6 automotive customer types and the lifetime value they bring to car dealers

On the latest episode of Mind Your Own Business, host and automotive sales training expert and founder of Sellchology Jonathan Dawson discusses the real lifetime value of customers. All customers aren’t created equally, yet many dealers don’t make distinctions between the different types of car buyers that enter their dealership. In this episode, Dawson defines customer lifetime value. He also breaks down the different sources of customers into six different categories. 

How many customer types exist? According to Dawson there are six categories to consider, starting with the walk in customer. These customers have no prior relationship with the dealership. They simply walk into the showroom by general curiosity. The next type of customer is the ad-based lead or appointment. These customers engage with dealers based on prior-research that has led to an appointment to look at a specific vehicle.

Another customer type is the repeat customer. These car buyers have completed transactions in the past and are returning to conduct more business. According to Dawson, different family members from the same house are called repeat household customers. The fourth type of customer are those that have been referred to the dealership by colleague or friend. The last two types are service conquest customers and self-generated customers.

Dawson then discusses a hypothetical situation of six buses containing 50 people representing the six different customer types. He challenges his audience to prioritize these customers from most valuable to least valuable. Dawson says dealers often prioritize the wrong buses, causing them to miss out on the best opportunity for future profitability.

Dawson says his number one priority among his six categories is the service conquest customer. He says this customer is even more valuable than repeat customers. Service customers who have no prior purchasing experience with the dealership are more likely to return to the service department of the dealership if they decide to buy a car from the lot. Building a strong relationship with service conquest customers should be a major priority for dealers who are looking to build customer retention.

Stay tuned for more great episodes of Mind Your Own Business.

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