4 Ways to Increase Customer Retention at Your Auto Dealership

Jennifer Lilley
June 17, 2021

The COVID-19 pandemic has turned much of the global economy upside down—and automotive dealerships are one industry of many feeling the weird effects.

The COVID-19 pandemic has turned much of the global economy upside down—and automotive dealerships are one industry of many feeling the weird effects. Vehicle inventory has been tight after a slow 2020 and might be for a while, but demand is high from consumers itching to spend.

This outlook is creating a situation in which customers aren’t getting as many deals, possibly meaning dealerships aren’t wowing people as much as they once could. Making a good impression is essential for return business—which is even more critical now given the tight inventory. If you don’t have a car currently in stock and it can’t be immediately ordered, you need to think about how to get potential buyers back to your dealership down the road.

Furthermore, keeping dealership employees engaged became more of a challenge during the pandemic. Engaged employees are more likely to enthuse customers, who in turn take their vehicles to you for maintenance, post good reviews online, and tell their friends and family that your dealership cares about its customers.

Whatever the future holds, customer retention will always be a priority for the automotive industry. Here are four ways to keep customers coming back to your dealership:

1. Emphasize the customer experience

Automotive sales have changed drastically in the past couple decades. Consumers can research everything they need to know about a car without even stepping foot in a dealership. No-haggle and online-only buying options also pose a challenge to traditional dealers, who, more than ever, need to show that they understand and truly care about the customer’s needs.

PwC research found that 73 percent of consumers factor their experience into purchasing decisions, and 42 percent would pay more for a “friendly, welcoming experience.” Buying a car is such a big purchase that customers are more risk-averse and less likely to forgive a dealership mistake. Emphasizing the customer experience in the automotive industry improves retention because you earn people’s trust—and ideally maintain that trust long after someone drives a car off your lot.

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2. Incentivize the customer experience

A great customer experience in the automotive industry starts with employees and goes a long way toward boosting retention. Disengaged employees make a negative impression on customers, and salespeople walk a fine line between guiding the sales journey and being pushy. On the other side, engaged employees and salespeople can be a secret weapon in maximizing the customer experience. The same PWC research found that 71 percent of consumers say employees significantly impact their experience.

A key to all this is ensuring employees stay engaged and always keep the customer experience top of mind. Gamification, contests, rewards, and other incentives can help employees follow best practices and achieve goals—especially those objectives that aren’t strictly sales-related. By gamifying work activities, you’re challenging workers to continuously think about how they’re interacting with customers.

3. Focus on the service department

Salespeople, with support from some other departments, can close the deal and impress the customer … and then the customer might not come back for a few years (or longer) when it’s time for another vehicle. Service departments offer a terrific path to retention because, ideally, customers will keep bringing their cars to the dealer for routine maintenance and occasional repairs.

However, service department employees, as technically skilled as they may be, might not be thinking about how to connect with and impress customers the way that, for example, salespeople do. Training can help your technicians better engage people, sell and upsell services, and give customers a reason to return. Incentives and gamification are also fantastic—and, perhaps more importantly, fun—strategies for encouraging service employees to step up their customer experience efforts.

4. Personalize follow-up

Marketing to existing customers is spray-and-pray for some dealerships: postcards and mass emails to promote upcoming sales or to remind vehicle owners to get an oil change. Such follow-up strategies can feel impersonal and even a nuisance, with customers often tossing mail offers and deleting emails—or worse, unsubscribing from email.

Email solutions and customer relationship management (CRM) can help make better, although automated, connections with customers. However, nothing is better than a written note, a text message, a phone call, or a non-automated email from employees asking customers how things are going and informing them of upcoming dealership events and offers. Follow-up strategies can also be gamified to help encourage employees to continue the relationships they worked so hard to establish during the sales process.

Arcade offers a performance engagement solution that helps the automotive dealership industry tackle customer retention while helping employees look at their jobs in a new way. We are an Affinity Partner of the American International Automobile Dealers Association (AIADA), in part because of our solution’s capabilities to connect with dealers CRM and KMS platforms and transform KPIs and business goals into gamified incentives. Request a demo to learn more.

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