The Disappearing Customer
The overarching objective of a dealership is to be profitable, says Jim Roche, senior vice president of marketing and managed services for Xtime.
And the foundation of that objective? Customer loyalty.
However, loyalty is often an abstract concept, and one that’s difficult to measure. How do you determine whether or not a customer will be loyal and come back?
One way is by creating an exceptional experience.
From the moment the customer walks in the door to purchase his or her vehicle, everyone in the dealership should do everything possible to ensure that customer keeps coming back for all of his or her future needs—from service to purchasing a new vehicle.
The reality, however, is this happens only a small percentage of the time. According to a study by Cox Automotive, only 33 percent service visits are conducted at a dealership.
“You can’t disconnect sales and service retention,” Roche says.
Retaining customers through service will most likely result in them purchasing their next vehicle from you. Seventy-four percent of customers stated that their experience with the service department influenced their decision to purchase another vehicle from that dealership, according to a study by Cox Automotive.
“Experience is what drives retention,” Roche says. “Provide a great experience, [customers] will be more loyal and drive more profit.”
Experience is so important that Xtime’s market research found that 93 percent of dealerships reported that they believed the experience was more important than the repair itself when it came to whether a customer will return.
“The ‘customer-first’ strategy adoption was driven decades ago by OEMs with emphasis on CSI and J.D. Power Associates scores. But to make the customer-first strategy stick at the retail level, dealerships must see the benefits of better communication, and improved productivity as well as see the dollar result in terms of more service appointments, more spend per RO, more repeat sale,” Roche says.
Don’t be a Silo.
If experience is so important, why do dealerships often fail to deliver? According to Paul Whitworth, senior vice president of operations, Cox Automotive Retail Solutions Group, it’s because all of the different areas involved do not work together and fail to see the bigger picture.
“The industry has suffered historically from siloed solutions,” Whitworth says. “Because our industry is so complex, there are many areas of expertise involved. This leads to silos. Typically people in one silo don’t understand the other silos, which is what has been behind the lack of integration.”
The OEMs, dealers and vendors all need to work together in order to deliver the best possible experience for a customer, Whitworth says.
“As a business person, you can’t be managing a metric over here and a metric over there without thinking of the whole thing,” Whitworth says. “We believe that by bringing the whole thing together, you can start thinking of revenue per customer over a longer time frame.”
If the goal of a dealership is to turn a profit, it should concentrate on its most profitable area—the service department.
When it comes to customer loyalty, the service department has a distinct advantage—until the warranty expires. According to a study by Cox Automotive, 6 out of 10 customers with a warranty will schedule a service visit at the dealership. But after the warranty has expired, that number drops drastically to 3 out of 10.
So, what can be done to keep those numbers up?
Technology is a great way to improve efficiency, which is something Roche believes the majority of the industry still lags behind.
“I can pick up my phone and book two round-trip tickets to China,” he says. “I can book my hotel and a rental car. Those experiences are raising expectations for consumers. We’re not there yet.”
There are simple ways that dealerships can make the service experience smoother for customers. Utilizing mobile devices is one example, Roche says.
“A best practice is to put customer and vehicle history information on a tablet and allow a service advisor to get out from behind a desk and a customer to check in and out anywhere,” Whitworth says.
Technology can also be used to send out service reminders and recalls. More than one-third of customers are unaware of their vehicle service schedule and/or recalls, according to a Cox Automotive study. Automated service reminders should be utilized to remind consumers when to bring vehicles in.
Evaluating Customer Experience.
“Retention can be hard to measure,” Roche says.
In order to evaluate whether or not something is working, Roche advises evaluating whether there is an ROI, not just in terms of dollars, but also in terms of time saved and both employee and customer satisfaction.