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CAP trade watch: Welcome back customer loyalty

Dealers hardly need reminding that customer loyalty has become harder to earn than ever before.

The availability of comparative information via the internet has enabled consumers to make price-led purchasing decisions more easily than at any time before. But, although that is true in general, there are dealers who have risen to the challenge and developed better levels of service which have enabled them to hold on to customers.

Research among retail used car dealers indicates almost 40 per cent believe they have turned the corner on customer loyalty and are now seeing more repeat business than five years ago. The rest report little change or a worsening of customer loyalty – but still the figures are more encouraging than might have been assumed.

When dealers are asked what brings customers back it is clear that price competitiveness is still important, but not necessarily the sole reason, for repeat business. Less than a quarter cite price as the principal reason for their success. Brand loyalty, in the case of franchise dealers, good service and high quality staff who build relationships with buyers appear to be just as important.

CAP’s research also suggests that where a high level of returning customers is achieved, the proportion of those who buy again tends to be high: almost one in four used car retail dealers claim that between 40 and 50 per cent of their sales are to repeat customers, while only eight per cent say that the figure is ten per cent or less.

As cars converge in terms of quality and become increasingly like other consumables in the way they are treated as a commodity, it seems the best way to differentiate one offering from another is to make the purchase experience the major selling point.

Those dealers who retain the best staff as well as employing rigorous customer care policies will almost certainly be best placed for success.

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