Achieving sales targets, meeting KPIs and strategic goals are integral to a dealership’s success – and in today’s competitive marketplace, this is no small feat. One of the biggest challenges that many auto sales professionals face is building strong relationships with customers to build long term loyalty and retention.Traditionally, auto manufacturers and dealerships have relied on the customer satisfaction survey or Customer Satisfaction Index (CSI), to compile information about the level of customer satisfaction. These survey tools have enabled those in the auto industry to collect feedback on customer satisfaction levels in regards to sales or services provided.
Yet, there is a growing awareness that high CSI scores alone do not lead to long term profitability; customer retention and loyalty does. Dealerships and manufacturers are beginning to realise that customer satisfaction at the point of sale may not always bring about loyalty and advocacy. This is because while satisfaction is a measure of the customer’s opinion, it is behaviour triggered by loyalty and advocacy that brings the customer (and their friends and family) back again through repeat business and referrals. This is usually apparent when comparing data between sales and service CSI, since
dealerships usually score lower on the Service CSI than the Sales CSI. The implication is that “satisfaction” begins to deterioriate after the initial purchase experience, leading to long term customer defection in many instances.
So why do dealerships fail after the sales experience?
Failure to focus on improving the “ownership” experience
While the ability to make a sale is important, many organisations fail to grasp the opportunities to develop relationships and build loyalty once the customer drives off the lot. Dealerships consider the sale as the end of a deal rather than the beginning of a relationship. In order to change, dealerships need to re-evaluate their priorities, and treat the sale as the beginning of a relationship.
Lack of CSI “motivation” after initial sales
Because it is considered the end of a deal, most CSI incentives end when the deal is done. As a result, the opportunity to build upon the rapport developed and to continue to provide superior ownership experience is abandoned because it no longer deemed important. Without something in place to encourage customer engagement after the sale, the benefits of customer retention becomes lost and employees move on to the next sale to boost CSI score.
Lack of understanding the benefits of customer retention
When the focus is on sales figures & CSI, everyone in the dealership fails to recognise the importance of customer retention because these are not measured. And what is not measured does not matter. Yet initiatives to retain customers can potentially add more to the dealership’s profitability than constantly acquiring new customers.
Innovative CSI Solutions to Improve Customer Retention
For forward thinking dealerships, the good news is there are positive steps that you can take to achieve greater levels of customer loyalty and retention. Instead of relying solely on the traditional CSI model, which is still important, there are additional steps you can tale that can make a difference to your long term success.
Focus on the customer
This is not always as obvious as it should be, but focusing on the customer should be the key purpose; it shouldn’t end once the deal is over. Investing in your customers takes time and commitment; and focusing beyond the deal is not something that is natural for many auto dealerships. But the rewards are well-worth the effort. Repeat patronage from loyal customers costs less to serve than acquiring new customers, and loyal customers also tend to recommend friends and families consistently. Many dealerships underestimate the potential benefit of having a pool of loyal customers who constantly bring in new and repeat businesses.
Realign incentives to achieve customer retention
Adjusting the way CSI is managed will facilitate a change in the dynamics of the survey process; moving from a sales survey to a broader owner-experience focus. Currently, CSI surveys usually focus on customer satisfaction levels during the initial sales experience. However, statistics show that satisfaction deterioriates over time after the initial sales experience.
By modifying the CSI survey to incorporate a focus on the customer experience after the sale, dealerships can get a clearer picture of the level of customer defection and service decay. CSI incentives can take into account initiatives and effort to improve owner experience, and ultimately impact the level of retention and advocacy.
Hire a business coach
Most auto manufacturers and dealerships focus solely on improving products and the initial sales experience. While this is important, it is an incomplete strategy in thelong term. Building a business model that excludes aggressive customer retention strategies is simply unsustainable.
Engaging a business coach or consultant gives an objective perspective to your business. Instead of focusing on just the CSI results, the business coach can look at ways to measure longer term customer satisfaction scores and analyse how they directly correlate to their purchase behaviours and loyalty.
A strong business model needs to consider strategies used to sell auto products to new customers as well as how to retain customers and build long term loyalty and repeat purchases. A business coach can help you better understand the life cycle value of purchasing and ownership.
Developing a Focus on Customer Retention
Introducing change in an organisation can be a complex process. Many dealerships and auto manufacturing management teams are used to focussing on making the sale, and CSI is measured based on that single sales experience. In order to implement changes and create a customer-centric culture, dealerships and manufacturers should focussed on expanding, improving, and properly aligning CSI incentives to achieve long-term relationships with customers after the sale. Most auto manufacturers and dealerships struggle with how to keep customers locked in to future sales and repeat business. It is easy to get customers excited about a new vehicle, but helping customers stay excited, that takes structure, practice, and skill.
Enthusiasm for a new vehicle purchase is normal – but after several years, the customer will have a strong sense of what they do and don’t like about their purchase. They will be thinking about their next vehicle and what they would like from that vehicle. A smart dealership will have strategies in place to capitalise on the customer relationship developed during and after the sale so that when the time comes to buy another, the dealership is well-placed to meet those needs.
A good customer retention strategy and strong customer relationship smooths the way toward the next sale. Unfortunately, most CSI programmes do not yet measure this critical process which can result in a lost opportunities.
Understand of the Value of Retention
The final hurdle for dealerships and manufacturers to overcome is the lack of understanding of what is the true the value of a loyal customer. After all, for many businesses, the glory is in bringing in the sales, not keeping the customer happy. While the focus on the sale guarantees that sales employees will work to build customer rapport, they tend to drop the ball the moment the contract is signed, and move on to the next deal. There is a common belief that time taken to establish relationships is better spent making new deals.
Understanding the limitations of traditional sales-oriented approach in today’s business environment is critical to the long term success of both dealerships and manufacturers. The importance of taking time to develop a stronger customer relationship and setting up future sales and referrals ensures future sales while reducing the cost of acquiring new customers. By managing relationships and catering to loyal customers, the seller or manufacturer will generate lifetime value through repeat sales to happy customers.
The CSI surveys need to be expanded to enable auto dealerships andmanufacturers to improve their customer strategies with regards to retention and advocacy. Customer retention is a crucial part of any business and customer satisfactionshould be analysed in this context. In this way, you will reach your customers from the initial sale, through the life cycle of vehicle ownership and when they return as a repeat customer for the next purchase. Ω