Customer retention is more vital than ever, but many dealerships still focus more on gaining new customers than on getting more value out of the ones they already have. A great way to encourage retention is to create a formal loyalty program for your customers to join.
Not convinced a loyalty program is worth it for your dealership? Let’s look at a dozen reasons you should reconsider.
Customer retention by the numbers
1. 80% of your future profits will come from just 20% of your existing customers, according to the business leadership book Leading on the Edge of Chaos by Emmett C. Murphy and Mark A. Murphy.
2. It can cost a dealership up to 7x more to acquire a new customer than it does to retain a customer it already has, reports Kissmetrics.
3. Companies can boost profits by almost 100% by retaining an additional 5% of their customers.
These stats can seem rather abstract, so it’s important for your dealership to use your CRM data to calculate the average lifetime value of a customer. Here’s a tip from Harvard Business Review for encouraging the right mindset for your employees:
4. Tell all your employees the dollar amount that each customer repreents over time. It’s much more powerful than simply telling them “all customers are valuable.”
It can cost a dealership up to 7x more to acquire a new customer than it does to retain a customer it already has.
Customer satisfaction is key
5. 80% of companies believe they deliver a superior customer experience, but only 8% of customers agree, according to research from Bain & Company.
6. “Completely satisfied” buyers are over 4x more likely to make a second purchase from a dealership than “very dissatisfied” buyers, according to the 2016 Automotive Dealership Loyalty Study by MaritzCX.
7. A report from Microsoft found that 62% of customers have stopped doing business with a brand or organization due to a poor customer service experience.
Start with service
Many loyalty programs are based on utilization of your service department. This makes sense for a variety of reasons:
8. According to data from ICDP, selling a car with a service package leads to 50% higher retained margin over the customer lifetime.
9. A study by marketing technology company Performance Loyalty Group found that loyalty program members visit a dealership’s service department nearly 2x as often and spend 2x as much as customers who do not participate in a loyalty program.
10. The average spend for loyalty program members was $662.01 per year, compared to $336.63 for non-members, according to the same study.
Loyalty programs capture value
11. 50% of loyalty program members are willing to pay more for convenience. Only 36% of consumers who do not participate in a loyalty program feel the same way.
12. Not only do loyal customers purchase more, they are also more likely to refer new customers.
But, be sure to commit
There’s one bonus statistic that you don’t want any part of:
13. 85% of loyalty program members never hear from their loyalty programs again after the first day they sign up.
No matter what form your loyalty program takes, you want to make sure to leverage the customer data you have to contact your program members regularly. Use their preferred contact method, personalize the offers appropriately, and fine-tune your messaging over time to align with your customers’ needs and interests.
Want to learn how to implement a loyalty program at your dealership?Download the White Paper