Surviving the Customer Loyalty Tailspin

Today, the Big 3 automakers account for only 44% of the market – a 26% decline from 2 and a half decades ago. In this short amount of time, consumer loyalty is no longer within reach, as the average customer retention rate across the industry has sunk below 50%. This amounts to dealers losing more than half of their customers each year.

 

Why the sharp decline in loyalty?

 

Carl Sewell wrote his ground-breaking book “Customers for Life” in 1990, changing how many dealers viewed their customer relationships and paving the way for the industry to drive higher levels of service and loyalty. While increased competition and online pricing is partially to blame for the decline in loyal consumers, a critical factor is the changing mindset of the U.S. consumer. The hard truth for dealers is most consumers have redefined what it means to be loyal in the digital age.

 

How the meaning has changed.

 

AutoLoop surveyed 1,000 vehicle owners from across the U.S. to better understand their mindset towards loyalty. We were surprised to learn 62% of consumers actually consider themselves loyal to an automotive service center despite the low retention rate for the average dealer. To better understand the gap between consumers’ attitudes and their actions, we dug deeper. When we asked customers to tell us what loyalty means to them, we found a split among generations.

  • Baby Boomers were most likely to say loyalty equates to always visiting the same store when they have a need for service.
  • The younger generations are more likely to cite loyalty as a “sometimes” rather than an “always” behavior.
  • Slightly more than half of Millennials actually believe they are loyal even though they frequently visit competitors.

 

In other words, loyalty is more of a convenient activity rather than a commitment. Given this discovery, dealers are faced with a new challenge – prevent their best customers from going elsewhere even if they show no signs of disloyalty.

 

Our research shows that dealers lose close to $1M per year of service spending from their current customers. To address the lost revenue opportunity, dealers need to dramatically rethink their marketing strategies. Many dealers are using outdated, disconnected marketing programs with little to no coordination across media and touch points.

 

Engagement is key.

 

Given the constant threat of losing business to competitors, progressive dealers need to use a variety of integrated programs to stay top-of-mind and continuously engage with their customers. At AutoLoop, we are leading the charge by integrating more programs and touch points to ensure dealers stay relevant at all times. From appointments to inspections, newsletters to maintenance reminders, and loyalty programs to mobile apps, AutoLoop has the fully-integrated platform dealers need to stay ahead of the competition and keep their customers coming back time and time again.

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Comment by steven chessin on January 10, 2017 at 2:55pm

"In other words, loyalty is more of a convenient activity rather than a commitment."

You mentioned the customer's loyalty commitment to the store but what about the store's to the customer ? Is that being fulfilled ? No. You mention that AutoLoop has "integrated programs". You describe that as "leading the charge by integrating more programs and touch points to ensure dealers stay relevant at all times. From appointments to inspections, newsletters to maintenance reminders, and loyalty programs to mobile apps."

Sounds good. Thanks for the info. I will visit your website,look things over and contact you. As a BUSINESS DEVELOPMENT DIRECTOR, I see most dealers merely look at lead management which is just one (narrow) perspective of what DEVELOPMENT truly means. Do you have any suggestions how that perspective can be widened to address the loyalty slippage they are not handling well at all ? I have found a reluctance to stronger customer loyalty that I cannot comprehend ! --- They say to me they do not want to discuss anything except selling more cars today and do I want to work for them selling cars or not ? --- This is THE most common problem in this business --- all they want are more salesmen.

SALES is a now business T O D A Y. Loyalty programs are seeds that need time to grow. I know I cannot change greyhounds into bloodhounds but 25% retention instead of 60%+ should be shouting the need. OBVIOUSLY SOMETHING IS BROKEN THAT NEEDS TO BE FIXED ! Who can accept a 30% loss of business leak that can be sealed ?!

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