A study of dealer sales has shown that an effective customer contact strategy could increase customer retention rates, despite a falling market.
A unique study of current practices among dealers representing 17 automotive finance brands, conducted by Chrysalis Loyalty, has revealed that “big gains are available”.
Dealers confidentially shared data to reveal their ratio of cars sold per customer contacted, along with descriptions of their approach to customer relationship and renewal management.
While the most achieve one new sale for every 1.4 customers contacted, many more are reporting only one sale for every 10 customers contacted. In a significant minority of cases, the figures are one in 20.
Chrysalis Loyalty’s product and marketing director, Mark Fretwell (pictured),said: "This is all good news for most funders and dealers because it demonstrates that many of the new customers they need are already hiding in plain sight.
"We have been able to establish a clear link between the lowest renewal rates and a lack of process for some dealers, who often report that their customer contact strategy relies entirely on being instructed to mount a campaign by their brand or finance provider.”
The key finding was that the consistently high performance of dealers focus on customer loyalty.
Renewal rates in dealerships which run a dedicated customer contact strategy are far higher than in those which approach the issue on an ad hoc basis – for example, when instructed to by a brand or finance provider.
These results were gained by having were a clearly defined approach, disciplined implementation, careful integration with existing CRM approaches and a strong focus on individual skills for staff focused on customer renewals.
"Even when we drill down into the approaches of dealers with a more structured process we see big opportunities for increasing sales to existing customers - backed by real evidence of what works,” said Fretwell.
"Despite the industry's reliance on data analysis for many operations there is still a lack of focus on the most effective change points.
"As an example, we know from analysis that many customers will renew well before they reach a point in their contract where the cost to change may be zero, or when they pass the point of owing less finance than their car is worth.
"And yet many funders and dealers with a defined retention strategy limit their customer contact to one of those points.
"In contrast, the evidence shows that maintaining a consistent contact strategy throughout the life of a customer's finance agreement is what maximises renewals.
"Increasing retention is a vital part of business growth and it is striking to see how opportunities to do that are still wide open across the automotive financial services sector."