By Debbie Kirlew
Customer retention is undoubtedly the Holy Grail for the modern retailer.
However, we consumers are a fickle lot and no one really knows what makes us tick.
Traditionally, aftersales has been at the forefront of customer retention.
Preliminary findings from the 2013 Castrol Car Servicing & Repair Trend Tracker report suggests predictions of new car sales will see the average age of cars fall and the size of the 0-4 year car parc increase so franchised dealers could capture a higher proportion of servicing work than the 37% it achieved in 2012.
The report, due for release in June, suggests the retail market for service, maintenance and repairs will decline in the longer term following a 1% increase in real terms last year (7% since 2008) to £9.37 billion, largely due to people keeping cars longer.
Add in the report’s findings that independent workshops carried out
almost five times as many MoTs in 2012 as the franchised sector (74% of
all MoTs versus 15%), and customer retention has never been more sharply in focus.
Having the right tools to deliver the very best in customer care (which should benefit customer retention) is half the battle and here AM takes a closer look at just 10.
Customer Satisfaction Surveys
Satisfied customers are not always loyal – the results of reams of customer satisfaction surveys may guarantee manufacturer bonuses but not necessarily returning custom.
Jeremy Michael, managing director of Service Management Group which delivers customer satisfaction campaigns for clients such as Homebase, Wetherspoon pubs and Shell’s franchised fuel stations, said: “There’s so much more emotion poured into buying a car compared to eating a meal and in many ways the process lends itself much more to creating a loyal customer so it’s about understanding what is going to persuade those people to return and reconnect with the business.
“The real issue is differentiating feedback from insight and it is the latter which is the key to increasing customer loyalty.
“Anyone can ask customers what they think, but turning data into action and using it to make strategic decisions enhances customer retention.
Stephen Hurst, director of mystery shopping providers Association Europe and managing director of REACT Surveys, said mobile phones have opened up a new world enabling firms to understand a customer’s experience with feedback often being immediate.
Third-generation customer satisfaction surveys or CSat3G allows samples of customers to be sent questionnaires direct to their mobile devices.
Hurst said: “The industry has been invigorated by the arrival of this technology as people are happy to participate without having to be incentivised.
"It’s low cost, effective and gives businesses a chance to see what is really happening.”
Hurst believes the best insight comes from combining the objective assessment of staff performance with the subjective opinion of shoppers to understand where competitive strengths and weaknesses lie – a high score against a business’ own criteria is meaningless if competitors are delivering a better service.”
Dealer management system
The amount of information which can be extracted from the dealer management system (DMS) is immense, but it is only as good as the data which is input. Its size and complexity has attracted criticism that it is incapable of delivering everything a modern retailer requires.
However, the DMS continues to evolve with many incorporating add-on tools from CRM programmes to electronic vehicle health check systems, many of which are invaluable for improving retention.
ADP dealer services marketing manager Adam Palmer said: “The right DMS will help dealers to provide consistent excellent service across the
"Using a single integrated system, supported by a central customer database, dealers can manage all key customer-facing activities – all of which can positively influence a customer’s perception and help secure long-term loyalty.”
By locking customers into a 12-month pre-paid or monthly payment, service plans have proved their worth for customer retention, so much so that many manufacturers incorporate them into new car offers.
Tim Smith, commercial director of dealer web management company GForces, said: “Service plans are essentially a self-fulfilling marketing prophecy; once a customer has signed up, their custom is guaranteed for the length of the plan.
“Given the proliferation of service plans as standard on some new cars, years two to five is where franchised dealers can really cash in – critical
given that aftersales retention rates for used car customers is typically just 30-40% after the first year.
“We’ve seen clients achieve more than 60% on used car
aftersales retention with service plans.
As dealers improve service plan sales techniques, these figures will rise.”
Several major warranty companies have reported a growing uptake of extended warranty products, attributed to a number of factors, including the desire for peace-of-mind motoring, the expectation of a new car-buying experience by used buyers and a more robust sales process from dealers looking to exploit every revenue stream.
Arguably, a warranty offers a direct link or a reminder to the customer that the business which issued it should be the one which services and maintains the vehicle.
While service offers along with the attraction of genuine parts and factory-trained technicians are available in the franchised sector, there is a lack of an online marketing strategy compared with aggressive marketing from many
household name fast-fits which sees dealers losing customers, according to Chris Green, director of motoring.co.uk.
Green cites loyalty cards, aftersales electronic direct mails leading recipients to an aftersales offers page on dealer websites and online booking facilities as a few of the tools dealers could utilise, while Facebook and Twitter should be used to deliver service messages, much like the independent fast fit outlets.