We recently did a study of over 400 dealerships nationwide where we learned, through extensive research, that the average retention rate of the average dealership is less than 25 percent.
In fact, Google agreed. During one of their webinars, they revealed that the best customer retention rate a dealer can have is 25 percent… at best.
So how can you fight this?
Well, there’s many ways.
One option is to cut your losses and focus on the conquest market. If all dealerships are dealing with defective customers, then you have a wider pool of conquest customers to pull from than you would think.
Other options are the many customer retention programs, strategies, and offers that can work to improve your overall retention.
But, one retention practice you might be overlooking is your service department.
Did you know that the likelihood of a customer purchasing their next vehicle at your dealership is dependent on service retention?1
If the customer has defected from your service department, you only have a nine percent chance that they will purchase their next vehicle from you.
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If they visit 1-2 times per year, their likelihood to purchase from you increases to 46 percent!
And customers who visit your service department three to four times per year are 86 percent more likely to purchase their next vehicle from your dealership.
You Need to Get Customers to Your Service Department
Unfortunately, a recent study revealed that vehicle owners are leaning more and more towards independent repair shops.2 These “corner shop” mechanics are drawing potential customers away from dealership service departments through the convenience of location, customer service, price, and trust.
The study showed that 72% of service customers are opting for independent repair shops over dealership service departments, despite the fact that dealerships can provide a more efficient, higher quality experience.
The study revealed that more than half of these service customers don’t go back to their dealerships for service work because they’re worried they’ll be overcharged. As soon as a customer’s warranty runs out, they move on from their dealership’s service department to their local service shop.
You know what your service department can offer vehicle owners. You know that your mechanics can provide more knowledgeable insights about specific brand needs and better quality of service and parts.
So how can you convince, not just your customers who are defecting to independent repair shops, but the other vehicle owners in your area, to give your service department a chance?
You Need to Try Something Different
Well, first-off, you can’t use typical solutions.
You need to offer something unique and powerful enough to out-market your competition. If 72% of service customers are influenced by their experience at a service department, it’s up to you to influence them to yours and give them a better experience than any other dealership or independent repair shop can offer.
Inactive or defective customers won’t be easily convinced. They already know what your service department has to offer and they’ve decided to take their business elsewhere – or they’re at least considering it.
And potential customers are always more difficult. They have no relationship with your dealership and no reason to change that.
Every dealership is offering an owner loyalty plan or service reminder program and every dealership is fighting for conquest customers. If your current marketing plan is to inform all new customers about their warranty options through your service department and offer inactive or defective customers a free oil-change, you won’t get the results you need.
You Need to Try Something Proven
A service clinic is similar to a private sales event. It combines marketing with action and sales with service. It invites current, inactive, defective, and prospective customers into the service department for a 60-minute multipoint inspection at no charge. It’s an event specifically designed to impress them with your service and expertise.
You’re setting yourself up for success because you’re giving your service department all the time it needs to walk through each step of your process with the customer in order to build or regain their trust in your mechanics and earn their respect. And, as an additional perk, you’ll get repair orders.
When your attendees understand that your dealership has more knowledge of their specific vehicle, quicker turnaround times, and competitive prices, they’re significantly less likely to visit or return to independent repair shops.
You Need to See Results Past the Day of the Event
A good service clinic should go beyond the service department and beyond the day of the event.
During the clinic, the increase in service department traffic leads directly to an increase in showroom traffic. You’ll see increased traffic, an increased number of repair orders, happy customers, new faces, and you might even sell some cars!
But the long-term results are even better.
You’ve increased each visitor’s likelihood of purchasing their next vehicle from your dealership by at least 37 percent! This is the customer retention plan that most dealers overlook. Offers and oil-changes have their place, but service clinics bring defective, current, and new customers into your dealership and allow them time to browse your inventory and learn what makes your dealership stand out from the rest.
Service clinics aren’t just about hitting your repair order goals for the month or increasing your overall dealership profit – though they have those effects.
If your visitors are convinced that you have the best service, the most knowledgeable technicians, and the most competitive prices, they will return time and time again, service after service, purchase after purchase and contribute consistently to your bottom line.
- Data from 2016 Car Buyer Journey commissioned by Cox Automotive through IHS Automotive.