Customer loyalty to automotive brands has been tested over the past few years, with major economic downturns in many countries, dramatic swings in fuel prices and pressure to reduce the environmental impact of car ownership. Recent figures show that pre-2008, car buyers in the U.S. bought an average of 13 cars during their lifetime. Post-recession, that figure is now 9.4 cars.
Even when sales are high, the auto industry is notoriously cyclical, so it makes sense for automotive dealerships to not only nurture their sales funnel, but also ensure they are engaging their current customers, building loyalty through innovative retention programmes and services.
But to be successful, an entire dealership has to think bigger than just the latest promotion. When dealerships not only sell the cars, but have a base of satisfied customers who are happy to service their vehicles, buy accessories and plan to purchase their next vehicle from their favourite dealer and even refer friends and family,, they can grow profitably despite any industry slowdown.
How is car-buying changing?
The accelerating pace of technology innovation and the resulting change in consumer behaviour is having its impact on the world of the auto dealership. The fact is that consumers can now buy a car via the internet, without ever setting foot in a dealership.
Car buyers normally undertake extensive research online in advance of purchase, the so-called RoPo phenomenon (research before purchase). McKinsey & Company, recently surveyed 600 car buyers in the U.S., the U.K., and Germany about their use of digital throughout their entire decision-making process, as well as more than 50 car dealerships in Germany. Car dealers reported that only 5 percent of their customers are not highly informed upon their first visit, arriving with product feature details, model history and price comparisons, forcing them to up their sales game and provide specialist service, test drives and in-depth information to be able to satisfy these super-informed consumers.
Additionally, many automakers are embracing technologies such as telematics, big data and artificial intelligence (AI), allowing them to communicate directly with their customers without the dealerships in the picture.
The message is clear, dealerships need to ensure they are evolving their sales and customer retention techniques as quickly as their potential customers are embracing the internet, apps and other mobile tech. Integrating technology into the whole car buying and ownership process is one way of keeping the digital natives engaged and coming back to the dealership for more.
Car dealership — after sales service
Once the car is bought, dealerships face their second challenge — after-sales car service. This familiar problem needs a new approach and new technologies to help solve it once and for all.
The fact is that a high percentage of car buyers return to the dealership for a car service during their first year of ownership. However, as the years pass, the return rate gradually drops, until the fourth or fifth years when the return rate drops dramatically.
The dealership finds that if they have not nurtured a special relationship with their customers, they can be attracted by an OEM’s promotions and marketing, which encourage car owners to buy spare parts and accessories from competing dealerships or stores.
So dealers need to use a combination of classic marketing techniques, combined with new technologies, such as connected car platforms, that allow them to connect more directly with their customers.
Great relationship marketing needs to be built on recent, relevant data. And the fact is, that with connected car technology, dealers can have access to a range of actionable data at the same time as the car drivers.
Once implemented, the dealer receives information about its customers and the car itself. This can include the opportunity to see the car’s mileage, its technical condition and its journey mapping. Plus, by using the mobile application, the dealership can contact the car owner directly and discuss their needs, encourage them to return to the dealership for a car service, buy new accessories, or even to upgrade to a new vehicle.
Creating a seamless and valuable technical, as well as human, connection with a dealership helps the car owner and creates many advantages for the dealer. Increased levels of customer retention and the opportunity to upsell and cross-sell being the main benefits that dealerships see when they implement Zurich Connected Cars technology.
What about the future?
Customer retention will continue to be just as important to auto dealerships as gaining new customers. After all, It is the most cost-effective route to increased revenues.
And as new technologies, such as Voice Assistants, make the leap from the living room to the car, consumers will expect auto dealerships to be one step ahead of them, providing a seamless customer communications experience via connected car technology and mobile app to help them get the very best from their car and their whole driving experience.