5 Ways To Improve Dealership Customer Loyalty & Retention

by automotiveMastermind

While loyalty customers have long been critical to dealership success, customer retention has been a growing challenge for dealers in recent years due to limited inventory, rising vehicle prices, shifting buying behaviors and increased competition.

Despite these challenges, brand loyalty in the automotive retail market is starting to recover. According to S&P Global Mobility, industry wide brand loyalty rose to 52.5% through June 2024, a 1.9 percentage-point increase from the same period in 2023. This is the first year-over-year increase since 2020.

The Value of Customer Loyalty

Even as inventory levels normalize, proactively preventing customer defection is still crucial for both short-term and long-term success.

S&P Global Mobility reports that consumers now have more than 450 nameplates to choose from, with that number expected to grow to 650 by the end of the decade due to the rise of electric vehicles. At the same time, ownership costs have also increased by 30% since 2019.

Dealers need to take intentional, proactive steps to protect their customer base from competitors’ conquest efforts. To increase brand loyalty and improve dealership customer retention, dealers need to:

Proactively engage loyal customers

Communicate with personalized messaging

Focus on long-term customer experience

Identify signs of potential customer defection to prioritize immediate opportunities

Support sustainable success by supplying future sales

Proactively Identify and Communicate with Loyalty Customers

The first step in protecting your dealership’s loyalty audience is determining which of your customers poses the greatest risk of defection. As the lingering impacts of the inventory shortage continue to impact brand loyalty, dealers need to engage customers before they start shopping around to proactively prevent defection and improve customer retention.

To proactively identify, prioritize and engage loyalty customers before they defect requires seamless cooperation across the dealership. This requires support from marketing, sales teams and service departments to maintain a consistent customer experience that keeps customers engaged until their next purchase.

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Advanced dealership marketing tools empower dealers to take this approach even further. Combining these insights with third-party data, like financial records and household demographic information, gives dealers an even clearer view of their loyalty audience. This enables them to prioritize their marketing strategy and efforts and automatically engage customers before they return to market.

Personalize Messaging to Address Unique Needs

Identifying which of your loyal customers poses the greatest risk of defection is only one part of the equation. Retaining loyalty customers also means keeping them engaged over time, an increasingly difficult challenge amid aggressive conquest efforts from the competition.

To stand out from the noise and retain loyal buyers, your dealership needs to craft personalized messaging that proves you know and can care for your customers best.

Personalizing your messaging means more than including your customer’s name and vehicle of interest in an email template. Your messaging needs to demonstrate why they should continue trusting your dealership with their business.

Look for opportunities to build trust with your loyal audience through every customer touchpoint, such as:

Marketing F&I products

Marketing personalized financing special offers

Ongoing communications after the initial sale

Focus on the Customer Experience and Keeping in Touch

While prices are still high, offers from competitors and expanded online retailing options are increasingly tempting your customers to shop around. To proactively prevent customer defection, dealers need to maintain consistent communication with buyers throughout their buying journey.

Look for opportunities to keep in contact with your buyers with personalized messaging that speaks to their specific and evolving needs and in their preferred medium. Ensure each touchpoint builds on the last in a useful and helpful manner, meeting your loyal customers where they are in their ownership or buyer journey to keep them engaged over the years.

For example, some dealers are utilizing behavior prediction technology to maintain consistent communication with customers via convenient service alerts. By serving as an ongoing customer concierge through service alerts and following dealership service drive best practices, dealers can create the type of service experience that keeps customers coming back.

Supporting Short-Term Success

While inventory levels have normalized, soaring prices and increased competition make it essential for dealers to move vehicles quickly. By matching the right vehicles to customers before they start shopping elsewhere, dealers can engage buyers earlier in their buying journey, helping maximize inventory turnover and sales profitability.

Leveraging behavior prediction technology helps analyze customer insights from CRM, DMS and inventory data. This enables dealers to account for the wide range of factors beyond brand loyalty that influence a buyer’s purchasing decisions – and map their available inventory to meet those needs.

This proactive approach not only helps maximize available inventory, but it also strengthens customer relationships by offering tailored solutions that align with each buyer’s preferences.

Loyalty Customers Supply Future Sales

Your loyalty customers remain a critical source of future sales, especially as the automotive retail industry continues to face the challenge of high vehicle prices. While inventory levels have recovered, rising costs and increased competition can still disrupt customer loyalty, making it more important than ever to focus on retaining your loyal customers.

Remember: Loyalty customers increase in value over time and are an invaluable supply of high-ROI sales, as they are:

Less likely to negotiate

More likely to generate service and other fixed-ops revenue

Contribute significantly to referral business

By avoiding short-sighted strategies that focus solely on immediate sales or pricing, dealers can maintain customer loyalty and build long-term relationships through personalized, consistent communication, helping to prevent competitors from capturing high-value customers.

Interested in learning how Mastermind can help your dealership improve customer loyalty and retention, even in the most challenging environments? Contact us for a free demo.