June 15, 2021

Customer Retention - An Introduction

NAC Blog
NAC Blog

Customer Retention - An Introduction

2020 was a fantastic year for dealer profits: margins on vehicle sales were up and helped make up for lower averages from the Fixed Ops side last year. With average transaction prices continuing their rise—and new vehicle inventory expected to remain tight for at least the first half of 2021—dealers stand to make solid profits on vehicle sales again this year. In light of such a successful sales climate it is easy to forget to think long-term, but it can be the best time to focus on building customer loyalty and retention at your dealership. In this series, we will cover challenges that hold many stores back as well as key strategies that will help you get your dealership ready for the future by building strong customer retention and lasting business relationships.  

Service Experience Critical to Creating Loyalty

For many dealerships in today's market, there is a disconnect between departments. The sales, service and parts departments are all run in separate ways, preventing your dealership from operating as one fluid and successful entity. It's not until you're able to combine each part of the business into one powerful, unified force that you'll begin to earn customers that will keep coming back year after year.

In many cases, a customer's journey begins in your service department. Perhaps they've never purchased a vehicle from your dealership, but they bring their car in for repairs. After a diagnosis is made, the customer decides that it's not worth sinking more money into repairs. Because they already know and trust you, they proceed to buy a new vehicle from your lot in lieu of repairing their existing vehicle. When they need parts or repairs on that vehicle down the road, your dealership will be at the forefront of their mind. Without their positive interactions with your service advisors, this lucrative sales relationship would not be possible.  

In the above example, the service department played a critical role in creating a positive first impression of the dealership for a new customer; that positive experience paved the way for a sales relationship beyond the service drive. But often, the interdepartmental cooperation at a dealership does not flow so smoothly. In the next post in our series, we will delve into the importance of cooperation—rather than competition—between dealership departments, and how a unified strategy that is focused on customer satisfaction and retention will help your store build a strong and profitable future.  To learn even more about the importance of building customer loyalty, check out the video of our latest episode if Fixed Ops 5 on YouTube by clicking here.

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