The Undeniable Value of Customer Loyalty to a Car Dealership

The Undeniable Value of Customer Loyalty to a Car Dealership

The Undeniable Value of Customer Loyalty to a Car Dealership

Do you remember that one house down the street when you were a kid, the one that had a new car in the driveway every couple of years? Thinking back, it wasn’t a random string of vehicle makes, was it? They were always the same brand. Mr. and Mrs. Smith would take their old ride to the dealership, trade it in, and return with the latest model. Then your neighbor would stand in the driveway showing off, telling neighbors how loyal he was to his brand of choice and proudly identifying himself by association with it. It’s a fond memory of another time, but the truth is that repeat shoppers are still driving profits with car dealership loyalty today. Cultivating customer loyalty can have a real impact on your bottom line.


What is Customer Loyalty and Why Does it Matter?

Often the result of a positive experience or a strong emotional connection with a company, customer loyalty is a measure of how likely someone is to continue doing business with a particular company or brand over time. Across industries, customer loyalty stats are unmistakable:

  • New customers cost more than 5X what new customers do. (Bain & Co.)
  • For most companies, more than 50% of revenue comes from repeat business, and those repeat customers spend 67% more than new customers do. (BIA/Kelsey)
  • It costs 16X to bring a new customer to the average spend level of a repeat customer. (Martech)
  • New customers have a 13% chance of converting, as opposed to 65% for returning customers. (Forbes)
  • 61% of consumers will go out of their way to purchase from a trusted brand. (InMoment)
  • Increasing customer retention rates by just 5% increases profits by up to 95%. (Bain & Co.)

Of course, customer churn is real, and your dealership will always continue advertising and marketing to attract new buyers. But are you doing everything you can to cultivate your relationships with existing customers?


Strategies for Boosting Customer Loyalty at the Car Dealership     

Supply chain disruptions, staffing shortages, and increased competition — including competition from aftermarket service centers and looming competition from the very vehicle manufacturers you represent — are making it more difficult for automotive dealerships to succeed than ever before. Owners and managers need to use every tool at their disposal not only to attract, but also to retain customers. Here are three suggestions to help you:


1. Integrate the Showroom and the Service Lane

At many dealerships, the sales floor and the service department are inadequately integrated. They’re provided with separate software platforms that don’t communicate effectively with each other and keep the departments siloed. Instead, build a bridge between them to support customers at every stage of their relationship with your business. By using a single customer communication process, the showroom and service department can effectively collaborate on stronger customer relationships and boost long-term loyalty at your dealership. 

Only 13% of consumers who purchase their vehicles at a dealership come in for regular service,
yet one study demonstrated that those who receive service at the dealership are
86X more likely to return to purchase their next vehicle. 


2. Improve Customer Communication with Texting

When creating a customer communication plan for your dealership, think beyond email and phone calls. To build the loyalty you’re looking for, you’ve got to give your customers the communication they want on the schedule you need. That’s why the most successful dealerships have embraced texting as the best mode of communication to build customer loyalty. Texting has become the nation’s preferred way of communicating across all demographics. It’s so pervasive that even 94% of smartphone users 70 and older are text messaging on a weekly basis (Experian). Americans are texting about more than their social plans.

85% of customers prefer that businesses communicate with them
via text message and those little messages have a 98% open rate. 


3. Increase Personalization Across All Channels

Personalization – the tailoring of marketing messages and communication to a customer’s specific needs, interests, and preferences – has become a standard technique in emails and other communications. It is not only favored by today’s consumers; it is expected and demanded. 

Personalization builds loyalty, and failing to deliver personalization alienates consumers. Segment’s 2022 State of Personalization Report offers some important insights:

  • One in three consumers (38%) will shop with a brand they’ve had a good experience with again, even if less expensive or more convenient options are available. 
  • Nearly half (49%) of consumers are likely to become repeat buyers after a personalized shopping experience with a retail brand.
  • 62% say a brand will lose their loyalty if they don’t deliver a personalized experience, an increase of 45% from the previous year.
“Creating more personalized customer outreach will further
help dealerships grow share of wallet.” – Mckinsey & Co.


How TEXT2DRIVE Boosts Customer Loyalty at Car Dealerships

TEXT2DRIVE combines the streamlined communication customers prefer with the personalization they insist on, improving customer engagement and communication and leading to brand loyalty. Dealerships using TEXT2DRIVE’s automated messaging system see a quick ROI, with a $300 lift per repair order and a 35% boost in CSI scores. 

The easy-to-use, fully customizable platform can send personalized messages in response to a range of triggers, including appointment reminders, scheduled maintenance due dates, recall notices, real-time service status updates. Boost CSI survey completion rates when you send the link by text. Increase the likelihood that a lease customer will get their next vehicle from your dealership with a text to let them know that their lease is coming to an end and that you have great deals for their next car or truck. They can even reply to that text to schedule a convenient test drive. Perhaps best of all, texts are a way for friendly, frictionless communication. Staying in touch via automated, personalized birthday and anniversary messages is a great way to build customer relationships over time.

Increase customer loyalty at your dealership. Take a product tour for more information on how TEXT2DRIVE, the industry’s leading communications platform, can drive profits through the automated messaging customers demand.