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Creating a loyal customer is sort of like getting married. The introduction is followed by a period of courtship and, if all goes well, commitments are made. Loyalty in the automotive world is something that everyone battles from the OEM level to the dealership. Did you know, however, that the longer you’ve had a customer the harder it is to keep them?
Logic would dictate that you would need to focus more on creating customer loyalty in the beginning than after the marriage. However, according to R.L. Polk, “loyalty rates decline after the third year of ownership and continue to decline after the fourth year, and every year after that.” Polk attributes this fact to “boredom”. Their studies show that the longer a customer owns a car, the less exciting the ownership experience becomes.
Just as in marriage, there’s what is referred to as a “honeymoon” period. You’ve taken the vows and began your new life together, and everything is wonderful. Apparently, according to Polk, a similar period exists when it comes to customer loyalty and retention. As we consider ways to increase customer retention, it seems as if length of ownership is extremely important. It certainly makes sense that, no matter how long you’ve had a customer and no matter how great of a relationship you’ve had with them, if they get “bored” and switch to a new make, you’ve definitely lost a sale but chances are probably very good that you will lose them as a service customer.
The fight against “boredom” is something that OEMs take on by introducing fresh models with new features, more powerful engines, sleeker more modern looks and technological advances. They encourage leasing by offering low residuals and money factors with the hopes that the customer will stay loyal by returning to lease another vehicle.
How do you help buck this trend and insure that your customers stay loyal? One way is certainly by making the customer experience exceptional. People certainly love excellent customer service, and it is one of your greatest weapons in creating loyal customers. Another way is by implementing a dealership loyalty program that incentivizes customers to keep doing business with you. There’s a reason that almost every major retailer in the US has a rewards program of one form or another. It allows you to track how your customers are spending money with you which then gives you the data to create offers better tailored to them.
No matter what you do, make sure that you’re retention strategy isn’t focusing solely on creating loyalty in new customers. Analyze your sales history and shift some of your focus to customers who purchased 24-36 months ago and you’ll be well on your way to helping your OEM increase brand retention while insuring that you’re giving your dealership the opportunity to intervene with your loyal customers before they get bored.