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From: Jared Hamilton
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Courtney Evans

Courtney Evans Vice President of Product Marketing

Exclusive Blog Posts

WEBINAR RECORDING - Five Ways to Grow Your Profits in the Second Half of 2020

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Owner Retention Programs: The Good, the Bad and the Ugly

Most auto dealerships do some, if not all of their service marketing with their manufacturer owner retention programs (ORPs). The purpose of ORPs is stated in the name: to build customer loyalty. But how well do these programs deliver on that promise?

The results from ORPs are all over the board. Some dealerships effectively use ORPs to increase customer retention, while other dealers experience lackluster results.

The Pros

The premise behind ORPs is to stay in touch with sold customers, bring them back in for service and continue the relationship until they're ready to buy again. This is definitely the right idea. Sending consistent communications to customers keeps brand awareness high and generates ROs and revenue.

The Bad

Many dealerships' ORPs underperform due to a "one size fits all" marketing strategy. If you're simply sending out mailers and emails once a month with an offer based on what you think customers will respond to, you're not getting optimal results.

The Ugly

Dealers underinvest in service marketing as a whole. Fixed ops is responsible for roughly half of dealership gross profits, yet most dealers spend 10% or less of the overall marketing budget on service marketing.

Even worse, as sales start to slow, service marketing budgets often get cut. This makes no sense. If sales are slowing, don’t you want to get more service business? How else do you expect to maintain profits during challenging times?

If your service marketing strategy is not working, change it, don’t cut it.  

The key to maximizing ORP dollars is to measure results. However, most dealers go about this the wrong way.

For example, many dealers view service marketing campaigns as a way to generate immediate ROI. For every email campaign sent, success is measured with metrics like open rates, click-through rates (CTRs), number of ROs or dollars generated.

While it's important to keep your marketing partner accountable, the ultimate goal of an ORP is to increase customer retention. Therefore, the correct way to measure results of your ORP is with customer loyalty or retention metrics.

Some popular metrics include Net Promoter Score (NPS), active customer status, customer lifetime value (CLV) or revenue per units-in-operation ($/UIO). Pick one or several to measure progress by.

Tips for Improving ORP Results

Once you have customer retention benchmarks for your ORP effectiveness, it’s time to implement strategies to improve results.  Here are a few tips to get you started.

Most dealers choose a budget-first approach, but this caps the potential audience that your campaigns can reach. Instead, use a goal-oriented budget approach and strategically select communications based on your dealership’s needs and business goals. This might mean doing fewer campaigns but maximizing the reach x frequency of each campaign.

Diversify your channel strategy beyond email and direct mail. Implement an omnichannel strategy and add social media, digital advertising and other channels depending on the goal of the campaign. If you’re doing conquest service campaigns, it takes up to seven touches to drive customer action. Adding more channels enhances the effectiveness of the channels you already have in place.

Not every campaign has to drive ROI. Be sure to include campaigns such as service thank-you’s and educational pieces that help build customer relationships.

Take a holistic approach and consider how your ORP messaging complements your overall dealership’s marketing strategy. What dealership events and marketing messages can be incorporated into your ORP?

Additionally, many dealers fail to leverage their customer data to create targeted and relevant ORP campaigns. Using predictive analytics can help identify which customers are most likely to buy into your dealership’s service value proposition and therefore are most likely to become loyal customers.

You can read more about these strategies as well as others in Affinitiv’s ebook, “Turbocharge Your Owner Retention Program (ORP) Marketing.”

Once you’ve modernized your ORP and you’re getting better results, it’s time to connect the dots between your ORP marketing and the rest of your dealership’s marketing. Your owner retention program should not be run in a separate silo. To really maximize results, it’s important to integrate your service marketing strategy with your sales marketing strategy.

Integrating the ORP into the rest of your marketing creates a more consistent and better customer experience throughout the vehicle ownership lifecycle, which in turn increases customer loyalty and generates more revenue.

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