Service Customer Retention is Money in the Bank

January 2011, Auto Dealer Today - WebXclusive

by Brice Englert - Also by this author

Times are tough, but not every dealer’s story is doom and gloom. Thanks to a renewed effort in fixed operations and a strong focus on customer retention, many auto dealers are making money.

Recent reports project declining service revenues for auto dealers through 2013. Clearly, if dealers do nothing, these projections will become a certainty. However, evidence strongly suggests that with just a little effort auto dealers can easily recover this lost revenue, and even more.. Here are a few proven strategies to help you retain your service customers.

Develop a Marketing Plan
marketing plan needn’t be a long, complicated document. It simply needs to identify who your customers are and how and when you will communicate with them. Instead of sending sporadic off-the-cuff e-mails, consistently target your customers with relevant messages. Recurring e-mail campaigns generate higher response rates than ad hoc e-mails—9.35 percent, on average, versus 5.1 percent.

Ad hoc campaigns still have a time and a place, but they should not be your dealership’s primary means of communication. Putting in the time up front to develop a marketing plan will free up time spent planning each month and can greatly increase revenue. Bay Ridge Honda Volvo in Brooklyn, N.Y., is an excellent example. In 2009, after years of sending ad hoc emails, the dealership put a marketing plan in place. E-mail open rates increased 21 percent and year-over-year revenue went up 85 percent.

A thoughtful, targeted e-mail campaign can even help reclaim lost and defecting customers. These customers respond well to targeted e-mail campaigns, with an average response rate of 1.8 percent.

Use a Variety of Communication Channels
It really pays to examine how you communicate with your customers. Are you sending e-mail alone? Try adding direct mail or voice messaging to the campaign? Yes, I mean sending the same message to the same people through multiple channels. Combining communication channels can nearly double response rates and increase the ROI of the campaign.

Fletcher Jones Motorcars in California experimented by sending a service mailer to its traditionally e-mail-only client list and then compared the response rates to those who received only the mailer. The result? Customers who received both e-mail and direct mail outperformed their direct mail-only counterparts by 96 percent.

Text messaging is another communication channel that can’t be ignored. More U.S. consumers use text messaging than regularly use e-mail, and it’s an ideal way to reach your service customers. Using an opt-in text messaging service, your service department can communicate in real time with your customers—letting them know when their vehicle is ready, gaining approval for repairs or up-sells, sending service appointment reminders, and other service-related campaigns.

Focus on the Customer
Your retention rate, and revenue, depends upon how your customers interact with you. Are you accessible and easy to work with? Do they feel they matter?

Take a close look at the messages you’re sending. Do your campaigns focus on the customer or do they scream mass-marketing? Making a customer feel special is easy with a customized campaign. Send them a birthday greeting or acknowledge the anniversary of their vehicle purchase.

A newsletter is a great way to stay in touch with your customers but only if it provides relevant information. Have you taken the time to write articles that are relevant to your area, your customers and your dealership? Dealer-generated content consistently outperforms canned newsletter content.

Customers want to feel appreciated and in control. A great way to offer control and flexibility is with online scheduling. Available 24 hours a day, seven days a week, it lets the customer decide when to bring in their vehicle. This efficient system reduces the number of missed appointments by more than 25 percent.

For the last 18 months, Auto Park Honda in Cary, N.C., has seen customer participation in online scheduling grow consistently, with 17 percent of all appointments now made online. That’s impressive but the highlight of their story is show rate. Because the customer is in control and because their appointment scheduler automatically generates appointment reminders for both online and DMS appointments, their show rates now average more than 96 percent. That’s money in the bank!

With the right marketing mix and constant attention to customer needs, dealers can increase service revenue and more than offset the effects of the down economy.

Vol. 7, Issue 11

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