Let’s review some Customer Retention….facts…


These statistics are directly from NADA, the National Automobile Dealers Association…


Ninety percent… and I repeat…


Ninety percent of a dealership’s advertising budget… is spent attempting to acquire a NEW or Pre-Owned vehicle customer.


While the remaining 10 percent of the budget… is spent in the Service and Parts Departments.


Considering that the average dealership spends $384,000 per year…on advertising  


This means that the average dealership only spends $38,400/year on retaining its customers.


That statistic is disturbing.


The easiest and least expensive customer to sell to… is the one that has already bought from you.


The auto industry… is working too hard and spending too much money… constantly trying to acquire new customers…


And while acquiring new customers is VERY important…


They already have thousands in their database… that are theirs to keep once they develop the right retention plan.


Now…the average new vehicle customer…according to NADA… is keeping their vehicle approximately 40 months before trading it in…


AND…Regular service customers are 17 times more likely to buy their next vehicle from their servicing dealership…


17 times more likely!!


Not twice as likely…or 5 times more likely…17 times more likely!!!


Did you also realize that 30% of YOUR customers…have a friend or family member that will purchase a vehicle within the next year??


Wouldn’t you like to have an opportunity to sell a vehicle to those people??


Very few dealerships track their marketing & retention efforts.


Most cannot tell… with a definitive answer… what is working and what is not.


More often then not, they do the same thing year after year.


That fits my favorite definition of insanity -- “Doing the same thing over and over again and hoping for a different result.”


So …what measurement instrument are you using…to track customer retention??


If you have to stop and think about it…you probably are not tracking it very well…


Is the Service and Parts Departments using specific operations codes to track your marketing efforts??


You can be very specific with these operation codes to help you track what is working and what is not…


Are you offering any special incentives to your customers to remain loyal??


You don’t need to give away anything to keep your customers loyal…


All it requires… is a little attention… and a little consideration…isn’t that what we all want??


There are countless ways to retain your customers…but you need to manage and measure these ways…


No program is good or bad …until it is measured…


Investing in retention… it’s an investment in the future… and cannot be underestimated.


So if you haven’t already… I strongly encourage you to take retention seriously.


Adopt a program to help you achieve results… and measure and track how the program you choose… works for you.


If not, you’re losing money to your competition.



About the Author: With 30 years in the retail Automotive Industry, from a Salesperson to a Dealer, I have a vast amount of experience in all areas of the automotive environment.


You can follow me on:


My website: www.JimKristoff.com  

Twitter: @jimkristoff

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Comment by Jim Kristoff on August 22, 2011 at 9:58am

Amen Richard!

Please read my 2 part blog on BDC'S, titled; "are you ready for a BDC that does it all"

Comment by Richard Jungkuntz on August 22, 2011 at 9:12am

Great Stuff! Most dealers are caught in the here and now. How to sell and service more cars TODAY...Unfortunately that plan should have started weeks ago..

Another NADA Fact:  80% of customers stop returning to the dealership because the dealership stop communicating with them. Its a world full of short term memory customers, if you are name is not consistently in your customers mind, they will go to the closest, cheapest or first person to contact them.


I believe that 80% of the business is retention and referral. Should'nt your efforts reflect that also?

Comment by Marsh Buice on August 17, 2011 at 7:55pm
Perfect, thanks brother
Comment by Jim Kristoff on August 17, 2011 at 7:11pm

Thnaks Marsh!

I am glad you asked the question of what are the most cost effective ways of doing this.

I have a 2 part blog starting tomorrow on an "All encompassing BDC"...

Part 1 is tomorrow.

I am also going to post my 2 part blog on the best practices of the service lane next week.

Comment by Marsh Buice on August 17, 2011 at 6:22pm

Jim great, great stuff. What are some of the most cost effective ways of scrubbing through our database to do this-without hiring a company to come in and do it?

Comment by Stephanie Young on August 17, 2011 at 10:35am
Amen, brother Jim!!!!  I drive 45 minutes, passing two other Nissan dealerships, to have my car serviced.  Why?  The customer service.  I actually wrote a blog about it...surprise, surprise.  (smile)
Comment by Jim Kristoff on August 17, 2011 at 10:11am
Thanks Bobby!

The "drill down" of how to achieve more customer retention is coming up in 2 more blogs I am currently putting together. The first blog is on a concept of an "All encompassing BDC", and the second blog is, "Service Lane Vitals"....
Comment by Jim Kristoff on August 17, 2011 at 10:01am

Stephanie.....most dealers don't understand the whole concept of retention!

You sell the customer a vehicle once every 3-4 years.....you service them 10 plus times in that period. If you don't WOW them and retain them, you will lose them!

Comment by Stephanie Young on August 17, 2011 at 9:49am

LOL@ Tony.  If you can't find Jim, you just are not trying. 


Jim, why to take off the rose tinted glasses.  One of the pitfalls for most dealerships is around retention.....of customers, staff, process, goals,etc.  It is one of those areas where I wish I had a magic wand or better aspirin as I continue to rap my head on the wall in bewilderment. 

Comment by Jim Kristoff on August 17, 2011 at 8:51am
Thanks Tony!!!

I don't think I have enough places that you can follow me as of yet.....LOL.....

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