Any business owner understands the importance of customer retention and creating a loyal client base, however, many dealerships struggle with this practice in their service departments. As the cost of customer acquisition continues to rise, here is a refresher on why return customers are so important.
Repeat Customers Spend More Money
According to RJ Metrics, repeat customers spend about 300 percent more than new customers. If customer acquisition costs are high, the fastest way to mitigate those expenses is to turn a customer into a repeat visitor to your service department. When the service department is trustworthy, convenient, and loyal, repeat business will add up over time. It is crucial for dealers to look at the potential lifetime value of a customer.
Repeat Customers Trust Your Recommendations
For new customer acquisition, you have to sell yourself and your dealership, in addition to the services it supplies. Even under the best circumstances, new customers are generally more guarded and skeptical of your suggestions.
However, when working with a repeat customer, those barriers are lowered. Repeat service recommendations. If you want to raise your average return order, then focus on repeat customers.
Acquiring New Customers Is Expensive
Advertising, discounts, and service specials are all expenses for a dealership’s service department. These expenses may be necessary, but they are not always profitable. Unfortunately, most new customers drive away with not much more than basic, routine, maintenance.
Your customer acquisition plan should look beyond that first visit, and focus on retention in order to see costs fall.
In review, there are Three stages of customer conversion:
Stage One: When a new customer spends money for the first time in your dealership’s service department.
Stage Two: When that customer comes in for subsequent visits, thus becoming a repeat customer.
Stage Three: When your repeat customer becomes a promoter and starts to refer others to your service department.
Customer acquisition costs are the lowest in stage three and the lifetime value of a stage three customer becomes immeasurable. Long-term business success is built on a loyal customer base, and dealerships are no exception.
A dealership’s service department has the ability to become its very own profit center, independent of the sales department. A service department with a solid customer base can even carry an entire dealership when sales are slower, but it all starts with customer retention.
