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Car dealers must consider the 'lifetime value' of their customers, opinion

Lee Coomber, managing director of AU Limitless

For many years a bugbear of the motor industry is the transactional and infrequent relationship the car dealers has with their customers.

Staying relevant to that customer between purchases has proven a challenge that few have cracked.

In the current climate, it is more important than ever to think about the customer in terms of a longer relationship than a single purchase. A key to longer customer relationships is to think about customer lifetime value, which is the total worth to a business of a customer over the whole period of their relationship.

Understanding customer lifetime value will change the actions of any business. It allows more time, money and consideration to be spent on the customer in anticipation of a return over time. Knowing each customer’s lifetime value helps businesses develop strategies to acquire new customers and retain existing ones while maintaining profit margins.

According to HubSpot, over the last five years, the cost of acquiring new customers has increased by more than 50%. That’s why retaining customers and increasing the amount of profit generated from existing customers is critical.

Technology can help dealers of all sizes improve their customers’ experience. Customers interact with their mobile devices more than anything else. Putting a virtual dealership in their hands can help to build trust over time.

A useful application will give drivers notifications on everything from tax and MOT reminders to service history updates and notifications. Service appointments can be booked at the push of a button and automatically loaded into a dealer management system. It is efficient for both the customer and the dealership.

App-based technology can also support contactless check-in and key drop along with live updates of work schedules and supporting video. The process can free-up service advisors to focus on customers who need additional support.

While it is not advisable to spam customers with marketing messages, a more data-rich view of customers will ensure that communications are relevant and timely, whether they are delivered through the app, SMS or email

Early deployments of the AU Limitless system have seen operational improvements for both sales and service teams with positive customer feedback. Invoicing and payment can also be completed in an app with the automatic offering of finance.

There is also scope to plug-in automatic recall updates and wider provenance data. While the amount of data available on the customer is increased, it is also GDPR compliant due to the acceptance of terms and conditions in the app or by another communication channel.

Automation is arriving in dealerships, and it will change how the sector thinks about customer service. Already we are seeing ramps available for customers to drive over that check on wheel alignment and tyre depth and automatically add any work to the service quote.
The industry is already seeing a host of customer-facing applications launched by OEMs ranging from Kia Motor’s MyKia app to the Mercedes Me app, which offers shopping and lifestyle benefits.

If dealers are to own the customer, they need to own the customer journey to improve lifetime value. While the operational benefits are clear in terms of efficiency and social distancing, the bigger prize is a happier customer who wants to return to their local dealership for years to come.

Author: Lee Coomber, managing director of AU Limitless 

The latest AM industry special issue

There has never been such desire for management information, for on-the-spot monitoring, for streamlining and automation, as there is now.

With this in mind, AM asked suppliers of some of the critical technologies dealers can use in their businesses, whether at the front end or in back-of-house functions, to share their latest developments and technologies for the AM Dealer Technology Guide.


Read now

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