalizing inventory levels has made stocking your dealership with the right vehicles a continuously difficult task. That being said, mapping the vehicles already available in your inventory, to the buyers you predict to be interested in them, has never been easier.

Leveraging behavior prediction technology helps to analyze customer insights from their CRM and DMS, as well as inventory data. This allows dealers to account for the wide variety of factors, beyond brand loyalty, that influence a buyer’s purchasing decisions. From there, dealers can map their available inventory to the best prospective buyers.  

This loyalty sales process empowers dealers to meet their short-term sales goals, by maximizing their available inventory, all while protecting against competitor’s conquest efforts by reaching buyers before they start shopping around.

Loyalty Customers Supply Future Sales

Finally, dealership loyalty customers represent a critical source of future sales, where there is a lot of current optimism. For nearly two years, new and used car prices have inflated, with car dealers asking consumers to pay thousands of dollars over MSRP.  According to S&P Global Mobility, the US industry is now primed for a reset to previous competitive norms. This means that dealers need to be as prepared as ever.

Long before the pandemic, total new vehicle registrations declined year-over-year in both 2019 and 2020. At the same time, rapid digitalization has only increased competition between dealers. To succeed despite growing and evolving challenges, its critical dealers take a proactive approach to dealership customer retention

Remember: Loyalty customers increase in value and commitment over time. Just as it’s critical to think ahead and protect this segment against the competition through consistent communication, dealers need to ensure they’re not jeopardizing a long-term customer relationship with a short-sighted approach.

Loyalty customers are an invaluable supply of high ROI sales, as they are:

  • Less likely to negotiate
  • More likely to generate service and other fixed-ops revenues
  • Contribute to referral business 

Among inventory shortages and other uncertainties, focusing on dealership customer loyalty equates to a steady supply of highly profitable sales now and in the future. 

Interested in learning how Mastermind can help your dealership to continuously drive customer loyalty and retention, even in the most challenging environments? Contact us for a free demo.